VascularBiogenicsLtd_NASDAQ_VBLT_202210-K.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 Form 10-K (Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31,2022or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF

2、 1934 For the transition period from _ to _.Commission file number 001-36581 Vascular Biogenics Ltd.(Exact name of registrant as specified in its charter)Israel Not applicable(State or other jurisdiction ofincorporation or organization)(I.R.S.EmployerIdentification No.)8 HaSatat St.Modiin,Israel 717

3、8106(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code+972-8-9935000 Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredOrdinary Shares,par value NIS 0.01 per share VB

4、LT The Nasdaq Capital Market Securities registered pursuant to Section 12(b)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 to file reports pursuant t

5、o Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12months(or for such shorter period that the registrant was required to file suc

6、h reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 ofthis chapter)during the preceding

7、 12 months(or for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or an emerging growth company.Seethe definitions of“

8、large accelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filerNon-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark

9、 if the registrant has elected not to use the extended transition period for complying with any new or revised financialaccounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements as

10、sessment of the effectiveness of its internal control over financial reportingunder Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by c

11、heck mark whether the financial statements of the registrant included in the filing reflect the correction ofan error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensa

12、tion received by any of the registrantsexecutive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).Yes No As of June 30,2022,the last business day of the registrants mos

13、t recently completed second fiscal quarter,the aggregate market value of the registrants ordinary shares held by non-affiliates of the registrant,based on the closing price of the ordinary shares on the Nasdaq Global Market was approximately$93.8 million.The number of registrants ordinary shares out

14、standing as of March 13,2023 was 69,750,117.2025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm1/104 2025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/w

15、ww.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm2/104 TABLE OF CONTENTS CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS1SUMMARY OF RISK FACTORS2PART I 3Item 1.Business3Item 1A.Risk Factors22Item 1B.Unresolved Staff Comments50Item 2.Properties50Item 3.Legal Proceedings50Ite

16、m 4.Mine Safety Disclosures50PART II 51Item 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities51Item 6.Reserved51Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations52Item 7A.Quantitative and Qualitative

17、 Disclosures About Market Risk58Item 8.Financial Statements and Supplementary Data59Item 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure59Item 9A.Controls and Procedures59Item 9B.Other Information59Item 9C.Disclosure Regarding Foreign Jurisdictions that Prevent

18、 Inspections.59PART III 60Item 10.Directors,Executive Officers and Corporate Governance60Item 11.Executive Compensation63Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters68Item 13.Certain Relationships and Related Transactions,and Director Indepen

19、dence70Item 14.Principal Accounting Fees and Services73PART IV 74Item 15.Exhibits and Financial Statement Schedules74Item 16.Form 10-K Summary74SIGNATURES75 i2025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/0001493152230

20、07533/form10-k.htm3/104 CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report contains forward-looking statements that relate to future events or our future financial performance,which express the current beliefs and expectations of ourmanagement.Such statements involve a number of

21、 known and unknown risks,uncertainties and other factors that could cause our actual future results,performance or achievementsto differ materially from any future results,performance or achievements expressed or implied by such forward-looking statements.Forward-looking statements include all state

22、mentsthat are not historical facts and can be identified by words such as,but not limited to,“believe,”“expect,”“anticipate,”“estimate,”“intend,”“plan,”“targets,”“likely,”“will,”“would,”“could,”and similar expressions or phrases.We have based these forward-looking statements largely on our managemen

23、ts current expectations and future events andfinancial trends that we believe may affect our financial condition,results of operations,business strategy and financial needs.Forward-looking statements include,but are not limitedto,express or implied statements about:the completion of the proposed mer

24、ger,or the Merger,with Notable Labs,Inc.or Notable;implementation of our organizational streamlining and workforce reduction and anticipated savings therefrom;our cash runway;exploration of additional strategic transactions to further maximize shareholder value,including benefits from the sale of ou

25、r rights to lease the Modiin manufacturing facilityand certain related assets;receipt of additional grant funding from the European Innovation Council,or EIC,accelerator program;effects of discontinuation of the OVAL trial and ofra-vec program in all indications;the initiation,timing,progress and re

26、sults of our preclinical and clinical activities,including the first-in-human Phase 1 trial for VB-601 and our research and developmentprogram,if at all;our expectations about the availability and timing of data from any clinical trial;our ability to advance product candidates into,and successfully

27、complete,clinical trials;our plans for future clinical trials;our ability to manufacture our product candidate in sufficient quantities for clinical trials and,if appropriate,commercialization;the timing or likelihood of regulatory filings and approvals,including data required to file for regulatory

28、 approval;the commercialization of our product candidate,if approved;potential advantages of our product candidate;the pricing and reimbursement of our product candidate,if approved;our ability to develop and commercialize additional product candidates based on our platform technology;our business s

29、trategy;the implementation of our business model,strategic plans for our business,product candidate and technology;the scope and duration of protection we are able to establish and maintain for intellectual property rights covering our product candidate and technology;estimates of our expenses,futur

30、e revenues,capital requirements and our needs for additional financing;our ability to establish and maintain collaborations and the benefits of such collaborations;our ability to maintain our level of grant funding or obtain additional grant or other non-dilutive sources of funding;developments rela

31、ting to our competitors and our industry;and other risks and uncertainties,including those listed under the caption“Risk Factors.”All forward-looking statements involve risks,assumptions and uncertainties.You should not rely upon forward-looking statements as predictors of future events.The occurren

32、ce of theevents described,and the achievement of the expected results,depend on many events,some or all of which are not predictable or within our control.Actual results may differmaterially from expected results.See“Item 1A.Risk Factors,”“Item 7.Managements Discussion and Analysis of Financial Cond

33、ition and Results of Operations”and elsewhere inthis Annual Report for a more complete discussion of these risks,assumptions and uncertainties and for other risks and uncertainties.These risks,assumptions and uncertainties arenot necessarily all of the important factors that could cause actual resul

34、ts to differ materially from those expressed in any of our forward-looking statements.Other unknown orunpredictable factors also could harm our results.All of the forward-looking statements we have included in this Annual Report are based on information available to us on the date of this Annual Rep

35、ort.We undertake no obligation,and specifically decline any obligation,to update publicly or revise any forward-looking statements,whether as a result of new information,future events or otherwise.In light of theserisks,uncertainties and assumptions,the forward-looking events discussed in this Annua

36、l Report might not occur.12025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm4/104 SUMMARY OF RISK FACTORS Investing in our common shares involves a high degree of risk.You should carefully c

37、onsider the risks summarized below and other risks that we face,a detailed discussion of whichcan be found under“Item 1A.Risk Factors”below,together with other information in this annual report on Form 10-K and our other filings with the Securities and ExchangeCommission,or SEC.This summary list of

38、risks is not exhaustive of the factors that may affect any of our forward-looking statements and our business and financial results.If any ofthese risks actually occur,our business,financial condition and financial performance would likely be materially adversely affected.In such case,the trading pr

39、ice of our commonshares would likely decline and you may lose part or all of your investment.Below is a summary of some of the principal risks we face:There is no assurance that the proposed Merger will be completed in a timely manner or at all.If the proposed Merger is not consummated,our business

40、could suffermaterially and our stock price could decline.If the proposed Merger is not completed,we may be unsuccessful in completing an alternative transaction on terms that are as favorable as the terms of the proposed Mergerwith Notable,or at all,and we may otherwise be unable to continue to oper

41、ate our business.Our board of directors may decide to pursue a dissolution and liquidation of ourcompany.In such an event,the amount of cash available for distribution to our shareholders will depend heavily on the timing of such liquidation as well as the amount ofcash that will need to be reserved

42、 for commitments and contingent liabilities.The issuance of our ordinary shares to Notable stockholders in the proposed merger will substantially dilute the voting power of our current shareholders.We are exploring strategic alternatives to enhance shareholder value,including the proposed merger wit

43、h Notable,transactions involving VB-601 and the recently completedsale of our Modiin facility rights.We may not be successful in consummating such transactions or they may not deliver the value to our shareholders that we anticipate.Historically,we have been highly dependent on the success of ofra-v

44、ec in oncology applications.The Phase 3 OVAL clinical trial evaluating ofra-vec in ovarian cancer hasbeen discontinued after not meeting statistical significance in progression-free survival,or PFS,or overall survival,or OS,and we have ceased further development of ofra-vec in all indications.Such f

45、ailure and discontinued internal development of ofra-vec has resulted in,and may result in future,workplace reduction measures,decreaseanticipated near-term revenues and profitability,may cause reputational harm and result in a wind down of our operations.We are not in compliance with the Nasdaqs mi

46、nimum bid price requirement and if we fail to regain compliance with Nasdaqs continued listing requirements(or if the mergeris completed and the combined company does not meet Nasdaqs initial listing requirements),our ordinary shares could be delisted,which could adversely affect the liquidityof our

47、 ordinary shares and our ability to raise additional capital or enter into strategic transactions.We have undergone a significant workforce reduction to reduce operating expenses and extend our cash runway,but such efforts may not yield the anticipated benefits,whichcould have a material effect on o

48、ur operations.We have incurred significant losses since our inception and anticipate that we will continue to incur significant losses for the foreseeable future.We have never generated any revenue from product sales and may never be profitable.We may need to raise additional funding,which may not b

49、e available on acceptable terms,or at all.Failure to obtain this necessary capital when needed may force us to delay,limit or terminate our product development efforts or other operations(or could impact our ability to complete the proposed merger or the equity split in the proposed merger).We have

50、received and may continue to receive Israeli or other governmental grants to assist in the funding of our research and development activities.If we lose our fundingfrom these research and development grants and do not receive new grants,we may encounter difficulties in the funding of future research

51、 and development projects andimplementing technological improvements,which would harm our operating results.We may not receive the full 2.5 million grant from the Horizon Europe EIC Accelerator Program,which funding is subject to a lengthy process prior to receipt and which wemay not successfully ac

52、hieve,particularly in light of our decision to terminate the ofra-vec program and pursue the merger with Notable.We are highly dependent on our technology in general,and we cannot be certain that our product candidate VB-601 will receive regulatory approval or be commercialized orthat we will be abl

53、e to realize any value from VB-601.Any failure to successfully develop,obtain regulatory approval for and commercialize any current or future productcandidates,independently or in cooperation with a third party collaborator,or the experience of significant delays in doing so,would compromise our abi

54、lity to generaterevenue and become profitable.Our product candidate VB-601 is based on novel technology and is in very early stages of development,which makes it difficult to predict the time and cost of developmentand potential regulatory approval.We may find it difficult to enroll patients in futu

55、re clinical trials,and patients could discontinue their participation in our clinical trials,which could delay or prevent clinicaltrials of our product candidate.We may encounter substantial delays in our clinical trials or we may fail to demonstrate safety and efficacy to the satisfaction of applic

56、able regulatory authorities.The results from our future clinical trials may not be sufficiently robust to support the submission for marketing approval for our product candidate.Before we submit ourproduct candidates for marketing approval,the U.S.Food and Drug Administration,or FDA,and the European

57、 Medicines Agency,or EMA,may require us to conductadditional clinical trials,or evaluate subjects for an additional follow-up period.Legislative and regulatory activity may exert downward pressure on potential pricing and reimbursement for our product candidate,if approved,that could materially affe

58、ctthe opportunity to commercialize.We expect to rely on third parties to conduct some or all aspects of our product manufacturing,protocol development,research and preclinical and clinical testing,and thesethird parties may not perform satisfactorily.We intend to rely on third-party manufacturers to

59、 produce commercial quantities of any of our product candidates that receive regulatory approval,but we have not enteredinto binding agreements with any such manufacturers to support commercialization.Additionally,these manufacturers do not have experience producing our productcandidate at commercia

60、l levels and may not pass regulatory inspections or achieve the necessary regulatory approvals or produce our product candidate at the quality,quantities,locations and timing needed to support commercialization.Our future success depends on our ability to retain key employees,consultants,and advisor

61、s and to attract,retain and motivate qualified personnel.Pandemics or other global emergencies could have an adverse impact on our developmental programs and our financial condition.The market price of our ordinary shares may be highly volatile,and you may not be able to resell your shares at the pu

62、rchase price.As of January 1,2023,we lost our foreign private issuer status,and we are required to comply with(1)the Exchange Acts domestic reporting regime and(2)acceptedgovernance practices associated with U.S.domestic issuers in accordance with various SEC and Nasdaq rules,which will likely cause

63、 us to incur significant legal,accountingand other expenses.We also now qualify as a“smaller reporting company”and intend to use the scaled disclosures available to such companies,which may make aninvestment in our company less attractive to some investors.22025/1/17 12:31sec.gov/Archives/edgar/data

64、/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm5/104 PART I Item 1.BUSINESS Overview We are a biopharmaceutical company that has historically focused on developing targeted therapies for immune-inflammatory diseases and cancer.Ou

65、r goal has been to providedifferentiated targeted therapeutics to address the underlying cause of diseases where treatment options are limited.Our sole product candidate,VB-601,is a targeted antibody for immune-inflammatory applications that has shown disease-modifying activity across multiple precl

66、inical modelsincluding multiple sclerosis,rheumatoid arthritis and inflammatory bowel disease.VB-601 was developed using our monocyte targeting technology,or MTT,and is designed tospecifically inhibit monocyte migration.In October 2022,we submitted an application to the Israel Ministry of Health and

67、 institutional review board for a first-in-human Phase 1 trialevaluating VB-601 in healthy volunteers.Production of cGMP grade material of VB-601 for the Phase 1 trial was completed using a third party vendor,and the procedures required forstudy launch are being finalized.Initiation of this trial is

68、 subject to the progress and outcome of our corporate strategic process,and we may look to monetize this asset rather thancontinue development internally.Prior to July 2022,our lead candidate was ofra-vec(VB-111),a custom designed therapeutic candidate comprised of a viral vector,promoter,and therap

69、eutic gene.In July 2022,weannounced top-line results from the Phase 3 OVAL clinical trial.The trial did not meet the primary endpoints of achieving a statistically significant improvement in progression-freesurvival(PFS),or overall survival(OS)and we discontinued the trial.We have conducted a strate

70、gic review of the ofra-vec program and have ceased further development of ofra-vecin all indications.In August 2022,we announced a process to explore strategic alternatives to enhance shareholder value and engaged Chardan Capital Markets,LLC,or Chardan,as our exclusivefinancial advisor to assist in

71、this process.Potential strategic options to be explored or evaluated as part of the process included,but were not limited to merger,reverse merger,otherbusiness combination,sale of assets,licensing,or other strategic transactions.In August 2022,we also announced an organizational streamlining design

72、ed to reduce operating expenses and preserve capital as we explored strategic options to maximizeshareholder value.As a result,and to date,have we reduced our workforce by approximately 84%of our full-time employees.As part of the organizational streamlining,Dr.RonCohen,Dr.Bennett Shapiro and Ms.Ali

73、son Finger resigned from our board of directors,effective August 1,2022,reducing the number of members of our board of directors from nineto six.Recent Developments Proposed Merger with Notable Labs,Inc.On February 22,2023,we entered into an Agreement and Plan of Merger,or the Merger Agreement,with

74、Notable and Vibrant Merger Sub,Inc.,a Delaware corporation and our direct,wholly-owned subsidiary,or Merger Sub,pursuant to which,and subject to the satisfaction or waiver of the conditions set forth in the Merger Agreement,Notable will be merged withand into Merger Sub(which transaction we refer to

75、 throughout this Annual Report on Form 10-K as the Merger)at the effective time of the Merger,or the Effective Time,with Notablecontinuing after the Merger as the surviving corporation and our wholly-owned subsidiary.The Merger is intended to qualify as a tax-free reorganization for U.S.federal inco

76、me taxpurposes.At the Effective Time,each outstanding share of Notable capital stock will be converted into the right to receive our ordinary shares,as set forth in the Merger Agreement.Under theexchange ratio formula in the Merger Agreement,immediately following the Effective Time,the former Notabl

77、e securityholders are expected to own approximately 76%of ourordinary shares on a fully diluted basis and subject to adjustment and our securityholders of VBL as of immediately prior to the Effective Time are expected to own approximately 24%of our ordinary shares on a fully diluted basis and subjec

78、t to adjustment.Under certain circumstances further described in the Merger Agreement,the ownership percentages may beadjusted upward or downward based on the level of our net cash at the closing of the Merger,and the terms and net proceeds of Notables pre-merger financing.There can be noassurances

79、as to our level of net cash between the signing of the Merger Agreement and the closing of the Merger.The Merger Agreement contains a customary“no-shop”provision under which neither we nor Notable is permitted to(i)solicit any alternative acquisition proposals,(ii)furnish anynon-public information t

80、o any person in connection with or in response to any alternative acquisition proposal,(iii)engage in any negotiations or discussions with any person withrespect to any alternative acquisition proposal,(iv)approve,endorse or recommend any alternative acquisition proposal,or(v)execute or enter into a

81、ny agreement relating to anyalternative acquisition proposal.The“no-shop”provision is subject to certain exceptions that permit the board of directors of either party to comply with its fiduciary duties,which,under certain circumstances,would enable us or Notable to provide information to,and enter

82、into discussions or negotiations with,third parties in response to any alternativeacquisition proposals.The Merger Agreement contains customary representations,warranties and covenants made by Notable and our company,including representations relating to obtaining the requisiteapprovals of the secur

83、ityholders of Notable and our company,agreements relating to indemnification of directors and officers,and covenants relating to Notables and our conduct ourrespective businesses between the date of signing the Merger Agreement and the Effective Time.32025/1/17 12:31sec.gov/Archives/edgar/data/16032

84、07/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm6/104 The Merger Agreement provides each of our company and Notable with specified termination rights,and further provides that,upon termination of the Merger Agreement underspecified circ

85、umstances,the terminating party may be required to pay the other party a termination fee of$2,500,000.In addition,in connection with certain terminations of the MergerAgreement,we may be required to pay Notables out-of-pocket fees and expenses up to$500,000,or Notable may be required to pay our out-

86、of-pocket fees and expenses up to$500,000.The Merger Agreement provides that,immediately following the Effective Time,the board of directors of the combined company will consist of up to seven directors,with onedirector designated by us.Upon the closing of the transaction,the combined company will b

87、e led by Notables chief executive officer and executive management team.In connectionwith the Merger,we will seek to amend our articles of incorporation to:(i)effect an increase of our registered share capital and/or effect a reverse split of our ordinary shares at a ratioto be determined;(ii)change

88、 our name to“Notable Labs,Ltd.”;and(iii)make other such changes as mutually agreeable to our company and Notable.Our and Notables obligations to consummate the Merger are subject to the satisfaction or waiver of customary closing conditions,including,among others,obtaining the requisiteapproval of o

89、ur shareholders,obtaining the requisite approval of Notables stockholders,proceeds of Notables pre-closing financing,net of certain specified expenses,not being lessthan$5,000,000 and our net cash not being less than$15,000,000.In connection with the execution of the Merger Agreement,we and Notable

90、entered into shareholder support agreements with our current directors and executive officers whocollectively beneficially own or control an aggregate of approximately 2%of our outstanding ordinary shares.These shareholder support agreements provide that,among other things,each of the shareholders h

91、as agreed to vote or cause to be voted all of its ordinary shares beneficially owned by such shareholder in favor of the issuance of our ordinary shares in theMerger at the VBL shareholder meeting to be held in connection with the Merger.Although we have entered into the Merger Agreement and intend

92、to consummate the proposed Merger,there is no assurance that we will be able to successfully consummate theproposed Merger on a timely basis,or at all.If,for any reason,the proposed Merger is not completed,we will reconsider our strategic alternatives and could pursue one or more of thefollowing cou

93、rses of action:Pursue potential collaborative,partnering or other strategic arrangements for our assets,including a sale or other divestiture of our assets,such as VB-601;or in-licensingadditional programs and assets to develop internally.Pursue another strategic transaction like the proposed Merger

94、.Our board of directors may elect to pursue an alternative strategy,one of which may be a strategic transactionsimilar to the proposed Merger.Dissolve and liquidate our assets.If,for any reason,the proposed Merger is not consummated and we are unable to identify and complete an alternative strategic

95、 transactionlike the Merger or potential collaborative,partnering or other strategic arrangements for our assets,or to continue to operate our business due to our inability to raiseadditional funding,we may be required to dissolve and liquidate our assets.In such case,we would be required to pay all

96、 of our debts and contractual obligations,and to setaside certain reserves for potential future claims,and there can be no assurances as to the amount or timing of available cash left to distribute to our shareholders after payingour debts and other obligations and setting aside funds for reserves.S

97、ale of Assets in the Modiin Facility On February 15,2023,we entered into an Asset Purchase Agreement,or the Purchase Agreement,providing for the sale of our rights to lease the Modiin manufacturing facility,alongwith certain tangible assets and equipment located therein for$7.1 million.We intend to

98、use the proceeds from the asset sale to meet the$15.0 million minimum net cash closingcondition provided in the Merger Agreement and are disposing of such rights in contemplation of the Merger(although completion of such asset sale is not a condition to the Merger).There can be no guarantee that we

99、will have sufficient funds to satisfy the minimum net cash closing required pursuant to the Merger Agreement.We completed the asset sale onMarch 9,2023.We have retained the right to use a portion of the space for a nominal fee until May 31,2023.42025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000

100、149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm7/104 Platform Technology Monocyte Targeting Technology Our monocyte targeting technology,or MTT,is based on the internal discovery of a novel target,MOSPD2.This novel target,which we call the“m

101、ono-walk”receptor,is selectivelyexpressed on the surface of monocytes and controls their ability to migrate(or“walk”to)inflamed tissues.Monocytes are an important cell implicated in the chronicity of disease ininflammatory indications and previous attempts by others to specifically target this cell

102、type and prevent its migration to sites of inflammation have been unsuccessful.We believe thatour approach can address this gap in being able to optimally address chronic inflammation and we are utilizing antibody technology to specifically inhibit this target with high potency.VB-601 Program-MTT Ca

103、ndidate Our current MTT candidate,VB-601,is an investigational proprietary monoclonal antibody that binds the MOSPD2 surface protein,which we call the“mono-walk”receptor,and isengineered to specifically prevent monocytes from exiting the blood stream and traveling to inflamed tissues.Monocytes are o

104、ne of the key cells types in inflammation and particularlyimplicated in being responsible for the chronicity of disease.VB-601 is designed to offer a novel and differentiated approach in the landscape of current anti-inflammatory agents,mostof which target pro-inflammatory molecules and work through

105、 T and B lymphocytes but are not targeted to the monocyte cells.We have conducted various in-vivo pharmacology studies that demonstrate VB-601s potential activity against a broad range of prevalent chronic inflammatory indications:52025/1/17 12:31sec.gov/Archives/edgar/data/1603207/00014931522300753

106、3/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm8/104 We have also performed ex-vivo proof-of-concept studies demonstrating the ability of VB-601 to inhibit migration of monocytes isolated from blood samples of patients with a broadrange of prevalent chron

107、ic inflammatory indications:Based on our preclinical in-vivo and human ex-vivo data,we believe VB-601 has potential utility in a wide range of immune-inflammatory diseases,such as multiple sclerosis(relapsing-remitting(RRMS)and progressive(PMS),rheumatoid arthritis(RA),psoriatic arthritis(PsA),non-a

108、lcoholic steatohepatitis(NASH),inflammatory bowel disease(including Crohns disease(CD)and ulcerative colitis(UC)and other immune-inflammatory diseases.62025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/

109、form10-k.htm9/104 We had a successful pre-IND meeting with the FDA regarding our development plan and have since completed IND-enabling toxicology studies that demonstrated a favorabletolerability profile that supports moving VB-601 into the clinic.Additionally,in October 2022,we submitted an applic

110、ation to the Israel Ministry of Health and institutional reviewboard for a first-in-human Phase 1 trial evaluating VB-601 in healthy volunteers.We used a third-party vendor for cGMP grade material of VB-601 for the Phase 1 clinical trial and arecurrently finalizing the procedures required to initiat

111、e this Phase 1 clinical trial.Initiation of this clinical trial is subject to the progress and outcome of the proposed Merger and wecontinue to explore strategic transactions to monetize this asset,which could result in ceasing internal development altogether.Our Strategy In August 2022,we announced

112、 a process to explore strategic alternatives to enhance shareholder value and engaged Chardan as our exclusive financial advisor to assist in this process.Potential strategic options explored or evaluated as part of the process included,but were not limited to merger,reverse merger,other business co

113、mbination,sale of assets,licensing,orother strategic transactions.As a result of this process,we entered into the Merger Agreement and recently closed the sale of our lease and certain related assets in our Modiin facility.While our current focus is on completing the Merger to maximize value for our

114、 shareholders,we will also continue to explore options for our product candidate,VB-601.We do notanticipate further development of this asset if the Merger is completed given the shift in strategic focus if the Merger is successful.However,there is no guarantee that we will besuccessful in identifyi

115、ng any strategic transaction for VB-601 or that we will be able to monetize or further develop this asset.Competition Inflammation is a defensive reaction involving the immune system.However,chronic inflammation can cause tissue damage and remodeling,which may cause the bodys immunesystem to attack

116、its own organs.There are various chronic inflammatory diseases,including multiple sclerosis,rheumatoid arthritis,lupus,ulcerative colitis,Crohns disease,amongothers.Many of these diseases are insufficiently managed by existing treatments that provide mostly symptomatic relief.Certain therapies that

117、target T or B lymphocytes can offer newpossibilities for some of the patients,yet there is still an huge unmet need.Unlike existing therapies,VB-601 is designed to target monocytes,a key component in chronic inflammation that is currently lacking therapeutic options.We believe VB-601 offersdifferent

118、iated technology,based on VBLs newly discovered biology-blocking the ability of monocytes to reach inflamed tissues via MOSPD2.While there are numerous drugcandidates in development for inflammatory indications,to the best of our knowledge,no other drug candidate are designed to target MOSPD2.Govern

119、mental Regulation The FDA and other regulatory authorities at federal,state and local levels,as well as in foreign countries,extensively regulate,among other things,the research,development,testing,manufacture,quality control,import,export,safety,effectiveness,labeling,packaging,storage,distribution

120、,recordkeeping,approval,advertising,promotion,marketing,post-approvalmonitoring and post-approval reporting of biologics.We,along with our vendors,contract research organizations,or CROs,clinical investigators and contract development andmanufacturing organizations,or CDMOs,will be required to navig

121、ate the various preclinical,clinical,manufacturing and commercial approval requirements of the governingregulatory agencies of the countries in which we wish to conduct studies or seek approval of our product candidates.The process of obtaining regulatory approvals of drugs andbiologics and ensuring

122、 subsequent compliance with appropriate federal,state,local and foreign statutes and regulations requires the expenditure of substantial time and financialresources.In the United States,the FDA regulates biologics under the Federal Food,Drug,and Cosmetic Act,or FD&C Act,and biologics under the FD&C

123、Act and the Public Health ServiceAct,or PHSA,as amended,and their implementing regulations.Biologics are also subject to other federal,state and local statutes and regulations.If we fail to comply with applicableFDA or other requirements at any time with respect to product development,clinical testi

124、ng,approval or any other regulatory requirements relating to product manufacture,processing,handling,storage,quality control,safety,marketing,advertising,promotion,packaging,labeling,export,import,distribution,or sale,we may become subject to administrative orjudicial sanctions or other legal conseq

125、uences.These sanctions or consequences could include,among other things,the FDAs refusal to approve pending applications,issuance ofclinical holds for ongoing studies,suspension or revocation of approved applications,warning or untitled letters,product withdrawals or recalls,product seizures,relabel

126、ing orrepackaging,total or partial suspensions of manufacturing or distribution,injunctions,fines,civil penalties or criminal prosecution.72025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm1

127、0/104 Our product candidate must be approved for therapeutic indications by the FDA before it may be marketed in the United States.For biologic product candidates regulated under theFD&C Act and PHSA,FDA must approve a BLA.The process generally involves the following:completion of extensive preclini

128、cal studies in accordance with applicable regulations,including studies conducted in accordance with good laboratory practice,or GLP,requirements;completion of the manufacture,under current good manufacturing practice,or cGMP requirements,of the drug substance and drug product that the sponsor inten

129、ds to use inhuman clinical trials along with required analytical and stability testing;submission to the FDA of an investigational new drug application,or IND,which must become effective before clinical trials may begin and must be updated annually andwhen certain changes are made;approval by an ins

130、titutional review board,or IRB,or independent ethics committee at each clinical trial site before each trial may be initiated;performance of adequate and well-controlled clinical trials in accordance with applicable IND regulations,good clinical practice,or GCP,requirements and other clinical trial-

131、related regulations to establish the safety and efficacy of the investigational product for each proposed indication;preparation and submission to the FDA of a BLA;a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;satisfactory completion of one or m

132、ore FDA pre-license inspections of the manufacturing facility or facilities where the product will be produced to assess compliance withcGMP requirements to assure that the facilities,methods and controls are adequate to preserve the biological products identity,strength,quality and purity;satisfact

133、ory completion of FDA audit of the clinical trial sites that generated the data in support of the BLA;payment of user fees for FDA review of the BLA,unless a waiver applies;andFDA review and approval of the BLA,including,where applicable,consideration of the views of any FDA advisory committee,prior

134、 to any commercial marketing or sale ofthe product in the United States.Preclinical Studies and Clinical Trials for Biologics Before testing any biologic in humans,the product candidate must undergo rigorous preclinical testing.Preclinical studies include laboratory evaluations of product chemistry,

135、formulation and stability,as well as in vitro and animal studies to assess safety and in some cases to establish the rationale for therapeutic use.The conduct of preclinical studies issubject to federal and state regulation and requirements,including GLP requirements for safety/toxicology studies.Th

136、e results of the preclinical studies,together with manufacturinginformation and analytical data,must be submitted to the FDA as part of an IND.An IND is a request for authorization from the FDA to administer an investigational product to humans and must become effective before clinical trials may be

137、gin.The central focus ofan IND submission is on the general investigational plan and the protocol(s)for clinical studies.The IND also includes the results of animal and in vitro studies assessing thetoxicology,pharmacokinetics,pharmacology,and pharmacodynamic characteristics of the product;chemistry

138、,manufacturing,and controls,or CMC,information;and any availablehuman data or literature to support the use of the investigational product.Some long-term preclinical testing may continue after the IND is submitted.The IND automatically becomeseffective 30 days after receipt by the FDA,unless the FDA

139、,within the 30-day time period,raises concerns or questions about the conduct of the clinical trial,including concerns thathuman research subjects will be exposed to unreasonable health risks,and imposes a full or partial clinical hold.FDA must notify the sponsor of the grounds for the hold and anyi

140、dentified deficiencies must be resolved before the clinical trial can begin.Submission of an IND may result in the FDA not allowing clinical trials to commence or not allowingclinical trials to commence on the terms originally specified in the IND.A clinical hold can also be imposed once a trial has

141、 already begun,thereby halting the trial until thedeficiencies articulated by FDA are corrected.The clinical stage of development involves the administration of the product candidate to healthy volunteers or patients under the supervision of qualified investigators,who generallyare physicians not em

142、ployed by or under the trial sponsors control,in accordance with GCP requirements,which include the requirements that all research subjects provide theirinformed consent for their participation in any clinical trial.Clinical trials are conducted under protocols detailing,among other things,the objec

143、tives of the clinical trial,dosingprocedures,subject selection and exclusion criteria and the parameters and criteria to be used in monitoring safety and evaluating effectiveness.Each protocol,and any subsequentamendments to the protocol,must be submitted to the FDA as part of the IND.Furthermore,ea

144、ch clinical trial must be reviewed and approved by an IRB for each institution at whichthe clinical trial will be conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are reasonable compared to the anticipated benefits.TheIRB also approves the info

145、rmed consent form that must be provided to each clinical trial subject or his or her legal representative and must monitor the clinical trial until completed.The FDA,the IRB,or the sponsor may suspend or discontinue a clinical trial at any time on various grounds,including a finding that the subject

146、s are being exposed to an unacceptablehealth risk.Additionally,some clinical trials are overseen by an independent group of qualified experts organized by the clinical trial sponsor,known as a data and safety monitoringcommittee,or DSMC.This group provides authorization for whether or not a trial ma

147、y move forward at designated intervals based on access to certain data from the trial.There alsoare requirements governing the reporting of ongoing clinical trials and completed clinical trials to public registries.Information about clinical trials,including results for clinical trialsother than Pha

148、se 1 investigations,must be submitted within specific timeframes for publication on www.ClinicalTrials.gov,a clinical trials database maintained by the NationalInstitutes of Health.A sponsor who wishes to conduct a clinical trial outside of the United States may,but need not,obtain FDA authorization

149、 to conduct the clinical trial under an IND.If a foreign clinicaltrial is not conducted under an IND,FDA will nevertheless accept the results of the study in support of an NDA if the study was conducted in accordance with GCP requirements,andthe FDA is able to validate the data through an onsite ins

150、pection if deemed necessary.82025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm11/104 Clinical trials to evaluate therapeutic indications to support a BLA for marketing approval are typicall

151、y conducted in three sequential phases,which may overlap.Phase 1Phase 1 clinical trials involve initial introduction of the investigational product in a limited population of healthy human volunteers or patients with the targetdisease or condition.These studies are typically designed to test the saf

152、ety,dosage tolerance,absorption,metabolism,distribution and excretion of the investigational productin humans,the side effects associated with increasing doses,and,if possible,to gain early evidence of effectiveness.Phase 2Phase 2 clinical trials typically involve administration of the investigation

153、al product to a limited patient population with a specified disease or condition to evaluatethe products potential efficacy,to determine the optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.Phase 3Phase 3 clinical trials typically involve administrat

154、ion of the investigational product to an expanded patient population to further evaluate dosage,to providestatistically significant evidence of clinical efficacy and to further test for safety,generally at multiple geographically dispersed clinical trial sites.These clinical trials areintended to es

155、tablish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval and physician labeling.Generally,twoadequate and well-controlled Phase 3 trials are required by the FDA for approval of a BLA.Post-approval trials,sometimes referred to as Phas

156、e 4 clinical trials or post-marketing studies,may be conducted after initial marketing approval.These trials are used to gainadditional experience from the treatment of patients in the intended therapeutic indication and are commonly intended to generate additional safety data regarding use of the p

157、roduct ina clinical setting.In certain instances,the FDA may mandate the performance of Phase 4 clinical trials as a condition of a BLA approval.Progress reports detailing the results of the clinical trials,among other information,must be submitted at least annually to the FDA.Written IND safety rep

158、orts must be submitted tothe FDA and the investigators fifteen days after the trial sponsor determines the information qualifies for reporting for serious and unexpected suspected adverse events,findings fromother studies or animal or in vitro testing that suggest a significant risk for human volunt

159、eers and any clinically important increase in the rate of a serious suspected adverse reactionover that listed in the protocol or investigator brochure.The sponsor must also notify the FDA of any unexpected fatal or life-threatening suspected adverse reaction as soon as possiblebut in no case later

160、than seven calendar days after the sponsors initial receipt of the information.Concurrent with clinical trials,companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics ofthe product candidate and finalize a pro

161、cess for manufacturing the drug product in commercial quantities in accordance with cGMP requirements.The manufacturing process must becapable of consistently producing quality batches of the product candidate and manufacturers must develop,among other things,methods for testing the identity,strengt

162、h,quality andpurity of the final drug product.Additionally,appropriate packaging must be selected and tested,and stability studies must be conducted to demonstrate that the product candidate doesnot undergo unacceptable deterioration over its shelf life.U.S.Marketing Approval for Biologics Assuming

163、successful completion of the required clinical testing,the results of the preclinical studies and clinical trials,together with detailed information relating to the productsCMC and proposed labeling,among other things,are submitted to the FDA as part of a BLA.A BLA is a request for approval to marke

164、t a new biologic for one or more specifiedindications and must contain proof of the biologics safety,purity and potency for the requested indications.The marketing application is required to include both negative andambiguous results of preclinical studies and clinical trials,as well as positive fin

165、dings,together with detailed information relating to the products CMC,and proposed labeling,amongother things.Data may come from company-sponsored clinical trials intended to test the safety and efficacy of a products use or from a number of alternative sources,includingstudies initiated by investig

166、ators.To support marketing approval,the data submitted must be sufficient in quality and quantity to establish the safety,purity and potency of theinvestigational biologic,to the satisfaction of the FDA.The FDA must approve a BLA before a biologic may be marketed in the United States.The FDA reviews

167、 all submitted BLAs to ensure they are sufficiently complete to permit substantive review before it accepts them for filing and may request additional informationrather than accepting the BLA for filing.The FDA must make a decision on accepting a BLA for filing within 60 days of receipt,and such dec

168、ision could include a refusal to file by theFDA.Once the submission is accepted for filing,the FDA begins an in-depth substantive review of the BLA.The FDA reviews a BLA to determine,among other things,whether theproduct is safe and effective for the indications sought and whether the facility in wh

169、ich it is manufactured,processed,packaged or held meets standards designed,including cGMPrequirements,designed to assure and preserve the products continued identity,strength,quality and purity.Under the goals and polices agreed to by the FDA under the PrescriptionDrug User Fee Act,or PDUFA,the FDA

170、targets ten months,from the filing date,in which to complete its initial review of a new molecular entity BLA and respond to the applicant,and six months from the filing date of a new molecular entity BLA for priority review.The FDA does not always meet its PDUFA goal dates for standard or priority

171、BLAs,and thereview process is often extended by FDA requests for additional information or clarification.92025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm12/104 Further,under PDUFA,as amen

172、ded,each BLA must be accompanied by a substantial user fee.The FDA adjusts the PDUFA user fees on an annual basis.Fee waivers or reductions areavailable in certain circumstances,including a waiver of the application fee for the first application filed by a small business.Additionally,no user fees ar

173、e assessed on BLAs forproducts designated as orphan drugs,unless the product also includes a non-orphan indication.The FDA also may require submission of a Risk Evaluation and Mitigation Strategy,or REMS,if it believes that a risk evaluation and mitigation strategy is necessary to ensure that theben

174、efits of the biologic outweigh its risks.A REMS can include use of risk evaluation and mitigation strategies like medication guides,physician communication plans,assessmentplans,and/or elements to assure safe use,such as restricted distribution methods,patient registries,special monitoring or other

175、risk-minimization tools.The FDA may refer an application for a novel biologic to an advisory committee.An advisory committee is a panel of independent experts,including clinicians and other scientificexperts,which reviews,evaluates and provides a recommendation as to whether the application should b

176、e 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 a BLA,the FDA typically will inspect the facility or facilities where the product is manufactured.The FDA wi

177、ll not approve an application unless it determines thatthe manufacturing processes and facilities are in compliance with cGMP requirements and are adequate to assure consistent production of the product within required specifications.Additionally,before approving a BLA,the FDA may inspect one or mor

178、e clinical trial sites to assure compliance with GCP and other requirements and the integrity of the clinical datasubmitted to the FDA.After evaluating the BLA and all related information,including the advisory committee recommendation,if any,and inspection reports regarding the manufacturing facili

179、ties andclinical trial sites,the FDA may issue an approval letter,or,in some cases,a complete response letter.A complete response letter indicates that the review cycle of the application iscomplete and the application is not ready for approval.A complete response letter generally contains a stateme

180、nt of specific conditions that must be met in order to secure finalapproval of the BLA,except that where the FDA determines that the data supporting the application are inadequate to support approval,the FDA may issue the complete responseletter without first conducting required inspections,testing

181、submitted product lots,and/or reviewing proposed labeling.In issuing the complete response letter,the FDA may requireadditional clinical or preclinical testing or recommend other actions,such as requests for additional information or clarification,that the applicant might take in order for the FDA t

182、oreconsider the application.Even with submission of this additional information,the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval.If and when those conditions have been met to the FDAs satisfaction,the FDA will typically issue an approval letter

183、.An approval letter authorizes commercial marketing of theproduct with specific prescribing information for specific indications.Even if the FDA approves a product,depending on the specific risk(s)to be addressed it may limit the approved indications for use of the product,require that contraindicat

184、ions,warnings or precautions be included in the product labeling,require that post-approval studies,including Phase 4 clinical trials,be conducted to further assess a products safety afterapproval,require testing and surveillance programs to monitor the product after commercialization,or impose othe

185、r conditions,including distribution and use restrictions or other riskmanagement mechanisms under a REMS,which can materially affect the potential market and profitability of the product.The FDA may prevent or limit further marketing of aproduct based on the results of post-marketing studies or surv

186、eillance programs.After approval,some 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 and approval.Orphan Drug Designation and Exclusivity Under the Orphan Drug Act

187、,the FDA may grant orphan drug designation to a biologic intended to treat a rare disease or condition,which is a disease or condition with either a patientpopulation of fewer than 200,000 individuals in the United States,or a patient population greater than 200,000 individuals in the United States

188、when there is no reasonable expectationthat the cost of developing and making the product available in the United States for the disease or condition will be recovered from sales of the product.Orphan drug designation mustbe requested before submitting a BLA.After the FDA grants orphan drug designat

189、ion,the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly bythe FDA.Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process,though companies developing orphanproducts are eligible for c

190、ertain incentives,including tax credits for qualified clinical testing and waiver of application fees.If a product that has orphan drug designation subsequently receives the first FDA approval for the disease or condition for which it has such designation,the product is entitled to aseven-year perio

191、d of marketing exclusivity during which the FDA may not approve any other applications to market the same therapeutic agent for the same indication,except inlimited circumstances,such as a subsequent products showing of clinical superiority over the product with orphan exclusivity or where the origi

192、nal applicant cannot produce sufficientquantities of product.Competitors,however,may receive approval of different therapeutic agents for the indication for which the orphan product has exclusivity or obtain approval forthe same therapeutic agent for a different indication than that for which the or

193、phan product has exclusivity.Orphan product exclusivity could block the approval of one of our productsfor seven years if a competitor obtains approval for the same therapeutic agent for the same indication before we do,unless we are able to demonstrate that our product is clinicallysuperior.If an o

194、rphan designated product receives marketing approval for an indication broader than what is designated,it may not be entitled to orphan exclusivity.Further,orphandrug exclusive marketing rights in the United States may be lost if the FDA later determines that the request for designation was material

195、ly defective or the manufacturer of theapproved product is unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or condition.102025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data

196、/1603207/000149315223007533/form10-k.htm13/104 Expedited Development and Review Programs for Biologics The FDA maintains several programs intended to facilitate and expedite development and review of new biologics to address unmet medical needs in the treatment of serious or life-threatening disease

197、s or conditions.These programs include fast track designation,breakthrough therapy designation,priority review and accelerated approval,and the purpose of theseprograms is to either expedite the development or review of important new biologics to get them to patients more quickly than standard FDA r

198、eview timelines typically permit.A new biologic is eligible for fast track designation if it is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address unmet medicalneeds for such disease or condition.Fast track designation applies to the combin

199、ation of the product candidate and the specific indication for which it is being studied.Fast trackdesignation provides increased opportunities for sponsor interactions with the FDA during clinical development,in addition to the potential for rolling review once a marketingapplication is submitted.R

200、olling review means that the FDA may review portions of the marketing application before the sponsor submits the complete application.In addition,a new biologic may be eligible for breakthrough therapy designation if it is intended to treat a serious or life-threatening disease or condition and prel

201、iminary clinicalevidence indicates that the biologic,alone or in combination with one or more other drugs or biologics,may demonstrate substantial improvement over existing therapies on one ormore clinically significant endpoints,such as substantial treatment effects observed early in clinical devel

202、opment.Breakthrough therapy designation provides all the features of fasttrack designation in addition to intensive guidance on an efficient product development program beginning as early as Phase 1,and FDA organizational commitment to expediteddevelopment,including involvement of senior managers an

203、d experienced review staff in a cross-disciplinary review,where appropriate.Any product submitted to the FDA for approval,including a product with fast track or breakthrough therapy designation,may also be eligible for additional FDA programs intended toexpedite the review and approval process,inclu

204、ding priority review designation and accelerated approval.A biologic is eligible for priority review,once a BLA is submitted,if theproduct that is the subject of the marketing application has the potential to provide a significant improvement in safety or effectiveness in the treatment,diagnosis or

205、prevention of aserious disease or condition.Under priority review,the FDAs goal date to take action on the marketing application is six months compared to ten months for a standard review.Products may be eligible for accelerated approval if they can be shown to have an effect on a surrogate endpoint

206、 that is reasonably likely to predict clinical benefit,or an effect on aclinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality,which is reasonably likely to predict an effect on irreversible morbidity or mortalityor other clinical benefit,taking into acc

207、ount the severity,rarity,or prevalence of the condition and the availability or lack of alternative treatments.Accelerated approval is usually contingent on a sponsors agreement to conduct,in a diligent manner,adequate and well-controlled additional post-approval confirmatory studies toverify and de

208、scribe the products clinical benefit and,under the Food and Drug Omnibus Reform Act,or FDORA,the FDA is now permitted to require,as appropriate,that such trialsbe underway prior to approval or within a specific time period after accelerated approval is granted.Additionally,under FDORA,the FDA has in

209、creased authority for expeditedprocedures to withdraw approval of a product or an indication approved under accelerated approval if,for example,the confirmatory trial fails to verify the predicted clinical benefit ofthe product.In addition,for products being considered for accelerated approval,the F

210、DA generally requires,unless otherwise informed by the Agency,that all advertising andpromotional materials intended for dissemination or publication within 120 days of marketing approval be submitted to the agency for review during the pre-approval review period.After the 120-day period has passed,

211、all advertising and promotional materials must be submitted at least 30 days prior to the intended time of initial dissemination or publication.Even if a product qualifies for one or more of these programs,the FDA may later decide that the product no longer meets the conditions for qualification or

212、the time period for FDAreview or approval may not be shortened.Furthermore,fast track designation,breakthrough therapy designation,priority review and accelerated approval do not change the scientificor medical standards for approval or the quality of evidence necessary to support approval,though th

213、ey may expedite the development or review process.Pediatric Information and Pediatric Exclusivity Under the Pediatric Research Equity Act,or PREA,as amended,certain BLAs and certain BLA supplements must contain data that can be used to assess the safety and efficacy of theproduct candidate for the c

214、laimed indications in all relevant pediatric subpopulations and to support dosing and administration for each pediatric subpopulation for which the product issafe and effective.The FDA may grant deferrals for submission of pediatric data or full or partial waivers.The FD&C Act requires that a sponso

215、r who is planning to submit amarketing application for a product candidate that includes a new active ingredient,new indication,new dosage form,new dosing regimen or new route of administration submit aninitial Pediatric Study Plan,or PSP,within 60 days of an end-of-Phase 2 meeting or,if there is no

216、 such meeting,as early as practicable before the initiation of the Phase 3 or Phase 2/3study.The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct,including study objectives and design,age groups,relevant endpointsand statistical approach,or a ju

217、stification for not including such detailed information,and any request for a deferral of pediatric assessments or a full or partial waiver of therequirement to provide data from pediatric studies along with supporting information.The FDA and the sponsor must reach an agreement on the PSP.A sponsor

218、can submitamendments to an agreed-upon initial PSP at any time if changes to the pediatric plan need to be considered based on data collected from preclinical studies,early phase clinical trialsand/or other clinical development programs.Unless otherwise required by regulation,PREA does not apply to

219、a biologic for an indication for which orphan drug designation has beengranted.112025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm14/104 A drug or biologic can also obtain pediatric market

220、exclusivity in the United States.Pediatric exclusivity,if granted,adds six months to existing exclusivity periods and patent terms.This six-month exclusivity,which runs from the end of other exclusivity protection or patent term,may be granted based on the voluntary completion of a pediatric study i

221、n accordancewith an FDA-issued“Written Request”for such a study.U.S.Post-Approval Requirements for Biologics Biologics manufactured or distributed pursuant to FDA approvals are subject to continuing regulation by the FDA,including,among other things,requirements relating torecordkeeping,periodic rep

222、orting,product sampling and distribution,reporting of adverse experiences with the product,complying with promotion and advertising requirements,which include restrictions on promoting products for unapproved uses or patient populations(known as“off-label use”)and limitations on industry-sponsored s

223、cientific andeducational activities.Although physicians may prescribe approved products for off-label uses,manufacturers may not market or promote such uses.The FDA and other agenciesactively enforce the laws and regulations prohibiting the promotion of off-label uses,including not only by company e

224、mployees but also by agents of the company or those speakingon the companys behalf,and a company that is found to have improperly promoted off-label uses may be subject to significant liability,including investigation by federal and stateauthorities.Failure to comply with these requirements can resu

225、lt in,among other things,adverse publicity,warning letters,corrective advertising and potential civil and criminalpenalties,including liabilities under the False Claims Act where products are obtain reimbursement under federal health care programs.Promotional materials for approved biologicsmust be

226、submitted to the FDA in conjunction with their first use or first publication.Further,if there are any modifications to the biologic,including changes in indications,labeling ormanufacturing processes or facilities,the applicant may be required to submit and obtain FDA approval of a new BLA or BLA s

227、upplement,which may require the development ofadditional data or preclinical studies and clinical trials.The FDA may impose a number of post-approval requirements as a condition of approval of a BLA.For example,the FDA may require post-market testing,including Phase 4 clinicaltrials,and surveillance

228、 to further assess and monitor the products safety and effectiveness after commercialization.In addition,manufacturers and their subcontractors involved in themanufacture and distribution of approved biologics are required to register their establishments with the FDA and certain state agencies and

229、are subject to periodic unannouncedinspections by the FDA and certain state agencies for compliance with ongoing regulatory requirements,including cGMPs,which impose certain procedural and documentationrequirements on sponsors and their CMOs.Changes to the manufacturing process are strictly regulate

230、d,and,depending on the significance of the change,may require prior FDAapproval before being implemented.FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any thirdparty manufacturers that a sponsor may use.Manufacture

231、rs and manufacturers facilities are also required to comply with applicable product tracking and tracing requirements.Accordingly,manufacturers must continue to expend time money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects ofregulatory

232、compliance.Failure to comply with statutory and regulatory requirements may subject a manufacturer to possible legal or regulatory action,such as warning letters,suspension of manufacturing,product seizures,injunctions,civil penalties or criminal prosecution.There is also a continuing,annual program

233、 user fee for any marketed product.The FDA may withdraw approval of a product if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market.Later discovery of previously unknown problems with a product,including adverse events of

234、 unanticipated severity or frequency,or with manufacturing processes,or failure to complywith regulatory requirements,may result in revisions to the approved labeling to add new safety information,requirements for post-market studies or clinical trials to assess new safetyrisks,or imposition of dist

235、ribution or other restrictions under a REMS.Other potential consequences include,among other things:restrictions on the marketing or manufacturing of the product,complete withdrawal of the product from the market or product recalls;the issuance of safety alerts,Dear Healthcare Provider letters,press

236、 releases or other communications containing warnings or other safety information about the product;fines,warning letters or holds on post-approval clinical trials;refusal of the FDA to approve applications or supplements to approved applications,or suspension or revocation of product approvals;prod

237、uct seizure or detention,or refusal to permit the import or export of products;injunctions or the imposition of civil or criminal penalties;andconsent decrees,corporate integrity agreements,debarment or exclusion from federal healthcare programs;ormandated modification of promotional materials and l

238、abeling and issuance of corrective information.122025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm15/104 United States Patent Term Restoration Depending upon the timing,duration and specifi

239、cs of FDA approval of our product candidate,one of our United States patents may be eligible for limited patent term extension underthe Drug Price Competition and Patent Term Restoration Act of 1984,commonly referred to as the Hatch-Waxman Amendments.The Hatch-Waxman Amendments permit restorationof

240、the patent term of up to five years as compensation for patent term lost during the FDA regulatory review process.Patent term restoration,however,cannot extend the remainingterm of a patent beyond a total of 14 years from the products approval date and only those claims covering such approved produc

241、t,a method for using it or a method formanufacturing it may be extended.The patent term restoration period is generally one-half the time between the effective date of an IND and the submission date of a BLA plus thetime between the submission date of aa BLA and the approval of that application,exce

242、pt that the review period is reduced by any time during which the applicant failed to exercise duediligence.Only one patent applicable to an approved biologic is eligible for the extension and the application for the extension must be submitted prior to the expiration of the patent.The U.S.Patent an

243、d Trademark Office,or U.S.PTO,in consultation with the FDA,reviews and approves the application for any patent term extension or restoration.In the future,wemay apply for restoration of patent term for our currently owned or licensed patents to add patent life beyond a patents current expiration dat

244、e,depending on the expected length of theclinical trials and other factors involved in the filing of the relevant BLA.Biosimilars and Exclusivity The Patient Protection and Affordable Care Act,as amended by the Health Care and Education Reconciliation Act of 2012,collectively the ACA,includes a subt

245、itle called theBiologics Price Competition and Innovation Act,or BPCIA,which created an abbreviated approval pathway for biological products that are biosimilar to or interchangeable with anFDA-licensed reference biological product.The FDA has issued several guidance documents outlining an approach

246、for the review and approval of biosimilars in the United States.Biosimilarity,which requires that there be no clinically meaningful differences between the biological product and the reference product in terms of safety,purity,and potency,can beshown through analytical studies,animal studies,and a c

247、linical study or studies.Interchangeability requires that a product is biosimilar to the reference product and the product mustdemonstrate that it can be expected to produce the same clinical results as the reference product in any given patient and,for products that are administered multiple times

248、to anindividual,the biologic and the reference biologic may be alternated or switched after one has been previously administered without increasing safety risks or risks of diminishedefficacy relative to exclusive use of the reference biologic.Under the BPCIA,an application for a biosimilar product

249、may not be submitted to the FDA until four years following the date that the reference product was first licensed by the FDA.In addition,the approval of a biosimilar product may not be made effective by the FDA until 12 years from the date on which the reference product was first licensed.During thi

250、s 12-year period of exclusivity,another company may still market a competing version of the reference product if the FDA approves a full BLA for the competing product containing thatapplicants own preclinical data and data from adequate and well-controlled clinical trials to demonstrate the safety,p

251、urity and potency of its product.The BPCIA also created certainexclusivity periods for biosimilars approved as interchangeable products.The FDA may approve multiple“first”interchangeable products so long as they are all approved on the samefirst day of marketing.This exclusivity period,which may be

252、shared amongst multiple first interchangeable products,lasts until the earlier of:(1)one year after the first commercialmarketing of the first interchangeable product;(2)18 months after resolution of a patent infringement suit instituted under 42 U.S.C.262(l)(6)against the applicant that submitted t

253、heapplication for the first interchangeable product,based on a final court decision regarding all of the patents in the litigation or dismissal of the litigation with or without prejudice;(3)42 months after approval of the first interchangeable product,if a patent infringement suit instituted under

254、42 U.S.C.262(l)(6)against the applicant that submitted the application forthe first interchangeable product is still ongoing;or(4)18 months after approval of the first interchangeable product if the applicant that submitted the application for the firstinterchangeable product has not been sued under

255、 42 U.S.C.262(l)(6).Products deemed“interchangeable”by the FDA may be readily substituted by pharmacies,and suchsubstitution is governed by state pharmacy law.Other Regulatory Matters Following product approval,where applicable,the manufacturing,sales,promotion and other activities around product ca

256、ndidates and/or commercialization are also subject toregulation by numerous regulatory authorities in the United States in addition to the FDA.Regulatory agencies with authority over product candidates may include,and are not limitedto,the Centers for Medicare&Medicaid Services,other divisions of th

257、e U.S.Department of Health and Human Services,the Department of Justice,the Drug EnforcementAdministration,the Consumer Product Safety Commission,the Federal Trade Commission,the Occupational Safety&Health Administration,the Environmental Protection Agencyand state and local governments and governme

258、ntal agencies.If any products that we may develop are made available to authorized users of the Federal Supply Schedule of the General Services Administration,additional laws and requirementsapply.Products must meet applicable child-resistant packaging requirements under the U.S.Poison Prevention Pa

259、ckaging Act.Manufacturing,labeling,packaging,distribution,sales,promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws,among other requirements to which we may be subject.The distribution of pharmaceutical products is subject

260、to additional requirements and regulations,including extensive recordkeeping,licensing,storage and security requirementsintended to prevent the unauthorized sale of pharmaceutical products.132025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives

261、/edgar/data/1603207/000149315223007533/form10-k.htm16/104 The failure to comply with any of these laws or regulatory requirements may subject firms to legal or regulatory action.Depending on the circumstances,failure to meet applicableregulatory requirements can result in criminal prosecution,fines

262、or other penalties,injunctions,exclusion from federal healthcare programs,requests for recall,seizure of products,total or partial suspension of production,denial or withdrawal of product approvals,relabeling or repackaging,or refusal to allow a firm to enter into supply contracts,includinggovernmen

263、t contracts.Any claim or action against us for violation of these laws,even if we successfully defend against it,could cause us to incur significant legal expenses and divertour managements attention from the operation of our business.Prohibitions or restrictions on marketing,sales or withdrawal of

264、future products marketed by us could materially affectour business in an adverse way.Changes in regulations,statutes or the interpretation of existing regulations could impact our business in the future by requiring,for example:(i)changes to our manufacturingarrangements;(ii)additions or modificatio

265、ns to product labeling or packaging;(iii)the recall or discontinuation of our products;or(iv)additional recordkeeping requirements.If anysuch changes were to be imposed,they could adversely affect the operation of our business.Other Healthcare Laws If we obtain regulatory approval of our products,we

266、 may be subject to various federal and state laws targeting fraud,waste,and abuse in the healthcare industry.These laws mayimpact,among other things,our proposed sales,marketing,and education programs.In addition,we may be subject to patient privacy regulation by both the federal government andthe s

267、tates in which we conduct our business.The U.S.laws that may affect our ability to operate include:the U.S.federal Anti-Kickback Statute,which prohibits,among other things,persons from knowingly and willfully soliciting,receiving,offering or paying remuneration,directly or indirectly,to induce,or in

268、 return for,either the referral of an individual,or the purchase or recommendation of an item or service for which payment may be madeunder a federal healthcare program,such as the Medicare and Medicaid programs.In addition,the government may assert that a claim including items or services resulting

269、from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or federal civil money penaltiesstatute(as discussed below);U.S.federal civil and criminal false claims laws and civil monetary penalty laws,including the

270、federal False Claims Act,which impose criminal and civil penalties againstindividuals or entities for knowingly presenting,or causing to be presented,to the federal government,including the Medicare and Medicaid programs,claims for paymentthat are false or fraudulent,making a false statement to avoi

271、d,decrease or conceal an obligation to pay money to the federal government,or knowingly concealing orknowingly and improperly avoiding or decreasing such an obligation;the U.S.federal Health Insurance Portability and Accountability Act of 1996,or HIPAA and its implementing regulations,which created

272、new federal criminal statutes thatprohibit executing a scheme to defraud any healthcare benefit program and prohibit knowingly and willfully falsifying,concealing or covering up a material fact or makingany materially false statements in connection with the delivery of or payment for healthcare bene

273、fits,items or services;HIPAA,as amended by the Health Information Technology for Economic and Clinical Health Act of 2009,or HITECH,and their respective implementing regulations,whichimpose certain obligations,including mandatory contractual terms,on covered healthcare providers,health plans,and hea

274、lthcare clearinghouses,as well as their businessassociates,with respect to safeguarding the privacy,security and transmission of individually identifiable health information;the U.S.federal Physician Payments Sunshine Act which requires certain manufacturers of drugs,devices,biologics,and medical su

275、pplies for which payment is availableunder Medicare,Medicaid,or the Childrens Health Insurance Program,with specific exceptions,to report annually to the Centers for Medicare&Medicaid Servicesinformation related to payments or transfers of value made to physicians(currently defined to include doctor

276、s,dentists,optometrists,podiatrists and chiropractors),physicianassistants,nurse practitioners,clinical nurse specialists,certified registered nurse anesthetists and teaching hospitals,as well as information regarding ownership andinvestment interests held by the physicians described above and their

277、 immediate family members;federal government price reporting laws,which require us to calculate and report complex pricing metrics in an accurate and timely manner to government programs;federal consumer protection and unfair competition laws,which broadly regulate marketplace activities and activit

278、ies that potentially harm consumers;andanalogous state and laws and regulations in other jurisdictions,such as state anti-kickback and false claims laws,which may apply to sales or marketing arrangements andclaims involving healthcare items or services reimbursed by non-governmental third-party paye

279、rs,including private insurers,and state and laws in other jurisdiction governingthe privacy and security of health information in certain circumstances,many of which differ from each other in significant ways and often are not preempted by HIPAA,thuscomplicating compliance efforts.Many U.S.states ha

280、ve adopted laws similar to the federal Anti-Kickback Statute and False Claims Act,and may apply to our business practices,including,but not limited to,research,distribution,sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental payers,includi

281、ng private insurers.In addition,somestates have passed laws that require pharmaceutical companies to comply with the April 2003 Office of Inspector General Compliance Program Guidance for PharmaceuticalManufacturers and/or the Pharmaceutical Research and Manufacturers of Americas Code on Interaction

282、s with Healthcare Professionals.Several states also impose other marketingrestrictions or require pharmaceutical companies to make marketing or price disclosures to the state and require the registration of pharmaceutical sales representatives.142025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000

283、149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm17/104 At the state level,legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical product pricing,including price or patientreimbursement

284、 constraints,discounts,restrictions on certain product access and marketing cost disclosure and transparency measures,and,in some cases,designed to encourageimportation from other countries and bulk purchasing.Because of the breadth of these laws and the narrowness of the statutory exceptions and sa

285、fe harbors available,in the event we obtain regulatory approval for any one of our products,it is possible that some of our business activities could be subject to challenge and found to violate one or more of such laws,regulations,and guidance.Law enforcement authoritiesare increasingly focused on

286、enforcing fraud and abuse laws,and it is possible that some of our practices may be challenged under these laws.Violations of these laws can subject us toadministrative,civil and criminal penalties,damages,fines,disgorgement,the exclusion from participation in federal and state healthcare programs,i

287、ndividual imprisonment,reputational harm,and the curtailment or restructuring of our operations,as well as additional reporting obligations and oversight if we become subject to a corporate integrityagreement or other agreement to resolve allegations of non-compliance with these laws.Efforts to ensu

288、re that our current and future business arrangements with third parties,and ourbusiness generally,will comply with applicable healthcare laws and regulations will involve substantial costs.Insurance Coverage and Reimbursement Significant uncertainty exists as to the coverage and reimbursement status

289、 of any drug products for which we may obtain regulatory approval.In the United States,sales of anyproducts for which we may receive regulatory approval for commercial sale will depend in part on the availability of coverage and reimbursement from third-party payers.Third-partypayers include governm

290、ent programs such as Medicare and Medicaid,managed care providers,private health insurers,and other organizations.The process for determining whether apayer will provide coverage for a drug product may be separate from the process for setting the reimbursement rate that the payer will pay for the dr

291、ug product.In the United States,the principal decisions about reimbursement for new medicines are typically made by CMS,an agency within HHS.CMS decides whether and to what extent a new medicine will becovered and reimbursed under Medicare and private payers tend to follow CMS to a substantial degre

292、e.Third-party payers may limit coverage to specific drug products on anapproved list,or formulary,which might not include all of the FDA-approved drugs for a particular indication.Moreover,a payers decision to provide coverage for a drug productdoes not imply that an adequate reimbursement rate will

293、 be approved.Adequate third-party reimbursement may not be available to enable us to maintain price levels sufficient torealize an appropriate return on our investment in product development.Third-party payers are increasingly challenging the price and examining the medical necessity and cost-effect

294、iveness of medical products and services,in addition to their safety and efficacy.In order to obtain coverage and reimbursement for any product that might be approved for sale,we may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectivene

295、ss of any products,in addition to the costs required toobtain regulatory approvals.Factors payers consider in determining reimbursement are based on whether the product is:a covered benefit under its health plan;safe,effective and medically necessary;appropriate for the specific patient;cost-effecti

296、ve;andneither experimental nor investigational.Our product candidates may not be considered medically necessary or cost-effective.If third-party payers do not consider a product to be cost-effective compared to other availabletherapies,they may not cover the product after approval as a benefit under

297、 their plans or,if they do,the level of payment may not be sufficient to allow a company to sell its products ata profit.The U.S.government and state legislatures have shown significant interest in implementing cost containment programs to limit the growth of government-paid health care costs,includ

298、ing price controls,restrictions on reimbursement and requirements for substitution of generic products for branded prescription drugs.For example,the ACA contains provisionsthat may reduce the profitability of drug products,including,for example,increased rebates for drugs reimbursed by Medicaid pro

299、grams,extension of Medicaid rebates to Medicaidmanaged care plans,mandatory discounts for certain Medicare Part D beneficiaries,and annual fees based on pharmaceutical companies share of sales to federal health care programs.At the state level,legislatures have increasingly passed legislation and im

300、plemented regulations designed to control pharmaceutical product pricing,including price or patientreimbursement constraints,discounts,restrictions on certain product access and marketing cost disclosure and transparency measures,and,in some cases,designed to encourageimportation from other countrie

301、s and bulk purchasing.Adoption of government controls and measures,and tightening of restrictive policies in jurisdictions with existing controls andmeasures,could limit payments for pharmaceuticals.The marketability of any products for which we receive regulatory approval for commercial sale may su

302、ffer if the government and third-party payers fail to provide adequate coverageand reimbursement.In addition,an increasing emphasis on cost containment measures in the United States has increased and we expect will continue to increase the pressure onpharmaceutical pricing.Coverage policies and thir

303、d-party reimbursement rates may change at any time.Even if favorable coverage and reimbursement status is attained for one ormore products for which we receive regulatory approval,less favorable coverage policies and reimbursement rates may be implemented in the future.152025/1/17 12:31sec.gov/Archi

304、ves/edgar/data/1603207/000149315223007533/form10-k.htmhttps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm18/104 Current and Future Healthcare Reform Legislation The United States and many foreign jurisdictions have enacted or proposed legislative and regulatory changes aff

305、ecting the healthcare system that could prevent or delay marketingapproval of our product candidates,restrict or regulate post-approval activities and affect our ability to profitably sell any product for which we obtain marketing approval.Changes inregulations,statutes or the interpretation of exis

306、ting regulations could impact our business in the future by requiring,for example:(i)changes to our manufacturing arrangements;(ii)additions or modifications to product labeling;(iii)the recall or discontinuation of our products;or(iv)additional record-keeping requirements.In March 2010,the ACA was

307、enacted,which includes measures that have or will significantly change the way health care is financed by both U.S.governmental and private insurers.Among the provisions of the ACA of greatest importance to the pharmaceutical industry are the following:The Medicaid Drug Rebate Program requires pharm

308、aceutical manufacturers to enter into and have in effect a national rebate agreement with the Secretary of the Departmentof HHS as a condition for states to receive federal matching funds for the manufacturers outpatient drugs furnished to Medicaid patients.The ACA made several changes tothe Medicai

309、d Drug Rebate Program,including increasing pharmaceutical manufacturers rebate liability by raising the minimum basic Medicaid rebate on most brandedprescription drugs from 15.1%of average manufacturer price,or AMP,to 23.1%of average manufacturer price,or AMP,and adding a new rebate calculation for“

310、lineextensions”(i.e.,new formulations,such as extended release formulations)of solid oral dosage forms of branded products,as well as potentially impacting their rebateliability by modifying the statutory definition of AMP.The ACA also expanded the universe of Medicaid utilization subject to drug re

311、bates by requiring pharmaceuticalmanufacturers to pay rebates on Medicaid managed care utilization and by expanding the population potentially eligible for Medicaid drug benefits.In addition,the ACAprovides for the public availability of retail survey prices and certain weighted average AMPs under t

312、he Medicaid program.In order for a pharmaceutical product to receive federal reimbursement under the Medicare Part B and Medicaid programs or to be sold directly to U.S.government agencies,the manufacturer must extend discounts to entities eligible to participate in the 340B drug pricing program.The

313、 required 340B discount on a given product is calculated basedon the AMP and Medicaid rebate amounts reported by the manufacturer.The ACA expanded the types of entities eligible to receive discounted 340B pricing,although,underthe current state of the law,with the exception of childrens hospitals,th

314、ese newly eligible entities will not be eligible to receive discounted 340B pricing on orphan drugswhen used for the orphan indication.In addition,as 340B drug pricing is determined based on AMP and Medicaid rebate data,the revisions to the Medicaid rebate formulaand AMP definition described above c

315、ould cause the required 340B discount to increase.Expansion of the eligibility criteria for Medicaid programs by,among other things,allowing states to offer Medicaid coverage to additional individuals and by adding newmandatory eligibility categories for certain individuals with income at or below 1

316、33%of the Federal Poverty Level,thereby potentially increasing manufacturers Medicaidrebate liability.The ACA imposed a requirement on manufacturers of branded drugs to provide a 70%discount off the negotiated price of branded drugs dispensed to Medicare Part Dpatients in the coverage gap(increased

317、from 50%pursuant to the Bipartisan Budget Act of 2018,effective as of 2019).The ACA imposed an annual,nondeductible fee on any entity that manufactures or imports certain branded prescription drugs,apportioned among these entities according totheir market share in certain government healthcare progr

318、ams,although this fee would not apply to sales of certain products approved exclusively for orphan indications.A Patient-Centered Outcomes Research Institute was established pursuant to the ACA to oversee,identify priorities in,and conduct comparative clinical effectivenessresearch,along with fundin

319、g for such research.The research conducted by the Patient-Centered Outcomes Research Institute may affect the market for certain pharmaceuticalproducts.The ACA established the Center for Medicare and Medicaid Innovation within CMS,which is charged with testing new,innovative payment and service deli

320、very models.Since its enactment,there have been judicial,Congressional and executive challenges to certain aspects of the ACA.On June 17,2021,the U.S.Supreme Court dismissed the mostrecent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of

321、 the ACA.Prior to the Supreme Courts decision,President Bidenissued an executive order to initiate a special enrollment period from February 15,2021 through August 15,2021 for purposes of obtaining health insurance coverage through the ACAmarketplace.The executive order also instructed certain gover

322、nmental agencies to review and reconsider their existing policies and rules that limit access to healthcare,includingamong others,reexamining Medicaid demonstration projects and waiver programs that include work requirements,and policies that create unnecessary barriers to obtaining access tohealth

323、insurance coverage through Medicaid or the ACA.It is unclear how other healthcare reform measures of the Biden administration or other efforts,if any,to challenge,repeal orreplace the ACA will impact our business.162025/1/17 12:31sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htmhtt

324、ps:/www.sec.gov/Archives/edgar/data/1603207/000149315223007533/form10-k.htm19/104 In addition,other legislative and regulatory changes have been proposed and adopted in the United States since the ACA was enacted:On August 2,2011,the U.S.Budget Control Act of 2011,among other things,included aggrega

325、te reductions of Medicare payments to providers of 2%per fiscal year.Thesereductions went into effect on April 1,2013 and,due to subsequent legislative amendments to the statute,will remain in effect through 2030,with the exception of atemporary suspension from May 1,2020 through March 31,2022 due t

326、o the COVID-19 pandemic.Following the temporary suspension,a 1%payment reduction will occurbeginning April 1,2022 through June 30,2022,and the 2%payment reduction will resume on July 1,2022.On January 2,2013,the U.S.American Taxpayer Relief Act of 2012 was signed into law,which,among other things,fu

327、rther reduced Medicare payments to several types ofproviders.On April 13,2017,CMS published a final rule that gives states greater flexibility in setting benchmarks for insurers in the individual and small group marketplaces,whichmay have the effect of relaxing the essential health benefits required

328、 under the ACA for plans sold through such marketplaces.On May 30,2018,the Right to Try Act,was signed into law.The law,among other things,provides a federal framework for certain patients to access certain investigationalnew drug or biological products that have completed a Phase 1 clinical trial a

329、nd that are undergoing investigation for FDA approval.Under certain circumstances,eligiblepatients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program.There is no obligation for apharmaceutical manufacturer to make its pr

330、oducts available to eligible patients as a result of the Right to Try Act.OnMay 23,2019,CMS published a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs beginning January 1,2020.On December 20,2019,former President Trump signed into law the Further Conso

331、lidated Appropriations Act(H.R.1865),which repealed the Cadillac tax,the healthinsurance provider tax,and the medical device excise tax.It is impossible to determine whether similar taxes could be instated in the future.Additionally,there has been increasing legislative and enforcement interest in t

332、he United States with respect to drug pricing practices.Specifically,there has been heightenedgovernmental scrutiny over the manner in which manufacturers set prices for their marketed products,which has resulted in several U.S.Congressional inquiries and proposed andenacted federal and state legisl

333、ation designed to,among other things,bring more transparency to drug pricing,reduce the cost of prescription drugs under Medicare,and review therelationship between pricing and manufacturer patient programs.At a federal level,President Biden signed an Executive Order on July 9,2021 affirming the administrations policy to(i)support legislative reforms that would lower the prices of prescription dru