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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2018orTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
2、OF 1934 For the transition period from toCommission File No.00137852PROTAGONIST 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 className of each exchange on which registered
4、Common Stock,$0.00001 par valueThe Nasdaq Global MarketSecurities registered pursuant to Section 12(g)of the Act:None Indicate 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 is not required
5、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 duringthe preceding 12 months(or for such shorter period that the registran
6、t was required to file such reports),and(2)has been subject to such filing requirements for thepast 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 RegulationS-T(232.405 of this cha
7、pter)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 if disclosure of delinquent filers pursuant to Item 405 of Regulation SK(229.405 of this chapter)is not contained herein,and will notbe contained,to the
8、 best of registrants knowledge,in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or anyamendment to this Form 10K.Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smalle
9、r reporting company,or an emerginggrowth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b2 ofthe Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting company Emerging
10、 growth company If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Yes No Indicate by check mark whether
11、 the registrant is a shell company(as defined in Rule 12b2 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$96.0 million as of June 30,2018,based upon theclosing sale price on The Nasdaq Global Market report
12、ed on June 30,2018.Excludes an aggregate of 6,926,690 shares of the registrants common stock held byofficers,directors and affiliated stockholders.For purposes of determining whether a stockholder was an affiliate of the registrant at June 30,2018,the registrantassumed that a stockholder was an affi
13、liate of the registrant at June 30,2018 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 30,2018.E
14、xclusion of such shares should not be construed to indicate that any such person possesses the power,direct or indirect,to direct or cause the direction of themanagement or policies of the registrant or that such person is controlled by or under common control with the registrant.There were 23,347,0
15、66 shares of registrants Common Stock,par value$0.00001 per share,outstanding as of February 28,2019.DOCUMENTS INCORPORATED BY REFERENCE:Portions of the registrants definitive Proxy Statement for the registrants 2018 Annual Meeting of Stockholders,to be filed subsequent to the date hereof with theSe
16、curities 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 than120 days after the end of the registrants fiscal year ended December 31,2018.Table of ContentsPROTAGONIST THERAPEUTICS,INC.2018 FORM 10K AN
17、NUAL REPORTTABLE OF CONTENTS PagePART I Item 1.Business1Item 1A.Risk Factors30Item 1B.Unresolved Staff Comments76Item 2.Properties76Item 3.Legal Proceedings76Item 4.Mine Safety Disclosures76 PART II Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equit
18、ySecurities77Item 6.Selected Financial Data79Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations80Item 7A.Quantitative and Qualitative Disclosures about Market Risk95Item 8.Financial Statements and Supplementary Data97Item 9.Changes in and Disagreements With A
19、ccountants on Accounting and Financial Disclosure131Item 9A.Controls and Procedures131Item 9B.Other Information131 PART III Item 10.Directors,Executive Officers,and Corporate Governance132Item 11.Executive Compensation132Item 12.Security Ownership of Certain Beneficial Owners and Management and Rela
20、ted Stockholder Matters132Item 13.Certain Relationships and Related Transactions,and Director Independence132Item 14.Principal Accounting Fees and Services132 PART IV Item 15.Exhibits,Financial Statement Schedules133SIGNATURES Table of Contents PART IStatements made in this Annual Report on Form 10K
21、 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,as amended.Forward-looking statements are identified by words such as“believe,”“will,”“may,”“estimate,”“continue,”“anticipate,”
22、“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 state other“forward-l
23、ooking”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 results to differ materi
24、ally 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 in“Item 1A.Risk Factors”and elsewhere inthis Annual Report.In addition,statements that“we believe”and similar statements reflect our b
25、eliefs and opinions on therelevant subject.These statements are based upon information available to us as of the date of this report,and while webelieve such information forms a reasonable basis for such statements,such information may be limited or incomplete,andour statements should not be read to
26、 indicate that we have conducted an exhaustive inquiry into,or review of,allpotentially available relevant information.These statements are inherently uncertain and investors are cautioned not tounduly rely upon these statements.Forward-looking statements are based on our managements beliefs and ass
27、umptionsand on information currently available to our management.These statements,like all statements in this report,speak only asof their date,and we undertake no obligation to update or revise these statements in light of future developments.Wecaution investors that our business and financial perf
28、ormance are subject to substantial risks and uncertainties.Item 1.Business.OverviewWe are a clinical-stage biopharmaceutical company developing peptide-based product candidates to addresssignificant unmet medical needs in hematology and gastroenterology.Figure 1:Our Product Pipeline1 Table of Conten
29、tsIn hematology,our most advanced clinical product candidate,PTG-300,is under development for the treatment ofcertain rare blood disorders characterized by ineffective erythropoiesis,excessive red blood cells or iron overload.PTG-300is an injectable compound that mimics the effect of the natural hor
30、mone hepcidin,but with greater potency,solubility andstability.Hepcidin is a key hormone in regulating iron equilibrium and is critical to the proper development of red bloodcells.We are currently developing PTG-300 for the treatment of chronic anemia and iron overload,with an initial focus onbeta-t
31、halassemia non-transfusion dependent and transfusion dependent patients where the primary endpoints arehemoglobin increases and transfusion reductions,respectively.PTG-300 has received an orphan drug designation from theU.S.Food and Drug Administration(“FDA”)and European Union(“EU”)regulatory author
32、ities.The FDA has granted FastTrack designation to PTG-300 for the treatment of beta-thalassemia.In the first quarter of 2019,we began dosing patients in aglobal Phase 2 study of PTG-300 in beta-thalassemia.We plan to initiate a Phase 2 study in a second indication in the secondhalf of 2019.In gastr
33、oenterology our clinical stage product candidates,PTG-200 and PN-943,are potential first-in-class oral drugscurrently in development for inflammatory bowel disease(“IBD”),a GI disease consisting primarily of ulcerative colitis(“UC”)and Crohns disease(“CD”),that block biological pathways currently ta
34、rgeted by marketed injectable antibodydrugs.Our orally stable peptide approach offers targeted delivery to the gastrointestinal(“GI”)tissue compartment.Webelieve that,compared to antibody drugs,these product candidates have the potential to provide improved safety due tominimal exposure in the blood
35、,increased convenience and compliance due to oral delivery,and the opportunity for theearlier introduction of targeted therapy.As a result,if approved,they may transform the existing treatment paradigm for IBD.PTG-200 is a potential first-in-class oral Interleukin-23 receptor(“IL-23R”)antagonist for
36、 the treatment of IBD.Wehave entered into a worldwide license and collaboration agreement with Janssen Biotech,Inc.(“Janssen”),a Johnson&Johnson company,to co-develop and co-detail PTG-200 for all indications,including IBD.See“Item 7.ManagementsDiscussion and Analysis Overview”and Note 3 to the Cons
37、olidated Financial Statements included elsewhere in thisAnnual Report on Form 10-K for additional information.In 2018,we completed a Phase 1 clinical study to evaluate thesafety,pharmacokinetics and pharmacodynamics of PTG-200 in healthy volunteers.We expect Janssen to file a U.S.Investigational New
38、 Drug application(“IND”)for PTG-200 in CD in the first half of 2019.PN-943,a potential first-in-class oral,alpha-4-beta-7(“47”)specific integrin antagonist,is currently in a Phase 1single and multiple ascending dose clinical trial in healthy volunteers to evaluate safety,pharmacokinetics andpharmaco
39、dynamics.We developed PN-943 as a more potent oral gut-restricted 47 backup compound to PTG-100,our firstgeneration oral gut-restricted 47 inhibitor that was being developed for treatment of ulcerative colitis.In March 2018,weannounced the discontinuation of a global Phase 2 clinical trial of PTG-10
40、0 in patients with moderate to severe UC due tofutility following a planned interim analysis by an independent Data Monitoring Committee.In August 2018,we announcedthat an independent,blinded re-read of endoscopies from the study had demonstrated signals of clinical efficacy.A humanerror in the init
41、ial endoscopy reads by the original vendor which was characterized by an unusually high placebo effect ledto the original futile outcome.In addition,a pre-specified blinded histopathology analysis of colon biopsies from the trialindicated dose-dependent high rates of histologic remission which suppo
42、rted the observations of clinical remission andendoscopy responses for PTG-100.During 2018 we replaced PTG-100 with PN-943 as a development candidate for thetreatment of IBD based on an assessment of preclinical data from PN-943 suggesting that PN-943 is a more potent compoundthan PTG-100.We anticip
43、ate reporting top-line results of the PN-943 Phase 1 study in the first half of 2019.After having establishedpreliminary clinical efficacy with PTG-100 in UC patients,the PN-943 Phase 1 study is designed to evaluate potency andtarget engagement of PN-943 in comparison to the historical Phase 1 data
44、with PTG-100.If this study is successful,weanticipate filing an IND in the second half of 2019 in preparation for initiating a Phase 2 proof-of-concept(“POC”)study inUC in the first half of 2020.Our clinical development programs are all derived from our proprietary discovery platform.Our platform en
45、ables us toengineer novel,structurally constrained peptides that retain key advantages of both oral small molecules and injectableantibody drugs,while overcoming many of their limitations as therapeutic agents.Importantly,constrained peptides can bedesigned to alleviate the fundamental instability i
46、nherent in traditional peptides to allow different delivery forms,such asoral,subcutaneous,intravenous,and rectal.2 Table of ContentsIn addition,we continue to use our peptide technology platform to discover product candidates against targets indisease areas with significant unmet medical needs.Our
47、Product Candidates PTG-300 PTG-300 is an injectable hepcidin mimetic.Hepcidin is a natural hormone that regulates iron metabolism.We aredeveloping PTG-300 for the treatment of patients with beta-thalassemia by targeting the chronic anemia that arises frominsufficient production and decreased surviva
48、l of red blood cells known as ineffective erythropoiesis.In diseases ofineffective erythropoiesis,excessive quantities of iron in the bone marrow contribute to oxidative stress and premature celldeath causing anemia.In healthy individuals,hepcidin regulates iron levels by inhibiting iron absorption
49、from the GI tractand by limiting macrophage release of iron in the bone marrow.Individuals with beta-thalassemia and myelodysplasticsyndromes(“MDS”)can have insufficient hepcidin to maintain appropriate iron levels that result in chronic anemia.Becauseof stability issues,complexity of synthesis and
50、solubility limitations,direct replacement with native hepcidin is not apractical therapeutic approach.We developed PTG-300 as a stable,soluble,more readily manufactured injectable hepcidinmimetic that could potentially prevent iron toxicity and anemia with chronic sub-cutaneous injections.We complet
51、ed a Phase 1 single ascending and repeat dose clinical trial in normal healthy volunteers during the fourthquarter of 2017.In the study,PTG-300 produced dose-dependent increases in blood exposure and was well tolerated,with noserious adverse events or dose-limiting toxicities.The most common adverse
52、 event was a transient and self-limited erythema(redness)at the injection site in some subjects which was largely dose-related and absent of pain.The Phase 1 studydemonstrated that PTG-300 induced dose-related reductions in serum iron,which persisted beyond 72 hours at higher doselevels.PTG-300 has
53、received orphan drug designation from the FDA and EU regulatory authorities,and Fast Trackdesignation from the FDA for the treatment of beta-thalassemia.Fast Track designation is an expedited review to facilitatedevelopment of investigational drugs which treat a serious or life-threatening condition
54、 and fill an unmet medical need.In2018,we successfully filed an IND in the United States and related clinical trial applications outside the United States andinitiated enrollment in a global Phase 2 single-arm open label study of PTG-300 in patients with beta-thalassemia.In the first quarter of 2019
55、,we began dosing patients in the Phase 2 study in beta-thalassemia.The primary objectivesof this study are to evaluate the safety,tolerability and preliminary efficacy of PTG-300 and identify an appropriate startingdose and titration regimen for registration studies.We plan to initiate an additional
56、 Phase 2 study in a second indication in the second half of 2019.PTG-200 PTG-200 is a potential first-in-class GI-restricted IL23R specific antagonist peptide product candidate for the treatmentof IBD.Interleukin23(“IL-23”),a member of the IL12 family of pro-inflammatory cytokines,is a protein that
57、regulatesinflammatory and immune function and plays a key role in the development of IBD.By blocking the IL23 receptor withPTG200 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-
58、restricted nature.The IL-23 pathway is targeted by thedual IL-12 and IL23 antagonist antibody ustekinumab,administered as an infusion and marketed as Stelara,for psoriasis,psoriatic arthritis,and moderate-to-severe CD.We completed a Phase 1 clinical trial in normal healthy volunteers in the fourth q
59、uarter of 2018.This Phase 1 study,conducted in Australia,was a randomized,double-blind,placebo-controlled,single and multiple dose-escalation trial ineighty healthy volunteers.The primary endpoint was safety and tolerability.Secondary endpoints included the identificationof the maximally tolerated d
60、ose and the evaluation of pharmacokinetic parameters.3 Table of ContentsWe have a worldwide license and collaboration agreement with Janssen to co-develop and co-detail PTG-200 for allindications as described in Item 7.“Managements Discussion and Analysis Overview”and Note 3 to the ConsolidatedFinan
61、cial Statements included elsewhere in this Annual Report on Form 10-K.Together with Janssen,we currently plan todevelop PTG-200 for the treatment of moderate-to-severe CD,potentially followed by UC.We continue to providecompound supply services and expect Janssen to file an IND during the first half
62、 of 2019 to support a Phase 2 clinical studyin patients with Crohns disease.PTG-100 PTG-100 is our first generation 47 inhibitor that shares the same 47 integrin target as the injectable antibody drugvedolizumab,marketed as Entyvio,for the treatment of moderate-to-severe UC and CD.We completed exten
63、sive pre-clinical studies of PTG-100 in which we established pharmacological POC,and completed a Phase 1 clinical trial in Australiain 2016.We initiated a global Phase 2 study of PTG-100 in patients with moderate to severe ulcerative colitis.In March2018,we announced the discontinuation of the Phase
64、 2 clinical trial due to futility following a planned interim analysis byan independent Data Monitoring Committee.The interim data revealed an unusually high placebo rate of clinical remissionthat led to a futility decision and discontinuation of the trial.A human error in the initial endoscopy read
65、s by the originalvendor led to the original futile outcome.In August 2018,we announced that an independent,blinded re-read ofendoscopies from the study had demonstrated signals of clinical efficacy.In addition,a pre-specified blinded histopathologyanalysis of colon biopsies from the trial indicated
66、dose-dependent high rates of histologic remission which supported theobservations of clinical remission and endoscopy responses for PTG-100.PN-943 PN-943 has the potential to be a first-in-class oral,47 antagonist for the treatment of IBD.Based on preclinical data,we believe that PN-943 may be a mor
67、e potent 47 integrin antagonist compound than PTG-100 without sacrificing its otherpositive attributes,such as selectivity and tolerability.The 47 integrin is one of the most GI-specific biological targets forIBD.It is a cell surface protein present on T cells that plays an important role in the tra
68、fficking of T cells to the GI tissuecompartment by binding to MAdCAM1,an extracellular protein that resides mostly in the GI vasculature.We are leveraging several factors to inform and guide the clinical development of PN-943 for the treatment of IBD.First,PN-943(as with PTG-100)shares the same 47 i
69、ntegrin target as the injectable antibody drug vedolizumab,marketedas Entyvio,for the treatment of moderate-to-severe UC and CD.Second,we have completed extensive pre-clinical studiesof PN-943 in which we established pharmacodynamic target engagement POC,including effects on receptor occupancy,Tcell
70、 trafficking and mucosal healing in rodents and/or monkeys.Based on preclinical data,we believe that PN-943 may be amore potent 47 integrin antagonist compound than PTG-100 without sacrificing its other positive attributes,such asselectivity and tolerability.Third,we are utilizing pharmacodynamic(“P
71、D”)biomarker assays similar to those used withPTG-100 and described in scientific publications with Entyvio and other antibodies as indicators of target engagement toevaluate POC in our Phase 1 clinical trial with PN-943.These PD data include assessment of receptor occupancy and receptorexpression a
72、s observed with PTG-100 in a previous Phase 1 healthy volunteer study.We believe that we can leverage thedevelopment and regulatory path of Entyvio and other approved antibody drugs for IBD to help inform the design of ourclinical development studies.Finally,we demonstrated that our first generation
73、 47 integrin antagonist peptide compoundPTG-100 was safe and well-tolerated and showed evidence of clinical activity in the Phase 2 study in UC patients(n=83),which can inform the clinical development of PN-943.We initiated a Phase 1 single ascending dose(“SAD”)and multiple ascending dose(“MAD”)clin
74、ical trial of PN-943 inAustralia to evaluate the safety and tolerability,pharmacokinetics(“PK”),and PD-based POC in healthy subjects.We expectto announce results from the Phase 1 clinical trial in the first half of 2019.Additional Product CandidatesWe are currently researching potential oral and inj
75、ectable peptide-based product candidates for a range of conditionsincluding,but not restricted to,hematology and GI diseases.4 Table of ContentsOur IBD Solution:Oral,GI-Restricted Peptides as Targeted TherapiesFor the IBD targets of interest,the size and nature of our peptides are carefully selected
76、 and modified so as to acquirethe desired potency and specificity,and also to restrict their presence to the GI tissue compartment when administered orally.These features translate to oral,GI-restricted,selective and potent peptide drug candidates with specific advantagescompared to antibody drugs:O
77、ral administration.We are developing our peptide therapeutics in a convenient capsule or tablet formintended for oral administration.We believe oral administration may reduce many of the problems andlimitations associated with injections or infusions,including injection site pain and local reactions
78、,inconvenience,anxiety,high rates of immunogenicity and potential safety risks.Potential for improved safety and tolerability compared to antibody drugs.Oral and GI-restricted delivery minimizes systemic exposure in the blood.Oral GI-restricted delivery resultsin lower drug levels in the blood that
79、may provide the potential for an enhanced safety profile overantibody drugs.Peptides can be cleared more quickly from systemic circulation.Small molecules and peptides below a sizethreshold can be rapidly cleared from blood circulation by kidney filtration and excretion.Rapid clearancemay be benefic
80、ial especially if patients need to discontinue therapy.In contrast,antibody drugs,because oftheir long plasma half-life,may take months to clear from blood circulation leaving patients exposed tocontinued or increased safety risk.The likelihood of much lower immunogenicity of small stable peptides c
81、ompared to antibody drugsreduces the risk of loss of response.We believe that anti-drug antibodies are less likely to be elicitedagainst constrained peptides,due to their small size,lack of epitope density,resistance to proteolysis,oraltolerance,and minimal systemic absorption.Potential for localize
82、d delivery to site of disease.We believe oral dosing of GI-restricted peptides results insubstantially higher drug concentrations in the diseased GI tissue compartment compared to injectable antibodydrugs.This targeted delivery to the site of action may lead to more immediate and significant target
83、engagementat the site of active disease in the GI tissue compartment.Cost-effective and less complex manufacturing.Because of their size and stability,we believe that our oral,GI-restricted peptide product candidates can be produced,stored and shipped in a more cost-effective manner thanmany antibod
84、y drugs.In chronic GI diseases such as IBD,we believe that our oral,GI-restricted peptide product candidates may offerimproved delivery,the potential for improved safety and tolerability,and cost efficiencies that may provide an overallbenefit to patients,payors,and physicians.PTG300:AN INJECTABLE H
85、EPCIDIN MIMETIC PTG-300 was discovered through our peptide technology platform and is being developed as a novel injectablemimetic of the hormone hepcidin to potentially treat chronic anemia due to ineffective erythropoiesis in certain rare blooddisorders with an initial focus on beta-thalassemia.In
86、 these diseases,excessive quantities of iron in the bone marrow inhibitthe production and decrease the survival of red blood cells,causing anemia.In healthy individuals,hepcidin regulates ironlevels in the serum and the bone marrow.Because of stability issues,complexity of synthesis and solubility l
87、imitations,direct hepcidin replacement is not a practical therapeutic approach.We designed PTG-300 as a stable,soluble,manufacturable hepcidin mimetic that can treat anemia with weekly or less frequent subcutaneous delivery.5 Table of ContentsMechanism of Action and Rationale The molecular target of
88、 the hormone hepcidin is the cellular trans-membrane protein ferroportin,which functions as anexport channel for intracellular iron in macrophages,liver hepatocytes,and duodenal enterocytes.By binding to theextracellular domain of ferroportin,hepcidin prevents uptake of iron from the duodenal entero
89、cytes and redistributes iron byreducing the export of iron from inside the cells to the systemic circulation.Excessive quantities of iron relative to the lowerlevels of beta-globin chains in the bone marrow induce ineffective erythropoiesis resulting in anemia.As a hepcidin mimetic,PTG-300 may redis
90、tribute iron to the bone marrow macrophages,reduce iron-induced oxidative stress in the bone marrow,and allow for sufficient production of red blood cells.In addition,by limiting the release of iron into the blood,PTG-300may inhibit the damage caused by excessive absorption of iron by vital organs s
91、uch as the liver and heart(i.e.secondary ironoverload).Overview of Beta-Thalassemia and Current TherapiesWe anticipate our initial clinical indication for PTG-300 will be the treatment of chronic anemia in beta-thalassemia.As a result of the underlying genetic defect in b-globin production,beta-thal
92、assemia patients may be severely anemicresulting in the need for lifelong supportive care with regular red blood cell transfusions.Repeated transfusions can causesecondary iron overload in the heart and liver which results in shortened lifespan in patients.In the bone marrow,elevatedlevels of iron c
93、an prevent red blood cells from fully developing,resulting in anemia.In addition,the resulting immature redblood cells can aggregate in the spleen causing organ enlargement that may require surgical removal.In conditions ofineffective erythropoiesis,such as beta-thalassemia and MDS,hepcidin levels a
94、re suppressed leading to increases in ironabsorption from the GI tract and iron export from macrophages which may be toxic to developing erythrocytes.It has beenproposed that agents with hepcidin activity may help correct the iron distribution abnormalities in thalassemia withbeneficial effects on e
95、rythropoiesis.Existing treatment options for iron-loading anemia and secondary iron overload are limited.Patients with transfusion-dependent thalassemia(“TDT”)require lifelong regular red blood cell transfusions and general supportive care.Red bloodcell transfusions can treat a patients anemia but e
96、xacerbate the patients iron overload and are burdensome.The ironoverload caused by transfusions may require treatment with chelating agents,which can have adverse effects.Transfusionand iron chelation therapy have significantly improved the survival of TDT patients over the last few decades.However,
97、these agents work very slowly and have significant kidney and liver toxicity issues.We believe that PTG-300 may be able torestore iron homeostasis in the bone marrow as well as reduce excess circulating iron,improving anemia and therebyreducing or eliminating the need for red blood cell transfusions
98、 and related chelation treatments.Beta-thalassemia is most prevalent in people of Mediterranean descent,such as Italians,Greeks and Turks,and is alsofound in people from the Arabian Peninsula,Iran,Africa,Southeast Asia and southern China.Globally,the prevalence ofbeta-thalassemia was estimated to be
99、 approximately 300,000 patients in 2008 according to the Centers for Disease Control.The disease is rarer in the United States where Decision Resources Group(“DRG”)estimates there are approximately 3,000patients.In the major markets of the United States,Italy,Germany,UK,Spain,and France,DRG estimate
100、s there areapproximately 16,000 diagnosed patients.Most patients with beta-thalassemia suffer from anemia caused by hepcidindeficiency and a significant number are dependent on transfusions and chelating agents,which can cost between$50,000 to$70,000 per year in the United States.PTG-300s Pre-clinic
101、al Proof-of-Concept Studies In pre-clinical studies,we demonstrated that PTG-300 can lower serum iron more effectively than native hepcidin andmaintain reduced serum iron levels for at least 24 hours following a single subcutaneous injection(Figure 2).We have alsodemonstrated that PTG-300 in a dose
102、dependent manner can reduce serum iron in healthy mice,rats,and cyno,thusestablishing pre-clinical POC.6 Table of ContentsFigure 2:Significant Difference Between PTG-300 and Synthetic Hepcidin in Lowering Serum Iron in Healthy Mice PTG300 was also able to address the underlying anemia in a mouse gen
103、etic model of beta-thalassemia,as shown mostprominently by the significant increase in red blood cell number(“RBC”)and hemoglobin(“HGB”)with the correspondingdecrease in reticulocyte content(Figure 3).Consequently,we also observed a significant reduction in the pathologicalincreases in spleen weight
104、(splenomegaly)by addressing the underlying ineffective erythropoiesis.Furthermore,PTG300was effective in reducing the increase in liver iron content.In contrast the oral iron chelator deferiprone(“DFP”)did notcorrect the anemia or the splenomegaly.7 Table of ContentsFigure 3:PTG-300 Addresses Ineffe
105、ctive Erythropoiesis in Mouse Beta-thalassemia8 Table of ContentsPTG-300s Phase 1 Clinical Trial Overview We completed a Phase 1 clinical trial in Australia during the fourth quarter of 2017.The Phase 1 randomized,placebo-controlled single ascending-and repeat-dose study was conducted to evaluate th
106、e safety,tolerability,pharmacokinetics andpharmacodynamics of PTG-300 in 62 normal healthy male volunteers.The Phase 1 study demonstrated that PTG-300 induced dose-related reductions in serum iron,which persisted beyond72 hours at higher dose levels.These results were consistent with known activitie
107、s of hepcidin and pre-clinical studies ofPTG-300.In the study,PTG-300 produced dose-dependent increases in blood exposure,and was well tolerated,with noserious adverse events or dose-limiting toxicities.The most common adverse event was a transient and self-limited erythema(redness)at the injection
108、site in some subjects which was largely dose-related and absent of pain.The study provided apharmacodynamic POC and established a range of doses that could be evaluated in the treatment of beta-thalassemia.PTG300s Development Program In 2018,we successfully filed a U.S.IND as well as ex-U.S.clinical
109、 trial applications and initiated enrollment in aglobal Phase 2 single-arm open label study of PTG-300 in patients with non-transfusion dependent and transfusiondependent beta-thalassemia.The primary objectives of this study are to evaluate the safety,tolerability and preliminaryefficacy of PTG-300
110、and identify an appropriate starting dose and titration regimen for registration studies.In addition to the potential treatment of anemia in rare blood disorders,such as beta-thalassemia and myelodysplasticsyndromes,PTG-300 therapy may also have potential benefit in other diseases of iron dysregulat
111、ion such as hereditaryhemochromatosis,polycythemia vera,siderophilic infections,and liver fibrosis and we are evaluating potential developmentpathways for those indications.OVERVIEW OF INFLAMMATORY BOWEL DISEASE Inflammatory bowel disease is a group of chronic autoimmune and inflammatory conditions
112、of the colon and smallintestine,consisting primarily of UC and CD.In UC,inflammation may be limited to part of the colon or extend through itsentirety.UC is primarily characterized by ulceration of the intestinal surface,accompanied by rectal bleeding and frequent,urgent bowel movements.CD occurs an
113、ywhere along the GI tract,commonly affecting the small intestine and the proximallarge intestine.CD complications may include strictures and fistula,which penetrate all layers of the intestine.UC is usuallydiagnosed earlier than CD,due to bleeding symptoms.Patients with CD may initially present with
114、 abdominal pain,fatigueand anorexia,which can be misdiagnosed.Both diseases peak diagnosis years are in young adulthood and are found aboutequally in both males and females.Management is lifelong and affects school attendance,graduation rates,childbearing andwork productivity.IBD prevalence is incre
115、asing worldwide and is correlated with the adoption of western diets and lifestyle,as well as genetic factors(5 to 20%of affected patients have a first degree relative with the disease).Market OverviewIn 2017,GlobalData estimated that the UC market was approximately$5.4 billion across the United Sta
116、tes,France,Germany,Italy,Spain,the United Kingdom and Japan(the“7MM”).By the end of 2025,the UC market in the 7MM isexpected to reach$6.9 billion.During the same time period,GlobalData estimated that the CD market will grow from$9.0billion to$13.8 billion.Greater than 84%of UC product sales are from
117、 injectable biologic products,including biosimilars.Conventional small molecule therapies,such as aminosalicylates are not effective in CD,therefore once patients arediagnosed,they are even more likely to be treated with biologics than UC patients.Current Standard of Care in IBD In the last five yea
118、rs,treatment of IBD has evolved from a focus on successful symptom management to an emphasis onmodifying the underlying disease to achieve long-term remission.New technologies and outcome measures have beendeveloped to improve staging definitions and assessments of treatment benefit.Nonetheless,halt
119、ing or9 Table of Contentsreversing IBD progression has not yet been achieved with any single agent therapy and attaining and maintaining long-termremission in most patients remains an unmet medical need.Across therapeutic classes,15 to 25%rates of clinical remissionrepresent the current ceiling in p
120、atients with moderate-to-severely active disease.Biosimilar infliximab and other tumor necrosis factor(“TNF”)inhibitors are the first line standard of care in moderate-to-severe IBD.Anti-TNFs bind to and neutralize a central pro-inflammatory cytokine in the gut via systemicimmunosuppression.As a res
121、ult,they can be associated with infection and malignancy risk.Although the magnitude of theserisks is relatively low,they are significant for the young IBD population who must continue on lifelong treatment.Inaddition,more than 10%of patients treated with anti-TNF agents lose response with each year
122、 of treatment.In 2014,a novelanti-trafficking mechanism launched with vedolizumab(Entyvio),which blocks migration of leukocytes into the gut via47 integrins.This mechanism remains the only true“gut selective”approach in the IBD market today,althoughformulation technologies can limit systemic exposur
123、e from oral agents.Five years post-launch Entyvio has shown anexcellent safety profile,although it requires intravenous administration.Entyvio was followed by the launch ofustekinumab(Stelara)in CD in 2016,which blocks inflammation produced through the IL-12 and IL-23 pathways,andtofacitinib(Xeljanz
124、),an oral pan-Janus kinase(JAK)inhibitor was recently approved in UC.No head-to-head trials comparing the long-term safety and efficacy of the marketed mechanisms of action has beencompleted,although two are in progress to compare outcomes of anti-integrins and anti-TNFs.The first formal combination
125、trials in IBD were initiated in the last year,adding new mechanisms such as integrin inhibitors or IL-23 inhibitors to anti-TNFs.Most IBD experts now believe that combining treatment classes with additive or synergistic mechanisms of action willbe required to attain the disease-modifying effects and
126、 lasting remissions documented in other areas of immunology,such aspsoriasis or rheumatoid arthritis.We believe the development of new,potent and targeted oral therapies for IBD may offer safer and more effectivetreatment options,alone or in combination,for moderate-to-severe IBD patients.In additio
127、n,many clinicians continue toadvocate for earlier introduction of targeted therapeutics in mild-to-moderate IBD in order to prevent disease progression andirreversible gastrointestinal damage.Our oral,GI-restricted,peptide drugs PN-943 and PTG-200 work on the same specificvalidated targets as FDA-ap
128、proved injectable antibodies and have the potential to offer improved safety and compliance andto minimize the risk of immunogenicity associated with antibodies.Taken together,we believe that our product candidates,if approved,have the potential to be used more broadly,including treatment of mild-to
129、-moderate IBD.PTG200:AN ORAL IL23R ANTAGONIST PTG-200 was discovered through our peptide technology platform and is being developed as a potential first-in-classoral,GI-restricted antagonist that binds to the IL23R and specifically blocks its interaction with the IL23 cytokine.PTG200 will be initial
130、ly studied in patients with moderate-to-severe CD potentially followed by UC and pediatric IBD.Mechanism of Action and Rationale IL-23 is a member of the IL12 family of cytokines with pro-inflammatory and autoimmune properties.Cytokines arecell signaling proteins that are released by cells and affec
131、t the behavior of other cells.Binding of the IL23 ligand to theIL23R receptor leads to an expression of pro-inflammatory cytokines involved in the mucosal autocrine cascade that is animportant pathway of many inflammatory diseases,including IBD.Furthermore,genetic analyses of IBD patients haveimplic
132、ated IL23R mutations as a risk factor associated with susceptibility to IBD.The antagonist infused antibody drugustekinumab(marketed as Stelara for psoriasis,psoriatic arthritis,and moderate-to-severe CD)is a p40 antagonist antibodythat inhibits both the IL-23 and IL-12 pathways.Next-generation IBD
133、antibody drugs,such as guselkumab,target the p19subunit of the IL23 ligand and are specific to the IL-23 pathway,which is believed to be an important driver of local IBDpathology,while not blockading the IL12 pathway.IL12 is believed to be important in immune surveillance against thedevelopment of i
134、nfections and malignancies.We believe that the oral,GI-restricted nature of PTG-200 may allow PTG200 to be a potent inhibitor of the IL23pathway for the treatment of IBD.By targeting IL23R with our GI-restricted oral IL23R antagonist PTG-200,we10 Table of Contentsbelieve PTG200 may restore proper im
135、mune function in the GI tissue compartment where there is active disease whileminimizing the risk of systemic side effects.Several key cell types that reside in gut-associated lymphoid tissue(“GALT”),including T cells,innate lymphoid cells,and natural killer cells,increase their expression of IL-23R
136、 during the progressionof IBD.Therefore,the high concentrations of PTG200 in GALT will facilitate access and binding to IL23R expressed in thesame tissue.PTG200s Pre-Clinical Proof-of-Concept Studies PTG-200 potently inhibited binding of IL23 to the IL23 receptor in several biochemical(“ELISA”)and c
137、ell(transformed and primary)signaling assays in a subnanomolar to low nanomolar concentration range sufficient to inhibit50%of binding.PTG200 exhibited greater than a 50,000fold selectivity against other structurally similar receptors(IL-12Rb1 and IL6R)thereby potentially reducing the risk of off ta
138、rget interactions.In total,these drug properties provideevidence to characterize PTG-200 as a potential first-in-class orally stable IL23R-specific antagonist.In PK studies in rats and cyno,PTG-200 was GI-restricted with less than 0.5%oral systemic bioavailability in plasma orurine and principal exp
139、osure in the small intestine,colon,and feces.Similar results were observed in cyno.We have also completed pre-clinical POC studies in rat 2,4,6-trinitrobenzenesulfonic acid(“TNBS”)colitis modelsdemonstrating that oral delivery of PTG200 and other prototype antagonists significantly improved disease
140、outcomes,suchas reducing body weight loss,reducing the increased colon weight/length ratio,and reducing the increased colonmacroscopic score which is comprised of assessments of colon adhesions,strictures,ulcers,and wall thickness in a dosedependent manner(Figure 4).Furthermore,PTG-200 was found to
141、reduce the increased histopathology summary score,whichis comprised of assessments of mucosal and transmural inflammation,gland loss,and erosion parameters.Finally,PTG-200was able to reduce the expression of the pro-inflammatory IL23 induced cytokines in the colon and the IBD diseasebiomarker lipoca
142、lin(“LCN2”)in the serum and feces.11 Table of ContentsFigure 4:PTG200 Reduces Pathology in Rat TNBS-Induced ColitisThe efficacy of oral PTG-200 seen in this IBD model was comparable to that of a positive control antibody against therat IL23p19 subunit which was injected and therefore present in the
143、systemic blood compartment.This allows us to definethe efficacious dose range in rats(approximately 2861 mg/kg per day)with potential translation to the efficacious dose inhumans.PTG-200s Pre-Clinical Safety Studies In pre-clinical safety and toxicity studies in rats and cyno,PTG-200 was well-tolera
144、ted with no adverse events at thehighest dose levels tested.Clinical Development Plans In November 2018,we announced the completion of a Phase 1 clinical trial of PTG-200 in 80 normal healthyvolunteers.Results of the randomized,double-blind,placebo-controlled,single-and multiple-dose escalation stud
145、ydemonstrated that administration of PTG-200 was well-tolerated.No serious adverse events or dose-limiting toxicities wereobserved.The pharmacokinetic and pharmacodynamic parameters were consistent with the gastrointestinal-restricted designof PTG-200.We are developing PTG-200 in collaboration with
146、Janssen.We continue to provide compound supply servicesand expect Janssen to file an IND during the first half of 2019 to support a Phase 2 clinical study in patients with Crohnsdisease.See“Item 7.Managements Discussion and Analysis Overview”and Note 3 to the Consolidated FinancialStatements include
147、d elsewhere in this Annual Report on Form 10-K for additional information.12 Table of ContentsPN-943:AN ORAL 47 INTEGRIN ANTAGONISTPN-943 was discovered through our peptide technology platform and is being developed as a potential first-in-classoral,GI-restricted 47 integrin-specific antagonist init
148、ially for patients with moderate-to-severe UC.Based on preclinicaldata,we believe that PN-943 may be a more potent 47 integrin antagonist compound than PTG-100 without sacrificing itsother positive attributes,such as selectivity and tolerability.Mechanism of Action and Rationale Integrins,such as 47
149、,are transmembrane proteins that regulate cellular movement into extravascular tissue and playan important role in modulating the inflammatory reaction in the gut.The 47 integrin is expressed on the surface of Tcells,immune cells that help defend against foreign and potentially harmful substances th
150、at enter the body.The developmentof UC is driven by the migration of 47 T cells into the GI tissue compartment and their subsequent activation within the GItissue compartment.The entry of 47 T cells into the GI tissue compartment is facilitated by the protein-protein interactions(“PPI”)between the 4
151、7 integrin and its corresponding ligand,MAdCAM1,which is primarily expressed in the GI tissuecompartment.Hence,the binding of 47 to MAdCAM1 can be categorized as a GI-specific interaction and has beenidentified as an IBD-specific targeted therapeutic approach.By blocking the binding of 47 integrin t
152、o MAdCAM1,PN-943 may prevent T cells from entering the GI tissue compartment,thereby reducing the inflammation that leads to theclinical manifestations and long-term implications of UC.47 for IBD is targeted by FDA-approved Entyvio (vedolizumab),which has demonstrated safety and efficacy inpatients
153、with moderate-to-severe UC and CD.Since PN-943 targets the same biological pathway as Entyvio,we are utilizingsimilar PD-based POC in our pre-clinical studies and Phase 1 clinical trial to inform and guide our Phase 2 developmentprogram.We sourced these PD biomarker assays from public scientific pub
154、lications and do not maintain any contractualarrangement providing access to this information with the makers of these marketed products.Translating PN-943s Pre-Clinical POC to Clinical POC We established a potentially efficacious dose range of PN-943 in mice by demonstrating similar pharmacologic a
155、ctivitybetween oral PN-943 and the first-generation antagonist,PTG100,and an injectable 47 antibody in mouse models of IBD.Concurrently,we employed a complementary pharmacodynamics approach for establishing a potentially efficacious humandose range and early POC.This involved specific blood PD respo
156、nse markers that reflect 47 integrin target engagement ofPN-943 in the GI tissue compartment and then establishing a correlation of those PD measurements with efficacy responses inmouse colitis models.Target engagement is a critical feature for demonstrating that PN-943 can reach its intended target
157、,thus leading to the inhibition of T cell trafficking into the GI tissue compartment.Our PD markers were monitored in miceand cyno and are being similarly evaluated in normal healthy volunteers in our Phase 1 clinical trial.These blood PDresponses in pre-clinical studies have demonstrated that PN-94
158、3 engaged its intended 47 target and combined with PDdata from the Phase 1 trial will help guide dosing for our Phase 2 UC trial.PN-943s Pre-Clinical Proof-of-Concept Studies Pre-clinical studies have demonstrated that PN-943 is a potent and highly selective 47 antagonist with minimalsystemic absorp
159、tion.Rodent colitis models have further demonstrated that PN-943 can inhibit T cell trafficking in the gutsimilar to the actions of the first generation 47 antagonist,PTG-100,and the mouse 47 antagonist antibody.PN-943 potently inhibited binding of 47 to MAdCAM1 in several human biochemical enzyme-l
160、inkedimmunosorbent assays(“ELISA”)and cell adhesion(transformed and primary cells)assays in a low nanomolar concentrationrange sufficient to inhibit 50%of binding(“IC50”)comparable to vedolizumab(Figure 5).PN-943 exhibited greater than a50,000-fold selectivity against other structurally similar inte
161、grins,41 and L2,in cell adhesion assays which iscomparable to the selectivity of vedolizumab(Figure 5).PN-943 was stable in in vitro assays simulating the GI tissuecompartment,such as the small intestine and gastric stomach,with half-lives exceeding 12 hours and in human livermicrosomes suggesting s
162、trong oral stability and the potential for once daily dosing in humans.PN-943 did not affect thegrowth of and was not metabolized by common members of the human intestinal microflora.In13 Table of Contentstotal,these drug properties provide evidence to characterize PN-943 as a potential first-in-cla
163、ss orally stable 47specificantagonist.Furthermore,these drug properties allowed us to demonstrate POC in animal colitis studies.Figure 5:PN-943:More Potent Than PTG-100Non-clinical metabolism and PK studies demonstrated that much greater amounts of PN-943 as measured by themaximum concentration(“Cma
164、x”)as a percentage of total drug amount dosed orally,were present in the GI compartments,such as the small intestine,colon and feces compared to the systemic plasma and urine compartments of mice,rats and cyno,thus confirming its GI-restricted properties.Further,PN-943 has an oral systemic bioavaila
165、bility of less than 0.5%.We designed rodent colitis studies similar to those used for antibody drugs targeting this pathway to specificallymonitor pre-clinical blood PD responses to PTG-100 and PN-943,specifically receptor occupancy(“RO”)increases reflectingtarget engagement(Figure 6)and receptor ex
166、pression(“RE”)decreases reflecting subsequent pharmacologic activity.Inaddition,we measured increases in T cell numbers in the blood as a surrogate of T cell trafficking to and from the GI tissuecompartment as affected by PTG-100 and PN-943 treatments(Figure 6).Under inflammatory conditions in the G
167、I tissuecompartment PN-943 showed similar responses to PTG-100 at 3-fold lower dose.Further treatment benefit was demonstratedthrough analysis for colon and mucosal damage which are characteristics of UC in humans.14 Table of ContentsFigure 6:PN-943:Similar RO%and T Cell Trafficking at Lower Doses E
168、stablishing Blood Pharmacodynamic Readouts of Target Engagement We have used pre-clinical blood PD response markers that reflect target engagement in the GI tissue compartment andcorrelate with efficacy responses in mouse colitis studies to guide our dosing in human studies.Furthermore,we believe th
169、esepre-clinical blood PD responses,specifically receptor occupancy(“RO”)increases reflecting target engagement and receptorexpression(“RE”)decreases reflecting subsequent pharmacologic activity,can be compared to the PD responses we observedin our Phase 1 clinical trial in healthy volunteers and ult
170、imately can help to guide the dosing for evaluating clinical benefitin UC patients in the Phase 2 clinical trial.In the mouse colitis model,RO and RE were correlated with in vivo efficacy thatcan be extrapolated to the blood RO and RE observed in healthy mice and cyno.These PD markers from mice and
171、cyno havespecifically demonstrated increases in RO that peak at approximately 4 hours following a single dose and multiple doses anddecreases in RE after multiple doses in healthy mice and colitis mice.In translating the pre-clinical observations into aclinical setting,we will focus on evaluating do
172、se-and time-dependent trends in RO and RE in our Phase 1 clinical trial thatcan be benchmarked to the animal data to give us greater confidence in progressing PN-943 in clinical trials.Emphasis isplaced on trends and not on absolute numbers owing to differences in GI transit times in different speci
173、es and absence ofabsolute scaling methods from animals to humans for GI-restricted drugs.PN-943s Non-GLP and GLP Safety Pharmacology and Toxicology Studies To date,all toxicology and safety pharmacology studies have not identified any safety issues.Good LaboratoryPractices(“GLP”)toxicology studies i
174、n rats and cyno over 28 days of dosing showed that PN-943 was well-tolerated at alldose levels with no dose-limiting toxicities.No adverse effects were seen in either rat or cyno studies at all doses tested.Standard safety pharmacology and genotoxicity studies were similarly negative.We are initiati
175、ng 12 week GLP toxicologystudies to support our anticipated Phase 2 program.PN-943s Phase 1 Clinical Trial Overview Following the submission and approval of a Clinical Trial Notification(“CTN”),we initiated a Phase 1 randomized,double-blind,placebo-controlled clinical trial of PN-943 in normal healt
176、hy male volunteers in Australia.15 Table of ContentsThe Phase 1 SAD and MAD components are being conducted with a solution-based liquid formulation.In addition todetermining the safety and tolerability and PK of PN-943,the SAD and MAD components of the trial will evaluate PD-basedPOC through the ass
177、essment of 47 receptor occupancy and 47 target expression that indicate target engagement onperipheral blood memory T cells similar to what was done in the pre-clinical studies and in the Phase 1 trial with PTG-100.Inboth the SAD and MAD portions of the clinical trial,dose escalation will proceed fr
178、om 100 mg up to the planned 1,400 mgdose level.OUR PEPTIDE TECHNOLOGY PLATFORM Our proprietary technology platform has been successfully applied to a diverse set of biological targets that has led toseveral pre-clinical and clinical-stage peptide-based new chemical entities,including our clinical-st
179、age product candidates,for a variety of clinical indications.Our platform is comprised of a series of tools and methods,including a combination ofmolecular design,phage display,oral stability,medicinal chemistry,and in vivo pharmacology approaches.The platform is used to develop potential drug candi
180、dates:(i)using the structure of a target,when available,(ii)whenno target structure exists,or(iii)from publicly disclosed peptide starting points.In a structure-based approach,ourproprietary molecular design software and structural database of several thousand constrained peptides,termed Vectrix,are
181、screened to identify suitable scaffolds which form the basis of designing and constructing the first set of phage or chemicallibraries.The initial hits are identified by either panning or screening such libraries,respectively.When structuralinformation is unavailable for a target,hits are identified
182、 by panning a set of 34 proprietary cluster-based phage librariesconsisting of millions of constrained peptides.Once the hits are identified,they are optimized using a set of peptide,peptidemimetic and medicinal chemistry techniques that include the incorporation of new or manipulation of existing c
183、yclization-constraints,as well as natural or unnatural amino acids and chemical conjugation or acylation techniques.These techniquesare applied to optimize potency,selectivity,stability,exposure and ultimately efficacy.For oral stability,a series of in vitroand ex vivo oral-stability assays that por
184、tray the chemical and metabolic barriers a peptide will encounter as it transits the GItract are used to identify metabolically labile spots in the peptides.Such sites form the focus of medicinal-chemistry basedoptimization to engineer oral stability.Finally,various in vivo pharmacology tools are th
185、en used to quantify peptideexposure in relevant GI organs and tissues.The data can then be used to optimize required GI exposure and ultimately in vivoefficacy.The key foundations of the platform include:Molecular design tools and large database of constrained scaffolds Through advances in genomics,
186、molecular biology and structural genomic initiatives there has been an explosion inthe number of known structures of potential new drug targets,including PPI targets.In particular,constrained peptides havethe required surface complexity to match or complement the large flat surfaces of PPI targets t
187、o provide potent and selectivedrug candidates.We believe existing commercial molecular design software is not suitable,as it has been developed toidentify small molecules that plug cavities of enzymes and do not bind to PPI targets.We have developed a database of all known structures of a sub-class
188、of constrained peptides,known as disulfide-richpeptides(“DRPs”).We have collected approximately 4,500 DRP scaffolds that are found throughout nature,ranging fromsingle cell organisms to humans.We have created a proprietary molecular design environment,called Vectrix.A patternmatching algorithm withi
189、n Vectrix allows the selection of an appropriately stable DRP scaffold using the structure of thetarget of interest.This molecular design process is used to identify constrained peptides as starting points for hit discovery,which are ultimately optimized into potent,selective peptides against target
190、s which are not amenable to small molecule drugdiscovery.Phage display techniques and cluster libraries Phage display may be used to discover the original hit based on Vectrix-derived scaffolds,optimize existing hits,orto identify hits against those targets in which no structural information exists.
191、For the latter targets,a series of pre-existingphage libraries,termed cluster libraries,are used for hit discovery.This includes 20 proprietary libraries of16 Table of Contentsstructurally diverse DRPs that sample greater than 85%of their known structural diversity and 14 proprietary libraries thats
192、ample different protein loop geometries.Collectively these libraries provide immense potential for discovering hits atdiverse targets as they are based on natural-DRP scaffolds with these characteristics.Oral stability and in vitro and ex vivo assays The GI tract provides a set of chemical and metab
193、olic barriers that hinder the development of oral therapeutic agents.We have developed numerous in vitro and ex vivo systems that profile peptide candidates for their stability features neededfor oral delivery,GI restriction,and transit through the entire GI tract.This includes profiling for chemica
194、l stability,specifically pH and redox stability,and metabolic stability against proteases and other enzymes that are either of human ormicrobial origin.These in vitro assays identify metabolic weak spots of peptides,which can then be stabilized by peptidic andpeptidomimetic modifications without los
195、ing potency.Medicinal peptide chemistry We have significant expertise in optimizing potency,selectivity,oral stability and exposure of constrained peptidesusing a combination of peptide-cyclization,natural and unnatural amino acids,and various conjugation and acylationtechniques.With respect to PTG-
196、300,hit discovery and optimization relies exclusively on medicinal chemistry,with nophage display,to develop potent and selective injectable candidates with enhanced exposure in blood.For other targets,such as the discovery of PN-943 and PTG200,phage display is tightly coupled to medicinal chemistry
197、 and oral stabilitytechniques to develop potent,selective and oral molecules that are GI-restricted.In vivo pharmacology tools for GI restriction When developing oral,GI-restricted constrained peptides,we correlate efficacy with potency and level of GI tissuecompartment exposure.We have developed th
198、e required expertise and know-how to build PK and PD relationships tooptimize physicochemical features of constrained peptides such that they are minimally absorbed and have the requireddegree of GI tissue compartment exposure over the required duration of time to achieve efficacy.This involves exam
199、iningconstrained peptide concentrations in various GI tissue compartments,blood,urine,and feces when delivered orally inrodents.In this fashion,we can understand the degree of tissue targeting,GI restriction and oral stability that is required toachieve efficacy.Future Applications of our Platform W
200、e 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-coupledreceptors(“GPCRs”),ion channels,transporters and cytokines for a variety of t
201、herapeutic areas.In the future we may tackleother GI diseases and expand our delivery techniques to include other organ/tissue systems,such as the lung and eye,whichwill provide potential opportunities to pursue a variety of diseases.In addition,the gut may communicate with the immune,central nervou
202、s,and endocrine systems,providing the potential of our GI-restricted approach to treat metabolic,cancer andcardiovascular diseases.Lastly,we intend to progress our platform to achieve systemic bioavailability with peptides,therebyenabling us to address systemic diseases.Material Agreements Janssen L
203、icense and Collaboration Agreement In May 2017,we and Janssen entered into an exclusive license and collaboration agreement(the“Janssen License andCollaboration Agreement”)for the development,manufacture and commercialization of PTG-200 worldwide for thetreatment of CD and UC.The Janssen License and
204、 Collaboration Agreement became effective on July 13,2017.Upon theeffectiveness of the agreement,we received a non-refundable,upfront cash payment of$50.0 million from Janssen.17 Table of ContentsSee“Item 7.Managements Discussion and Analysis Overview”and Note 3 to the Consolidated Financial Stateme
205、ntsincluded elsewhere in this Annual Report on Form 10-K for additional information.Research Collaboration and License Agreement with Zealand Pharma A/S In June 2012,we entered into a Research Collaboration and License Agreement with Zealand Pharma A/S(“Zealand”)to identify,optimize and develop nove
206、l DRPs to discover a hepcidin mimetic.We amended this agreement on February 28,2014,at which point Protagonist assumed responsibility for the development program.See“Item 7.ManagementsDiscussion and Analysis Contractual Obligations and Other Commitments”and Note 6 to the Consolidated FinancialStatem
207、ents included elsewhere in this Annual Report on 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,technology,knowledge and ex
208、perience provide us withcompetitive advantages,we face competition from established and emerging pharmaceutical and biotechnology companies,academic institutions,governmental agencies and public and private research institutions,among others.We believe our principal competition in the treatment of c
209、hronic iron overload disorders such as beta-thalassemia willbe luspatercept(Acceleron/Celgene-BMS)and La Jolla Pharmaceuticals LJPC-401,a synthetic human hepcidin.Althoughgene therapy is potentially curative for beta-thalassemia,we believe that Bluebird Bios LentiGlobin will have limitedapplication
210、due to safety risks associated with its required“pre-conditioning”regimen,which is similar to allogeneichematopoietic stem cell transplantation.Hematopoietic stem cell transplantation is infrequently utilized in beta-thalassemiadue to its risk benefit profile in a younger patient population.Luspater
211、cept and LentiGlobin are in Phase 3 development forbeta-thalassemia and MDS and LJPC-401 is in Phase 2 studies for beta-thalassemia and hereditary hemochromatosis.There are currently no approved oral peptide-based 47 or IL23R products for IBD.We believe our principalcompetition in the treatment of I
212、BD will come from companies with injectable agents in the anti-integrin class that are or willbe approved by 2028,including:Takedas Vedolizumab(Entyvio)IV and SC(IV approved,SC Phase 3);Roches Etrolizumab SC(Phase 3);andShires SHP-647 SC(Phase 3;divested as part of the Takeda acquisition of Shire-bu
213、yer to bedetermined).In addition,oral agents with novel mechanisms of action are approved or in development,and may be approved for UCand/or CD prior to the launch of PTG-200 and PN-943.These include JAK inhibitors,pan-JAK tofacitinib(Xeljanz)recentlyapproved in UC and next-generation JAK1 inhibitor
214、s filgotinib and upadacitinib,as well as S1P inhibitors,ozanimod andetrasimod.The anti-IL-23 antibodies are also demonstrating positive data in IBD.Our product,PTG-200,will compete as theonly oral IL-23 receptor antagonist.Intellectual PropertyWe strive to protect and enhance the proprietary technol
215、ogy,inventions,and improvements that are commerciallyimportant to the development of our business,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 k
216、now-how,and continuing technological innovation to develop,strengthen,and maintain our proprietaryposition 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
217、 exclusivity and patent term extensionswhere available.18 Table of ContentsOur commercial success may depend in part 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 enforce o
218、urpatents;preserve the confidentiality of our trade secrets;and operate without infringing the valid enforceable patents andproprietary rights of third parties.Our ability to stop third parties from making,using,selling,offering to sell or importingour products may depend on the extent to which we h
219、ave rights under valid and enforceable patents or trade secrets thatcover these activities.We cannot be sure that patents will be granted with respect to any of our pending patent applicationsor with respect to any patent applications filed by us in the future,nor can we be sure that any of our exis
220、ting patents or anypatents that may be granted to us in the future will be commercially useful in protecting our commercial products andmethods of manufacturing the same.For more information,please see“Item 1A.Risk FactorsRisks Related to OurIntellectual Property.”We have eleven issued patents and n
221、umerous patent applications related to our clinical-stage product candidates andpossess substantial know-how and trade secrets relating to the development and commercialization of peptide basedtherapeutic products.Our proprietary intellectual property,including patent and non-patent intellectual pro
222、perty,isgenerally directed to,for example,peptide-based therapeutic compositions,methods of using these peptide-basedtherapeutic compositions to treat or prevent disease,methods of manufacturing peptide-based therapeutic compositions,andother proprietary technologies and processes related to our lea
223、d product development candidates.Specifically,our patentsand patent applications are directed to compositions of 47 integrin peptides,IL-23R antagonist peptides,and hepcidinand enkephalin mimetics peptides,as well as methods of synthesizing and using these peptides to treat inflammatorydisorders.App
224、lications are currently pending in the United States and other major jurisdictions,including Australia,Canada,China,Japan,and Europe.We expect our patents and patent applications,if issued,and if the appropriate maintenance,renewal,annuity,or other governmental fees are paid,to expire from October 2
225、033 to February 2039(worldwide,excludingpossible patent term extensions).Our objective is to continue to expand our portfolio of patents and patent applications in order to protect our productcandidates and related peptide-based drug technologies.We also license patents and patent applications direc
226、ted to processes and methods related to our technology platform.These patents have issued in the United States and other major jurisdictions,including Australia and Europe and areexpected to expire between September 2019 and February 2023.Material aspects of our technology platform are protectedby t
227、rade secrets and confidentiality agreements.In addition to 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 clin
228、ical trial design and implementation.We believe that our focus 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
229、 file,the patent term is 20 years from the date of filing the non-provisional application.In theUnited States,a patents term may be lengthened by patent term adjustment,which compensates a patentee for administrativedelays by the U.S.Patent and Trademark Office in granting a patent or may be shorten
230、ed if a patent is terminally disclaimedover an earlier-filed 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 proc
231、ess.The Hatch-Waxman Act permits a patent term extension of up to five years beyond the expiration of the patent.The length ofthe patent term extension is related to the length of time the drug is under regulatory review.A patent term extension cannotextend the remaining term of a patent beyond a to
232、tal of 14 years from the date of product approval and only one patentapplicable to an approved drug may be extended.Moreover,a patent can only be extended once,and thus,if a single patentis applicable to multiple products,it can only be extended based on one product.Similar provisions are available
233、in Europeand other foreign jurisdictions to extend the term of a patent that covers an approved drug.When possible,we expect toapply for patent term extensions for patents covering our product candidates and their methods of use.19 Table of ContentsTrade SecretsWe rely on trade secrets to protect ce
234、rtain aspects of our technology,particularly in relation to our technology platform.However,trade secrets can be difficult to protect.We seek to protect our proprietary technology and processes,in part,byentering into confidentiality agreements with our employees,consultants,scientific advisors and
235、contractors.We also seek topreserve the integrity and confidentiality of our data and trade secrets by maintaining physical security of our premises andphysical and electronic security of our information technology systems.While we have confidence in these individuals,organizations and systems,agree
236、ments or security measures may be breached,and we may not have adequate remedies forany breach.In addition,our trade secrets may otherwise become known or be independently discovered by competitors.Tothe extent that our consultants,contractors or collaborators use intellectual property owned by othe
237、rs in their work for us,disputes may arise as to the rights in related or resulting know-how and inventions.For more information,please see“Item 1A.Risk FactorsRisks Related to Our Intellectual Property.”Manufacturing We contract with third parties for the manufacturing of all of our product candida
238、tes for pre-clinical,clinical studiesand eventually for commercial supplies,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 co
239、ntract manufacturing organization(“CMOs”)eliminates the need for us to directly invest inmanufacturing facilities,equipment and additional staff.Although we rely on contract manufacturers,our personnel andconsultants have extensive manufacturing and quality control experience overseeing CMOs.We regu
240、larly consider secondsource or back-up manufacturers for both active pharmaceutical ingredient and drug product manufacturing.To date,ourthird-party manufacturers have met the manufacturing requirements for the product candidates.We expect third-partymanufacturers to be capable of providing needed q
241、uantities of our product candidates to meet anticipated full-scalecommercial demands,but we have not assessed these capabilities beyond the supply of clinical materials to date.Wecurrently engage CMOs on a“fee for services”basis based on our current development plans.We plan to identify CMOs andente
242、r into longer term contracts or commitments as we move our product candidates into Phase 3 clinical trials.We believethere are alternate sources of manufacturing that have been and could be engaged and enabled to satisfy our clinical andcommercial requirements,however we cannot guarantee that identi
243、fying and establishing alternative relationships with suchsources will be successful,cost effective,or completed on a timely basis without significant delay in the development orcommercialization of our product candidates.Government Regulation The FDA and comparable regulatory authorities in state a
244、nd local jurisdictions and in other countries imposesubstantial and burdensome requirements upon companies involved in the clinical development,manufacture,marketingand distribution of drugs,such as those we are developing.These agencies and other federal,state and local entities regulate,among othe
245、r things,the research and development,testing,manufacture,quality control,safety,effectiveness,labeling,storage,record keeping,approval,advertising and promotion,distribution,post-approval monitoring and reporting,sampling and export and import of our product candidates.U.S.Government Regulation In
246、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 subsequent compliance with applicablefederal,state,local and foreign statutes and regulations requires the expenditure o
247、f substantial time and financial resources.Failure to comply with the applicable U.S.requirements at any time during the product development process,approvalprocess or after approval,may subject an applicant to a variety of administrative or judicial sanctions,such as the FDAsrefusal to approve pend
248、ing NDAs,withdrawal of an approval,imposition of a clinical hold,issuance of warning letters,product recalls,product seizures,total or partial suspension of production or distribution,injunctions,fines,refusals ofgovernment contracts,restitution,disgorgement or civil or criminal penalties.20 Table o
249、f ContentsThe process required by the FDA before a drug may be marketed in the United States generally involves the following:completion of pre-clinical laboratory tests,animal studies and formulation studies in compliance with theFDAs GLP regulations;submission to the FDA of an IND application,whic
250、h must become effective before human clinical trialsmay begin;approval by an independent institutional review board(“IRB”)at each clinical site before each trial may beinitiated;performance of adequate and well-controlled human clinical trials in accordance with good clinicalpractice(“GCP”)requireme
251、nts to establish the safety and efficacy of the proposed drug product for eachindication;submission to the FDA of an NDA;satisfactory completion of an FDA advisory committee review,if applicable;satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the pro
252、ductis produced to assess compliance with current good manufacturing practices(“cGMP”)requirements and toassure that the facilities,methods and controls are adequate to preserve the drugs identity,strength,qualityand purity;andFDA review and approval of the NDA.Pre-clinical Studies Pre-clinical stud
253、ies include laboratory evaluation 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,together withmanufacturing information,analytical data and any available clinical data or
254、literature,among other things,to the FDA aspart of an IND.Some pre-clinical testing may continue even after the IND is submitted.An IND automatically becomeseffective 30 days after receipt by the FDA,unless before that time the FDA raises concerns or questions related to one or moreproposed clinical
255、 trials and places the clinical trial on a clinical hold.In such a case,the IND sponsor and the FDA mustresolve any outstanding concerns before the clinical trial can begin.As a result,submission of an IND may not result in theFDA allowing clinical trials to commence.Clinical Trials Clinical trials
256、involve the administration of the 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 for their participation in any clinical t
257、rial.Clinical trials are conducted 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 FD
258、A as part of the IND(or equivalent submission ex-US).In addition,an IRB or ethics committee(“EC”)ateach institution participating in the clinical trial must review and approve the plan for any clinical trial before it commencesat that institution.Information about certain clinical trials must be sub
259、mitted within specific timeframes to the NationalInstitutes of Health(“NIH”)for public dissemination on their www.clinicaltrials.gov website.21 Table of ContentsHuman clinical trials are typically conducted in three sequential phases,which may overlap or be combined:Phase 1:The drug is initially int
260、roduced into healthy human subjects or patients with the target disease orcondition and tested for safety,dosage tolerance,absorption,metabolism,distribution,excretion and,ifpossible,to gain an early indication of its effectiveness.Phase 2:The drug is administered to a limited patient population to
261、identify possible adverse effects andsafety risks,to preliminarily evaluate the efficacy of the product for specific targeted diseases and todetermine dosage tolerance and optimal dosage.Phase 3:The drug is administered to an expanded patient population,generally at geographically dispersedclinical
262、trial sites,in well-controlled clinical trials to generate enough data to statistically evaluate theefficacy and safety of the product for approval,to establish the overall risk-benefit profile of the product,and to provide adequate information for the labeling of the product.Progress reports detail
263、ing 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.Furthermore,the FDA or the sponsor may suspend o
264、r 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 the clinical trial is not beingconducted in ac
265、cordance with the IRBs requirements or if the drug has been associated with unexpected serious harm topatients.Marketing Approval Assuming successful completion of the required clinical testing,the results of the pre-clinical and clinical studies,together with detailed information relating to the pr
266、oducts 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 substantial application user fee.Under the Prescription
267、Drug 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 date the NDA is submitted to FDA because the F
268、DA 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 NDAs orsupplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimedindicat
269、ions 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 submission of some or all pediatric data until af
270、ter 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 risks.The REMS plan could include medication g
271、uides,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 after submission,before accepting them forfili
272、ng,to determine whether they are sufficiently complete to permit substantive review.The FDA may request additionalinformation rather than accept an NDA for filing.In this event,the application must be resubmitted with the additionalinformation.The resubmitted application is also subject to review be
273、fore the FDA accepts it for filing.Once the submission isaccepted for filing,the FDA begins an in-depth substantive review.The FDA reviews an NDA to determine,among otherthings,whether the drug is safe and effective and whether the facility in which it is manufactured,processed,packaged orheld meets
274、 standards designed to assure the products continued safety,quality and purity.22 Table of ContentsThe FDA may refer an application for a novel drug to an advisory committee.An advisory committee is a panel ofindependent experts,including clinicians and other scientific experts,that reviews,evaluate
275、s and provides arecommendation as to whether the application should be approved and under what conditions.The FDA is not bound by therecommendations of an advisory committee,but it considers such recommendations carefully when making decisions.Before approving an NDA,the FDA typically will inspect t
276、he 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 the product within requiredspecifications.A
277、dditionally,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 reports regarding the manufacturing facilities
278、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 require additional clinical or pre-clinical t
279、esting 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 theFDAs satisfaction,the FDA will typically i
280、ssue an approval letter.An approval letter authorizes commercial marketing of thedrug 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 thatcontraindications,warnings or precautions b
281、e 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 surveillance programsto monitor the product after commercialization,or impose other conditions,including distributio
282、n and use restrictions orother risk management mechanisms under a REMS,which can materially affect the potential market and profitability of theproduct.The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies orsurveillance programs.After approval,so
283、me types of changes to the approved product,such as adding new indications,manufacturing changes and additional labeling claims,are subject to further testing requirements and FDA review andapproval.Orphan Designation The FDA may grant orphan designation to drugs or biologics intended to treat a rar
284、e 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,thereis no reasonable expectation that the cost of developing and marketing the product for this type of disease or condition willbe recovered fr
285、om sales in the United States.Orphan designation must be requested before submitting a NDA or BiologicsLicense Application(“BLA”).After the FDA grants orphan designation,the identity of the therapeutic agent and its potentialorphan use are disclosed publicly by the FDA.Orphan designation does not co
286、nvey any advantage in or shorten the durationof the regulatory review and approval process.In the United States,orphan designation entitles a party to financial incentives such as opportunities for grant fundingtowards clinical trial costs,tax advantages and user-fee waivers.In addition,if a product
287、 receives the first FDA approval forthe indication for which it has orphan designation,the product is entitled to orphan exclusivity,which means the FDA maynot approve any other application to market the same product for the same indication for a period of seven years,except inlimited circumstances,
288、such as a showing of clinical superiority over the product with orphan exclusivity or where themanufacturer with orphan exclusivity is unable to assure sufficient quantities of the approved orphan designated product.Competitors,however,may receive approval of different products for the indication fo
289、r which the orphan product hasexclusivity or obtain approval for the same product but for a different indication for which the orphan product hasexclusivity.Orphan product exclusivity also could block the approval of one of our products for seven years if a competitorobtains approval of the same pro
290、duct as defined by the FDA or if our product candidate is determined to be contained withinthe competitors product for the same indication or disease.If a drug or biological product designated as an orphan productreceives marketing approval for an indication broader than what is designated,it may no
291、t be entitled to orphan productexclusivity.23 Table of ContentsPost-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by theFDA,including,among other things,requirements relating to recordkeeping,periodic reporting,pr
292、oduct sampling anddistribution,advertising and promotion and reporting of adverse experiences with the product.After approval,most changesto the approved product,such as adding new indications or other labeling claims are subject to prior FDA review andapproval.There also are continuing,annual progr
293、am user fee requirements for any marketed products,as well as applicationfees for supplemental applications with clinical data.The FDA may impose a number of post-approval requirements as a condition of approval of an NDA.For example,theFDA may require post-marketing testing,including Phase 4 clinic
294、al trials,and surveillance to further assess and monitor theproducts safety and effectiveness after commercialization.In addition,drug manufacturers and other entities involved in the manufacture and distribution of approved drugs arerequired to register their establishments with the FDA and state a
295、gencies 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 approval before being implemented.FDA regulations also requireinvestigation and
296、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 continue to expend time,money,and effort in the area of production and quality c
297、ontrol 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 market.Later discovery of previously unknownproblems with a product,including a
298、dverse events of unanticipated severity or frequency,or with manufacturing processes,or failure to comply with regulatory requirements,may result in mandatory revisions to the approved labeling to add newsafety information;imposition of post-market studies or clinical trials to assess new safety ris
299、ks;or imposition of distributionor other restrictions under a REMS program.Other potential consequences include,among other things:restrictions on the marketing or manufacturing of the product,complete withdrawal of the product from themarket or product recalls;fines,warning letters or holds on post
300、-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 the import or export of products;orinjunctions or the imposition of civil or criminal penalties.The F
301、DA 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 provisions of the approved label.TheFDA and other agencies actively enforce the laws and regulations prohibi
302、ting the promotion of off-label uses,and a companythat is found to have improperly promoted off-label uses may be subject to significant liability.Coverage and Reimbursement Sales of our product candidates,if approved,will depend,in part,on the extent to which the cost of such products willbe covere
303、d and adequately reimbursed by third-party payors,such as government healthcare programs,commercial insuranceand managed health care organizations.These third-party payors are increasingly limiting coverage and/or reducingreimbursements for medical products and services by challenging the prices and
304、 examining the medical necessity and cost-effectiveness of medical products and services,in addition to their safety and efficacy.If these third-24 Table of Contentsparty payors do not consider our products to be cost-effective compared to other therapies,they may not cover our productsafter approva
305、l 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 reimbursement for drug products among third-party payors inthe United States.Therefore,coverage and
306、reimbursement for drug products can differ significantly from payor to payor.Thecoverage determination process can be a time-consuming and costly process that may require us to provide scientific andclinical support for the use of our products to each payor separately,with no assurance that coverage
307、 and adequatereimbursement will be obtained or applied consistently.Even if reimbursement is provided,market acceptance of ourproducts may be adversely affected if the amount of payment for our products proves to be unprofitable for health careproviders or less profitable than alternative treatments
308、,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 price controls,restrictions on reimbursement and requirements for substitution of genericpro
309、ducts.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.Decreases in third-partyreimbursement for our product candidates or a decision by a third-party
310、 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,results ofoperations and financial condition.The Patient Protection and Affordable Care Act,as amended by the Health Care and Education Reco
311、nciliation 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 a significant annual fee on certain companies thatmanufacture or import branded prescription
312、drug products.The ACA also increased the Medicaid rebate rate and expandedthe rebate program to include Medicaid managed care organizations.It also contains substantial new provisions intended tobroaden access to health insurance,reduce or constrain the growth of health care spending,enhance remedie
313、s against healthcare fraud and abuse,add new transparency requirements for the health care industry,impose new taxes and fees onpharmaceutical manufacturers,and impose additional health policy reforms,any or all of which may affect our business.Since its enactment,there have been judicial and Congre
314、ssional challenges to certain aspects of the ACA,as well asefforts by the current administration to repeal or replace certain aspects of the ACA.For example,since January 2017,thePresident has signed two Executive Orders and other directives designed to delay,circumvent,or loosen certain requirement
315、smandated by the ACA.Concurrently,Congress has considered legislation that would repeal or repeal and replace all or partof the ACA.While Congress has not passed comprehensive repeal legislation,two bills affecting the implementation ofcertain taxes under the ACA were signed into law.The Tax Cuts an
316、d Jobs Act of 2017(the“Tax Act”)includes a provisionrepealing,effective January 1,2019,the tax-based shared responsibility payment imposed by the ACA on certain individualswho fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the“individualmandate”
317、.Additionally,on January 22,2018,the President signed a continuing resolution on appropriations for fiscal year2018 that delayed the implementation of certain ACA-mandated fees,including the so-called“Cadillac”tax on certain highcost employer-sponsored insurance plans,the annual fee imposed on certa
318、in health insurance providers based on marketshare,and the medical device excise tax on non-exempt medical devices.Further,the Bipartisan Budget Act of 2018,or theBBA,among other things,amends the ACA,effective January 1,2019,to close the coverage gap in most Medicare drugplans,commonly referred to
319、as the“donut hole”,and increase from 50%to 70%the point-of-sale discount that is owed bypharmaceutical manufacturers who participate in the Medicare Part D program.There may be additional challenges andamendments to the ACA in the future.The ACA is likely to continue the downward pressure on pharmac
320、eutical pricing andmay also increase our regulatory burdens and operating costs.Other legislative changes have also been proposed and adopted since the ACA was enacted.For example,the BudgetControl Act of 2011 resulted in aggregate reductions in Medicare payments to providers of 2%per fiscal year,wh
321、ich wentinto effect in 2013 and,following passage of subsequent legislation,including the BBA,will stay in effect through 2027unless additional Congressional action is taken.Additionally,the American Taxpayer Relief Act of 2012,among otherthings,reduced Medicare payments to several types of provider
322、s and increased the statute of limitations25 Table of Contentsperiod for the government to recover overpayments to providers from three to five years.These new laws may result inadditional reductions in Medicare and other health care funding.Further,there has been heightened governmental scrutiny ov
323、er the manner in which manufacturers set prices for theirmarketed products.Such scrutiny has resulted in several recent Congressional inquiries and proposed and enacted federaland state legislation designed to,among other things,bring more transparency to product pricing,review the relationshipbetwe
324、en pricing and manufacturer patient programs,and reform government program reimbursement methodologies forproducts.At the federal level,the current administrations budget proposal for fiscal year 2019 contains further drug pricecontrol measures that could be enacted during the 2019 budget process or
325、 in other future legislation,including,for example,measures to permit Medicare Part D plans to negotiate the price of certain drugs under Medicare Part B,to allow some statesto negotiate drug prices under Medicaid,and to eliminate cost sharing for generic drugs for low-income patients.While anypropo
326、sed measures will require authorization through additional legislation to become effective,Congress and the currentadministration have both stated that they will continue to seek new legislative and/or administrative measures to controldrug costs.At the state level,legislatures have become increasin
327、gly aggressive in passing legislation and implementingregulations designed to control pharmaceutical and biological product pricing,including price or patient reimbursementconstraints,discounts,restrictions on certain product access and marketing cost disclosure and transparency measures,and,insome
328、cases,designed to encourage importation from other countries and bulk purchasing.It is uncertain whether and how future legislation,whether domestic or foreign,could affect prospects for our productcandidates or what actions foreign,federal,state,or private payors for health care treatment and servi
329、ces may take in responseto any such health care reform proposals or legislation.Adoption of price controls and other cost-containment measures,andadoption of more restrictive policies in jurisdictions with existing controls and measures reforms may prevent or limit ourability to generate revenue,att
330、ain profitability or commercialize our product candidates.Other Health Care Laws and Compliance Requirements We will also be subject to health care regulation and enforcement by the federal government and the states and foreigngovernments in which we will conduct our business once our products are a
331、pproved.The laws that may affect our ability tooperate include,but are not limited to,the federal Health Insurance Portability and Accountability Act of 1996(“HIPAA”),asamended by the Health Information Technology for Economic and Clinical Health Act,which governs the conduct of certainelectronic he
332、alth care transactions and protects the security and privacy of protected health information;the criminal healthcare fraud statutes under HIPAA also prohibits persons and entities from knowingly and willfully executing a scheme todefraud any health care benefit program,including private payors,or kn
333、owingly and willfully falsifying,concealing orcovering up a material fact or making any materially false,fictitious or fraudulent statement in connection with the deliveryof or payment for health care benefits,items or services;the federal health care programs Anti-Kickback Statute,whichprohibits,among other things,persons from knowingly and willfully soliciting,receiving,offering or paying remune
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