1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549FORM 10-KANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended September 30,2020ORTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT
2、 OF 1934For the transition period from to Commission File Number:001-37759OUTLOOK THERAPEUTICS,INC.(Exact name of registrant as specified in its charter)Delaware 38-3982704(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)4260 U.S.Route 1Monmouth Juncti
3、on,New Jersey08852(Address of principal executive offices)(Zip Code)(609)619-3990(Registrants telephone number,including area code)Securities registered pursuant to Section 12(b)of the Act:Title of each class Trading Symbol(s)Name of each exchange on which registeredCommon StockOTLKThe Nasdaq Stock
4、Market LLCSeries A WarrantsOTLKWThe Nasdaq Stock Market LLCSecurities Registered Pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not requir
5、ed to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the preceding 12 months(or for such shorterperiod than the regist
6、rant was required to file such reports),and(2)has been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(232.405 of thi
7、s chapter)during thepreceding 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 c
8、ompany.See the definition of“largeaccelerated filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filerAccelerated filerNon-accelerated filerSmaller reporting companyEmerging growth companyIf an emerging growth compan
9、y,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards providedpursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestati
10、on to its managements assessment of the effectiveness of its internal control over financial reporting under Section 404(b)of theSarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued its audit report.Indicate by check mark whether registrant is a shell c
11、ompany(as defined in Rule 12b-2 of the Exchange Act).Yes No The aggregate market value of the registrants common stock,held by non-affiliates of the registrant as of March 31,2020(which is the last business day of registrants most recently completed second fiscalquarter)based upon the closing market
12、 price of such stock on The Nasdaq Capital Market on that date,was approximately$20.4 million.As of December 18,2020,the registrant had outstanding 127,183,109 shares of common stock,par value$0.01 per share.DOCUMENTS INCORPORATED BY REFERENCENone.Table of ContentsOUTLOOK THERAPEUTICS,INC.ANNUAL REP
13、ORT ON FORM 10-KTABLE OF CONTENTSPageCautionary Note Regarding Forward-Looking Statements and Industry DataiiSelected Risks Affecting Our BusinessiiiPART I1ITEM 1.Business1ITEM 1A.Risk Factors19ITEM 1B.Unresolved Staff Comments62ITEM 2.Properties62ITEM 3.Legal Proceedings62ITEM 4.Mine Safety Disclos
14、ures63PART II64ITEM 5.Market for Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity Securities64ITEM 6.Selected Financial Data65ITEM 7.Managements Discussion and Analysis of Financial Condition and Results of Operations66ITEM 7A.Quantitative and Qualitative Disclosu
15、res about Market Risk79ITEM 8.Consolidated Financial Statements and Supplementary Data80ITEM 9.Changes in and Disagreements with Accountants on Accounting and Financial Disclosure113ITEM 9A.Controls and Procedures113ITEM 9B.Other Information113PART III114ITEM 10.Directors,Executive Officers and Corp
16、orate Governance114ITEM 11.Executive Compensation114ITEM 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters114ITEM 13.Certain Relationships and Related Transactions,and Director Independence114ITEM 14.Principal Accounting Fees and Services115PART IV116I
17、TEM 15.Exhibits and Financial Statement Schedules116ITEM 16.Form 10-K Summary119In this report,unless otherwise stated or as the context otherwise requires,references to“Outlook Therapeutics,”“Outlook,”“the Company,”“we,”“us,”“our”and similar references refer to Outlook Therapeutics,Inc.(formerly kn
18、own as Oncobiologics,Inc.)and its consolidated subsidiaries.TheOutlook logo,Oncobiologics logo,LYTENAVA and other trademarks or service marks of Outlook Therapeutics,Inc.appearing in this report are theproperty of Outlook Therapeutics,Inc.This report also contains registered marks,trademarks and tra
19、de names of other companies.All othertrademarks,registered marks and trade names appearing in this report are the property of their respective holders.Convenience translations between Swiss Francs,or CHF,and U.S.dollars provided herein are based on the noon buying rate in New York City forcable tran
20、sfers in foreign currencies as certified for customs purposes by the Federal Reserve Bank of New York on September 30,2020,or CHF0.9188=$1.00.We do not represent that CHF were,could have been,or could be,converted into U.S.dollars at such rate or at any other rate.Table of ContentsiiCAUTIONARY NOTE
21、REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRY DATAThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,as amended.Forward-looking statements are based
22、on our managements beliefs andassumptions and on information currently available to our management.All statements other than statements of historical facts are“forward-lookingstatements”for purposes of these provisions,including those relating to future events or our future financial performance and
23、 financial guidance.Insome cases,you can identify forward-looking statements by terminology such as“may,”“might,”“will,”“should,”“expect,”“plan,”“anticipate,”“project,”“believe,”“estimate,”“predict,”“potential,”“intend,”“continue,”the negative of terms like these or other comparable terminology,inco
24、nnection with any discussion of future operating or financial performance.These statements are only predictions.All forward-looking statementsincluded in this Annual Report on Form 10-K are based on information available to us on the date hereof,and we assume no obligation to update anysuch forward-
25、looking statements.Any or all of our forward-looking statements in this document may turn out to be wrong.Actual events or resultsmay differ materially.Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknown risks,uncertainties and other factors.
26、We discuss many of these risks,uncertainties and other factors in this Annual Report on Form 10-K in greater detail inItem 1A under the heading“Risk Factors.”We caution investors that our business and financial performance are subject to substantial risks anduncertainties.This Annual Report on Form
27、10-K also contains estimates,projections and other information concerning our industry,our business,and the marketsfor certain diseases,including data regarding the estimated size of those markets,and the incidence and prevalence of certain medical conditions.Information that is based on estimates,f
28、orecasts,projections,market research or similar methodologies is inherently subject to uncertainties and actualevents or circumstances may differ materially from events and circumstances reflected in this information.Unless otherwise expressly stated,weobtained this industry,business,market and othe
29、r data from reports,research surveys,studies and similar data prepared by market research firms andother third parties,industry,medical and general publications,government data and similar sources.Table of ContentsiiiSELECTED RISKS AFFECTING OUR BUSINESSInvesting in our common stock involves numerou
30、s risks,including the risks described in“Part I,Item 1A.Risk Factors”of this Annual Report on Form10-K,any one of which could materially adversely affect our business,financial condition,results of operations,and prospects.These risks include,among others,the following:We have incurred significant l
31、osses and negative cash flows from operations since our inception and expect to continue to incursignificant losses and negative cash flows from operations for at least the next 12 months;Our independent registered public accounting firm has indicated that our recurring losses,negative cash flows fr
32、om operations andaccumulated deficit raise substantial doubt about our ability to continue as a going concern;We have never generated any revenue from product sales and may never be profitable;We will need to raise substantial additional funding to complete the development of our product candidate p
33、ipeline.This additionalfunding may not be available on acceptable terms or at all.Failure to obtain this necessary capital when needed may force us todelay,limit or terminate our product development efforts or other operations;Raising additional capital may cause dilution to our securityholders,rest
34、rict our operations or require us to relinquish rights to ourtechnologies or product candidates;We are highly dependent on the success of ONS-5010,our only product candidate in active development,and if ONS-5010 does notsuccessfully complete clinical development or receive regulatory approval,or is
35、not successfully commercialized,our business maybe harmed;We may not be successful in our efforts to enter into a strategic partnership for ONS-5010;Due to our limited resources and access to capital,we have,and will continue to need to,prioritize development of certain productcandidates;and these d
36、ecisions may prove to have been wrong and may harm our business.We may not be entitled to forgiveness ofour recently received Paycheck Protection Program,or PPP,loan,and our application for the PPP loan could in the future bedetermined to have been impermissible or could result in damage to our repu
37、tation;Clinical drug development is a lengthy and expensive process and we may encounter substantial delays in our clinical trials or mayfail to demonstrate safety and efficacy to the satisfaction of applicable regulatory authorities;If product liability lawsuits are brought against us,we may incur
38、substantial liabilities and may be required to limitcommercialization of our current or future product candidates,and our existing insurance coverage may not be sufficient to satisfyany liability that may arise;The development and commercialization of pharmaceutical products is subject to extensive
39、regulation,and we may not obtainregulatory approvals for ONS-5010 in any of the indications for which we plan to develop it,or any future product candidates,on atimely basis or at all;Any delays in the commencement or completion,or termination or suspension,of our planned or future clinical trials c
40、ould result inincreased costs to us,delay or limit our ability to generate revenue and adversely affect our commercial prospects;We face intense competition and rapid technological change and the possibility that our competitors may develop therapies that aresimilar,more advanced or more effective t
41、han ours.Other products may be approved and successfully commercialized before ours,which may adversely affect our financial condition and our ability to successfully commercialize our product candidates;We currently have no marketing and sales organization.If we are unable to establish sales and ma
42、rketing capabilities in jurisdictionsfor which we choose to retain commercialization rights,we may be unable to generate any revenue and will depend on the efforts ofour licensing partners,if any;We rely on third parties to conduct our preclinical and clinical trials and perform other tasks for us.I
43、f these third parties do notsuccessfully carry out their contractual duties,meet expected deadlines or comply with regulatory requirements,we may not be ableto obtain regulatory approval for or commercialize our product candidates and our business could be harmed;We currently engage single source su
44、ppliers for clinical trial services and multiple source suppliers for future drug substancemanufacturing,fill-finish manufacturing and product testing of ONS-5010.The loss of any of these suppliers,or any future singlesource suppliers,could harm our business;Table of ContentsivIf we infringe or are
45、alleged to infringe intellectual property rights of third parties,our business could be harmed.Third-party claimsof intellectual property infringement may prevent or delay our development and commercialization efforts;We may become involved in lawsuits to protect or enforce any future patents,which
46、could be expensive,time-consuming andunsuccessful;If we are unable to obtain and maintain effective patent rights for our product candidates or any future product candidates,we maynot be able to prevent competitors from using technologies we consider important in our successful development andcommer
47、cialization of our product candidates,resulting in loss of any potential competitive advantage our patents may haveotherwise afforded us;If we are unable to maintain effective proprietary rights for our product candidates or any future product candidates,we may not beable to compete effectively in o
48、ur markets;If we fail to comply with our obligations in the agreements under which we license intellectual property and other rights from thirdparties or otherwise experience disruptions to our business relationships with our licensors,we could lose license rights that areimportant to our business;O
49、ur business could be adversely affected by the effects of health pandemics or epidemics,including the ongoing COVID-19 globalpandemic,in regions where we or third parties on which we rely have significant manufacturing facilities,concentrations of clinicaltrial sites or other business operations,or
50、materially affect our operations,including at our headquarters in New Jersey and at ourclinical trial sites,as well as the business or operations of our manufacturers,contract research organizations(“CROs”)or other thirdparties with whom we conduct business;We are highly dependent on the services of
51、 our key executives and personnel,and if we are not able to retain these members of ourmanagement or recruit additional management,clinical and scientific personnel,our business will suffer;The trading price of our securities is likely to be volatile,and purchasers of our securities could incur subs
52、tantial losses;andBioLexis has beneficial ownership of a significant percentage of our common stock,together with its affiliates has the right todesignate members of our board of directors proportionate to its ownership,and is able to exert significant control over matterssubject to stockholder appr
53、oval,preventing new investors from influencing significant corporate decisions.Table of Contents1PART IItem 1.BusinessWe are a late clinical-stage biopharmaceutical company working to develop the first ophthalmic formulation of bevacizumab approved by the U.S.Food and Drug Administration,or FDA,for
54、use in retinal indications.Our goal is to launch directly or through a strategic partner as the first and onlyapproved bevacizumab in the United States,United Kingdom,Europe,Japan and other markets for the treatment of wet age-related maculardegeneration,or wet AMD,diabetic macular edema,or DME,and
55、branch retinal vein occlusion,or BRVO and we are in active late-stage discussionsfor the licensing and/or co-development rights to ONS-5010.ONS-5010(LYTENAVA(bevacizumab-vikg),our sole product candidate in active clinical development,is an investigational ophthalmic formulationof bevacizumab,which w
56、e are developing to be administered as an intravitreal injection for the treatment of wet AMD and other retinal diseases.Bevacizumab is a full-length,humanized anti-VEGF(Vascular Endothelial Growth Factor)recombinant monoclonal antibody,or mAb,that inhibitsVEGF and associated angiogenic activity.The
57、 study design for our Phase 3 clinical program to evaluate ONS-5010 as an ophthalmic formulation ofbevacizumab was reviewed at an end of Phase 2 meeting with the FDA in April 2018,and we filed our investigational new drug application,or IND,with the FDA in the first quarter of calendar 2019.Our clin
58、ical program for ONS-5010 in wet AMD involves three clinical trials,which we refer to as NORSE ONE,NORSE TWO and NORSETHREE.We reported achieving the anticipated safety and efficacy and positive proof-of-concept topline results from NORSE ONE,a clinicalexperience study,in August 2020.NORSE TWO is ou
59、r pivotal Phase 3 clinical trial comparing ONS-5010 to ranibizumab(LUCENTIS)thatcompleted enrollment in July 2020.Topline results are expected in the third calendar quarter of 2021.NORSE THREE is an open-label safety studybeing conducted to ensure the adequate number of safety exposures to ONS-5010
60、are available for the initial ONS-5010 Biologics License Application,or BLA,filing with the FDA.Enrollment was completed in October 2020.Accordingly,all three of the clinical trials required for our planned BLAsubmission for wet AMD in the second half of calendar 2021 have either been completed or a
61、re fully enrolled.In addition,we have received agreements from the FDA on three Special Protocol Assessments,or SPAs,for three additional registration clinical trialsfor our ongoing Phase 3 program for ONS-5010.These SPAs cover the protocols for NORSE FOUR,a registration clinical trial evaluating ON
62、S-5010to treat BRVO,and NORSE FIVE and NORSE SIX,two registration clinical trials to evaluate ONS-5010 to treat DME.We intend to initiate thesestudies in 2021 after submission of our BLA for wet AMD.Currently,the cancer drug Avastin(bevacizumab)is used off-label for the treatment of wet AMD and othe
63、r retinal diseases such as DME and BRVOeven though Avastin has not been approved by regulatory authorities for use in these diseases.If the ONS-5010 clinical program is successful,it willsupport our plans to submit for regulatory approval in multiple markets in 2021 including the United States,Unite
64、d Kingdom,Europe and Japan,aswell as other markets.Because there are no approved bevacizumab products for the treatment of retinal diseases in such major markets,we aredeveloping ONS-5010 as a standard BLA and not using the biosimilar drug development pathway that would be required if Avastin were a
65、n approveddrug for the targeted diseases.If approved,we believe ONS-5010 has potential to mitigate risks associated with off-label use of unapprovedbevacizumab.Off-label use of unapproved bevacizumab is currently estimated to account for at least 50%of all wet AMD prescriptions in the UnitedStates.O
66、ur StrategyOur goal is to launch ONS-5010 as the first,and only,approved bevacizumab for ophthalmic use in the United States,United Kingdom,Europe,Japanand other markets.We plan to do this directly or through a strategic partner.In order to achieve this goal,we have adopted a streamlined clinical an
67、dregulatory strategy to quickly and efficiently complete the process required to submit a BLA with the FDA at the earliest opportunity.The keyelements of our strategy include:Table of Contents2Leveraging the ophthalmic drug development and commercialization expertise of our leadership team.Members o
68、f our executive teamhave extensive expertise in developing and commercializing treatments for retinal diseases,such as wet AMD.We intend to leverage theircollective experience to further the development of,and execute an optimal commercial strategy for,ONS-5010,including licensing rights toONS-5010
69、to a strategic partner.Engaging with regulatory agencies to establish clear guidelines for potential approval.We have continued our approach to work closelywith regulatory authorities to develop and conduct clinical trials that we believe will appropriately support approval of our product candidates
70、if our clinical trials are successful.As an ophthalmic formulation of bevacizumab,we believe ONS-5010 has a well-defined regulatorypathway.Conducting and efficiently executing clinical trials inside and outside of the United States to support potential approval.We have designedour ONS-5010 clinical
71、program to take advantage of reduced costs for clinical trials conducted outside of the United States,as appropriate,such as our NORSE ONE study.We intend to further this strategy,in a manner that will support a BLA submission in the United States at theearliest opportunity for ONS-5010.Reducing and
72、 managing costs to minimize additional investment to complete our development programs.We have made the strategicdecision to outsource the commercial manufacturing and future clinical trial supply manufacturing for our product candidates.We believe thiswill significantly reduce future overhead costs
73、 not directly related to our ONS-5010 program.Our Product Candidate PortfolioWe are actively developing ONS-5010(LYTENAVA(bevacizumab-vikg)for use in the treatment of retina diseases such as wet AMD,DME andBRVO.We continue to hold the developed market commercialization rights for two legacy biosimil
74、ar product candidates,but currently have no plansto further develop these assets.ONS-5010 Bevacizumab for Ophthalmic UseONS-5010 is an investigational ophthalmic formulation of bevacizumab under development to be administered as an intravitreal injection for thetreatment of wet AMD and other retinal
75、 diseases.We currently intend to commercialize both vial and pre-filled syringe formulations if approved.Bevacizumab is a full-length,humanized anti-VEGF recombinant mAb that inhibits VEGF and associated angiogenic(the growth of new bloodvessels)activity.With wet AMD,abnormally high levels of VEGF a
76、re secreted in the eye.VEGF is a protein that promotes the growth of newabnormal blood vessels.Anti-VEGF injection therapy blocks this growth.Since the advent of anti-VEGF therapy,it has become the standard of caretreatment option within the retina community,globally.Previously,we were developing ON
77、S-5010 as a biosimilar of the cancer drug Avastin for use in oncology indications(ONS-1045).In the ONS-1045program,our bevacizumab met the primary and secondary endpoints in a three-arm single-dose pharmacokinetic,or PK,Phase 1 clinical trial.All thePK endpoints met the bioequivalency criteria of th
78、e geometric mean ratios within 90%confidence interval of 80-125%when compared to both U.S.-and E.U.-sourced Avastin reference products.We are developing ONS-5010 as an ophthalmic formulation of bevacizumab for a BLA filing and notusing the biosimilar drug development pathway.The following figure dem
79、onstrates the concentration-time profile of ONS-1045,U.S.-licensed Avastin,and E.U.-licensed Avastin as the mean.The vertical line at time zero denotes dosing.These results suggest a high degree of similarity among the threeproducts.Table of Contents3Comparative Potency of ONS-1045 versus Avastin(U.
80、S.and E.U.)Market OpportunityAge-related macular degeneration,or AMD,is a common eye condition and a leading cause of vision loss among people age 50 and older.Wet AMDis a form of“late stage”AMD and is also called neovascular AMD.In wet AMD,abnormal blood vessels grow underneath the retina.These ves
81、selscan leak fluid and blood,which may lead to swelling and damage of the macula causing vision loss.With wet AMD,abnormally high levels of VEGFare secreted in the eyes.VEGF is a protein that promotes the growth of new abnormal blood vessels.Anti-VEGF injection therapy blocks this growth.Since the a
82、dvent of anti-VEGF therapy,it has become the standard of care treatment option within the retina community,globally.Wet AMD is asignificant disease worldwide,with an estimated prevalence of over 2.9 million patients diagnosed in the United States,European countries and Japanalone in 2020(GlobalData)
83、.Although bevacizumab is not currently FDA-approved for use in treating wet AMD,it is believed that bevacizumabcurrently accounts for at least 50%of all wet AMD prescriptions in the United States,where Avastin is repackaged through compounding pharmaciesand prescribed off-label.If approved,we believ
84、e ONS-5010 has potential to mitigate risks associated with off-label repackaging of bevacizumab.DME is caused by a complication of diabetes called diabetic retinopathy.Diabetic retinopathy is the most common diabetic eye disease and the leadingcause of irreversible blindness in working age Americans
85、.Diabetic retinopathy usually affects both eyes and is caused by ongoing damage to the smallblood vessels of the retina.The leakage of fluid into the retina may lead to swelling of the surrounding tissue,including the macula.DME is the mostcommon cause of vision loss in people with diabetic retinopa
86、thy.DME can occur at any stage of diabetic retinopathy,although it is more likely tooccur in later stages of the disease.There were approximately 8.6 million patients with DME in the United States,European countries and Japan alonein 2020(GlobalData).In BRVO,retinal vein occlusions occur when there
87、is a blockage of veins carrying blood with needed oxygen and nutrients away from the nerve cellsin the retina.A blockage in the main vein of the retina is referred to as a central retinal vein occlusion,or CRVO,while a blockage in a smaller vein iscalled a branch retinal vein occlusion,or BRVO.Per t
88、he American Academy of Ophthalmology,retinal vein occlusions are the second most commonretinal vascular disorder after diabetic retinopathy.There were an estimated 0.3 million patients with BRVO in the United States,European countriesand Japan alone in 2020(GlobalData).Annual revenue(worldwide)for a
89、nti-VEGF therapies is estimated to be$13.1 billion in 2020(GlobalData).Table of Contents4Clinical Development StatusThe study design for our Phase 3 clinical program to evaluate ONS-5010 as an ophthalmic formulation of bevacizumab was reviewed with the FDA atan end of Phase 2 meeting in April 2018,a
90、nd we filed our IND with the FDA in the first quarter of calendar 2019.Our registration plans for wet AMD,the initial indication planned for ONS-5010,consists of three clinical trials which we refer to as NORSE ONE,NORSE TWO and NORSE THREE.We reported achieving the anticipated safety and efficacy a
91、nd positive proof-of-concept topline results from NORSE ONE,a clinical experience study,in August 2020.NORSE TWO is our pivotal Phase 3 clinical trial comparing ONS-5010 to ranibizumab(LUCENTIS)that completed enrollment inJuly 2020.Topline results are expected in the third calendar quarter of 2021.N
92、ORSE THREE is an open-label safety study being conducted to ensurethe adequate number of safety exposures to ONS-5010 are available for the initial ONS-5010 BLA filing with the FDA.Enrollment was completed inOctober 2020.Accordingly,all three of the clinical trials required for our planned BLA submi
93、ssion for wet AMD in the second half of calendar 2021have either been completed or are fully enrolled.We have also received agreement from the FDA on three SPAs for three additional registration clinical trials for our ongoing Phase 3 program forONS-5010.The agreements reached with the FDA on these
94、SPAs cover the protocols for NORSE FOUR,a registration clinical trial to treat BRVO,and NORSE FIVE and NORSE SIX,two registration clinical trials to treat DME.We intend to initiate these studies in 2021 after submission of ourBLA for wet AMD.NORSE ONENORSE ONE is designed as a randomized,masked clin
95、ical experience trial and serves as the first of our two required registration clinical trials tosupport our planned BLA filing with the FDA for ONS-5010 for the treatment of wet AMD.A total of 61 treatment nave and previously treatedpatients were enrolled in the study at nine sites in Australia and
96、 randomized onto treatment arms of ONS-5010 or ranibizumab.The primary endpointfor the study is the difference in proportion of subjects gaining 15 letters of BCVA at Day 330 for ONS-5010 dosed on a monthly basis compared toranibizumab dosed using the PIER alternative dosing regimen of three monthly
97、 doses followed by quarterly dosing.In August 2020,we reported positive proof-of-concept topline results for ONS-5010 as it achieved anticipated safety and efficacy expectations.In theanalysis of treatment nave patients who had a baseline visual acuity of 15 letters at Day 330.This subgroup is the r
98、elevant patient population for ourongoing pivotal clinical trial of ONS-5010.Additionally,in a key secondary endpoint for the relevant patient population,the ONS-5010 patientsachieved a mean improvement in BCVA of 8.3 letters.NORSE TWONORSE TWO is a masked,randomized,pivotal Phase 3 clinical trial t
99、hat serves as the second of our two required clinical trials evaluating ONS-5010against ranibizumab for wet AMD.Enrollment is complete with a total of 227 primarily treatment nave patients enrolled at 39 clinical trial sites in theUnited States.Patients enrolled in the study were randomized to eithe
100、r ONS-5010 or ranibizumab arms and are treated for 11 months.The primaryendpoint for the study is the difference in proportion of subjects gaining 15 letters of BCVA at Day 330 for ONS-5010 dosed on a monthly basiscompared to ranibizumab dosed using the PIER alternative dosing regimen.We expect to r
101、eport topline results from the study in the third quarter ofcalendar 2021.NORSE THREENORSE THREE is an open-label safety study being conducted to ensure the adequate number of safety exposures to ONS-5010 are available for theinitial regulatory filings in wet AMD.A total of 195 patients were enrolle
102、d in October 2020 with a range of retinal diseases for which an anti-VEGFdrug is a therapeutic option,including wet AMD,DME and BRVO.Patients in NORSE THREE will receive three doses of ONS-5010 over threemonths.Enrollment is now complete.Table of Contents5Commercialization,Sales and MarketingOur com
103、mercialization strategy is to maximize the revenue potential of ONS-5010.Although we are in active late-stage discussions for the licensingand/or co-development rights to ONS-5010,if we are not able to reach agreement,we could potentially market it ourselves if approved as we currentlyown all of the
104、 development and commercialization rights to ONS-5010 and only have an agreement to license rights to our Peoples Republic of China,or PRC,joint venture when formed for the greater China market(see“Collaboration and License AgreementsSyntone-Private Placement and PRCJoint Venture”).If approved,we be
105、lieve that ONS-5010 will be entitled to 12 years regulatory exclusivity granted in the United States againstbiosimilar competition.For many years,anti-VEGF therapy has been the standard of care for many ophthalmic diseases,including wet AMD,DME and BRVO.However,although multiple branded drugs have b
106、een approved for these indications(e.g.,LUCENTIS,EYLEA and BEOVU),they are very expensive.Doctorswho wish to treat their retinal patients with a less expensive anti-VEGF drug often use bevacizumab.But because there is no FDA-approvedophthalmic formulation of bevacizumab,doctors must use repackaged b
107、evacizumab(Avastin)provided by compounding pharmacists.Despiteclinicians widespread acceptance and use of bevacizumab to treat ophthalmic diseases such as wet AMD,DME and BRVO,no manufacturer haspreviously sought approval from FDA of bevacizumab for these purposes.The repackaged bevacizumab for opht
108、halmic use that is provided by compounding pharmacies can carry known risks of contamination(includingsilicone oil droplet contamination from syringes)and inconsistent potency,with potentially severe consequences,as leading retinal societies havereported.For these reasons,the retina community and pa
109、yors have shown interest in the development of an ophthalmic formulation of bevacizumabthat could be an on-label alternative to repackaged bevacizumab from compounding pharmacists.To meet this retinal market need,we are developing ONS-5010 as an investigational ophthalmic formulation of bevacizumab.
110、If approved,it willprovide an FDA-approved and European Agency-approved,viable treatment option across the spectrum of anti-VEGF ophthalmic drugs that treat wetAMD,DME and BRVO.Additionally,if approved,it would avoid the safety,sterility,potency,availability and syringe drawbacks that can occur with
111、repackaged bevacizumab from compounding pharmacies.Furthermore,if ONS-5010 is approved and commercialized,we expect that it will be priced responsibly compared to other branded anti-VEGFtherapies to help mitigate the high cost of treatment for retinal diseases.Both in the United States and globally,
112、the high cost of treating retinal diseasessuch as wet AMD,DME and BRVO can result in patients receiving an insufficient number of treatments,or potentially no treatment at all.Ourcommercial strategy for ONS-5010 includes providing an option as a first-line therapy for retinal diseases including step
113、 therapy where an anti-VEGFtherapy is indicated.Step therapy is a type of prior authorization for drugs that begins treatment for a medical condition with the most preferred drugtherapy and progresses to other therapies only if necessary.By ensuring the consistent availability of safe,sterile and fu
114、lly potent on-label bevacizumab for intravitreal injection,at a responsible price,ONS-5010,if approved,has the potential to become the anti-VEGF cornerstone of care for retinal diseases.It may also provide synergies with future long-acting agents and adjunct therapies for advanced treatment of wet A
115、MD,DME and BRVO.ONS-5010 has the potential,if approved andcommercialized,either by us or thorugh a strategic partner,with a responsible pricing strategy,to help lower the aggregate costs of treating retinaldiseases for the overall healthcare system.Collaboration and License AgreementsWe enter into c
116、ollaboration and license agreements in the ordinary course of our business.We have in-licensed certain technology from Selexis SA,orSelexis,that we used to research and develop our product candidates.For product candidates developed using the Selexis technology,we enter intocommercial license agreem
117、ents with Selexis that give us rights to commercialize,file investigational new drugs,or INDs and enter into collaborativearrangements with third parties for the further development and commercialization of such biosimilar product candidates.We have also licensed rightsto our inactive biosimilar pro
118、duct candidates(ONS-3010,ONS-1045 and ONS-1050)in other markets and are currently in active late-stage discussionsfor the licensing and/or co-development rights to ONS-5010.Table of Contents6MTTR Strategic Partnership Agreement(ONS-5010)In February 2018,we entered into a strategic partnership agreem
119、ent with MTTR LLC,or MTTR,to advise on regulatory,clinical and commercial strategy and assist in obtaining approval of ONS-5010,our bevacizumab therapeutic product candidate for ophthalmic indications.In January 2020,we agreed to terminate this arrangement and in connection therewith,following recei
120、pt of necessary stockholder approval,in March 2020,we issued an aggregate of 7,244,739 shares of our common stock to the four principals of MTTR(who include two of our named executive officers,Mr.Dagnon and Mr.Evanson)pursuant to individual consulting agreements we entered into with each of them,and
121、 paid MTTR a one-time settlement fee of$110,000.The consulting agreements also include terms setting the respective compensation arrangements of each of the principals,including for Mr.Dagnon and Mr.Evanson,who have been serving as executive officers since November 2018.We did not pay Mr.Dagnon or M
122、r.Evanson any direct compensation as consultants or as employees during the year ended September 30,2019 norduring the period from October 1,2019 through March 19,2020.During this time,Mr.Dagnon and Mr.Evanson were compensated directly by MTTRfor services provided to us,including as executive office
123、rs.We began compensating Mr.Dagnon and Mr.Evanson directly as consultants effectiveMarch 19,2020.Mr.Dagnon and Mr.Evanson have also agreed to provide consulting services to an affiliate of BioLexis pursuant to a separatearrangement.MTTR and its four principals under the strategic partnership agreeme
124、nt and the subsequent individual consulting agreements earned anaggregate$1,294,089 and$1,744,933 during the year ended September 30,2020 and 2019,respectively,which includes monthly consulting fees andexpense reimbursement,but excludes stock-based compensation related to restricted stock.Syntone Pr
125、ivate Placement and PRC Joint VentureIn May 2020,we entered into a stock purchase agreement with Syntone Ventures LLC,or Syntone,pursuant to which we sold and issued,in a privateplacement in June 2020,16,000,000 shares of our common stock at a purchase price of$1.00 per share,for aggregate gross pro
126、ceeds of$16.0 million.In connection with the entry into the stock purchase agreement,we entered into a joint venture agreement with Syntones PRC-based affiliate,pursuantto which we agreed to form a PRC joint venture that will be 80%owned by Syntones PRC-affiliate and 20%owned by us.Once formed,we in
127、tend toenter into a royalty-free license with the PRC joint venture for the development,commercialization and manufacture of ONS-5010 in the greater Chinamarket,which includes Hong Kong,Taiwan and Macau.Selexis Humira(ONS-3010),Avastin(ONS-5010 and ONS-1045)and Herceptin(ONS-1050)In October 2011,we
128、entered into a research license agreement with Selexis,whereby we acquired a non-exclusive license to conduct researchinternally or in collaboration with third parties to develop recombinant proteins from cell lines created in mammalian cells using the Selexis expressiontechnology,or the Selexis Tec
129、hnology.The research license expired on October 9,2018,and accordingly,we are no longer using the SelexisTechnology in our research.Selexis also granted us a non-transferrable option to obtain a perpetual,non-exclusive,worldwide commercial license under the Selexis Technology tomanufacture,or have m
130、anufactured,a recombinant protein produced by a cell line developed using the Selexis Technology for clinical testing andcommercial sale.We exercised this option in April 2013 and entered into three commercial license agreements with Selexis for ONS-1045(whichcovers ONS-5010),and two of our biosimil
131、ar product candidates,ONS-3010 and ONS-1050(which are no longer in active clinical development).Wepaid an upfront licensing fee to Selexis for each commercial license and also agreed to pay a fixed milestone payment for each licensed product.Inaddition,we are required to pay a single-digit royalty o
132、n a final product-by-final product and country-by-country basis,based on worldwide net salesof such final products by us or any of our affiliates or sub-licensees during the royalty term.At any time during the term,we have the right to terminateour royalty payment obligation by providing written not
133、ice to Selexis and paying Selexis a royalty termination fee.Commercial License AgreementsOn April 11,2013,following the exercise of our option to enter a commercial license under the Selexis research license,we entered into commerciallicense agreements with Selexis for each of ONS-1045,ONS-3010 and
134、ONS-1050.Under theTable of Contents7terms of each commercial license agreement,we acquired a non-exclusive worldwide license under the Selexis Technology to use the cell linesdeveloped under the research license and related materials,to manufacture and commercialize licensed and final products,with
135、a limited right tosublicense.We were required to pay an upfront licensing fee of CHF 65,000(approximately$0.1 million)to Selexis for each commercial license and also agreedto pay up to CHF 365,000(approximately$0.4 million)in milestone payments for each licensed product.In addition,we are required t
136、o pay a single-digit royalty on a final product-by-final product and country-by-country basis,based on worldwide net sales of such final products by us or any of ouraffiliates or sublicensees during the royalty term.The royalty term for each final product in each country is the period commencing fro
137、m the firstcommercial sale of the applicable final product in the applicable country and ending on the expiration of the specified patent coverage.At any timeduring the term,we have the right to terminate our royalty payment obligation by providing written notice to Selexis and paying Selexis a roya
138、ltytermination fee of CHF 1,750,000(approximately$1.8 million).The initiation of our Phase 3 clinical program for ONS-5010 in fiscal 2019 triggered aCHF 65,000(approximately$0.1 million)milestone payment to Selexis under the commercial license agreement,which we paid in November 2019.As of September
139、 30,2020,we have paid Selexis an aggregate of approximately$0.4 million under the commercial license agreements.Each of our commercial agreements with Selexis will expire in its entirety upon the expiration of all applicable Selexis patent rights.The licensedpatent rights consist of two patent famil
140、ies.The first patent family relates to methods of transferring cells,and is filed in the United States,Australia,Canada,Europe,Japan and Singapore.This patent family will begin to expire worldwide in 2022.The second patent family claims DNA compositionsof matter useful for having protein production
141、increasing activity.This patent family is filed in the United States,Australia,Canada,China,Europe,Hong Kong,Israel,India,Japan,South Korea,Russia,Singapore and South Africa.This patent family will begin to expire worldwide in 2025.Eitherparty may terminate the related agreement in the event of an u
142、ncured material breach by the other party or in the event the other party becomes subjectto specified bankruptcy,winding up or similar circumstances.Either party may also terminate the related agreement under designated circumstances if the Selexis Technology infringes third-party intellectualproper
143、ty rights.In addition,we have the right to terminate each of the commercial agreements at any time for our convenience;however,with respectto the agreements relating to ONS-3010 and ONS-1045,this right is subject to the consent of Laboratories Liomont,S.A.de C.V.,or Liomont(alicensing partner in Mex
144、ico for ONS-3010 and ONS-1045)pursuant to a corresponding letter we executed in conjunction with the standby agreemententered into between Selexis and Liomont on November 11,2014.The standby agreement permits Liomont to assume the license under the applicablecommercial agreement for Mexico upon spec
145、ified triggering events involving our bankruptcy,insolvency or similar circumstances.Ex-U.S.Collaboration and License AgreementsIn addition to pursuing potential strategic collaborations and partnerships for ONS-5010 for which we remain in active discussions,we have enteredinto strategic collaborati
146、ons for our legacy biosimilar drug product candidates that are no longer in active clinical development.Currently,we have ajoint participation agreement in place for ONS-3010 with Zhejiang Huahai Pharmaceutical Co.,Ltd.,or Huahai,whereby we share any future post-Phase 1 development costs with Huahai
147、,and proportionately share the revenues from commercialization of ONS-3010 in the United States,Canada,European Union,or E.U.,Japan,Australia and New Zealand.We could also be required to form a joint venture to further develop and commercializeONS-3010 with Huahai in the agreed countries,if so,reque
148、sted by Huahai.However,we do not have any other development and commercializationagreements for the United States or for major ex-U.S.markets,such as the E.U.and Japan.For emerging markets opportunities,in 2012 and 2013,we established early country-specific partnerships for ONS-3010 and ONS-1045 in
149、China withHuahai,in India with IPCA Laboratories Limited,or IPCA,and in Mexico with Liomont,and in September 2017 we entered into an agreement withBioLexis Pte.Ltd.,or BioLexis,our controlling stockholder,providing for the license of rights to ONS-3010 and ONS-1045 in emerging marketsexcluding China
150、,India and Mexico.To date,these agreements have collectively provided an aggregate of$29.0 million in payments as of September30,2020.Table of Contents8Until such time as we may enter into a strategic partnership for ONS-5010,aside from our joint participation agreement in place for ONS-3010 withHua
151、hai,whereby we agreed to share post-Phase 1 clinical development costs,and proportionately share the revenues from commercialization of ONS-3010 in the United States,Canada,E.U.and Japan,among other markets,and under which we could be required to form a joint venture with Huahaifor ONS-3010 if so re
152、quested by Huahai,we do not have any commercial license or development agreements for the United States or for major ex-U.S.markets,such as the E.U.or Japan.We currently have collaboration and license agreements for smaller ex-U.S.markets and,collectively,suchagreements have provided an aggregate of
153、$29.0 million in payments as of September 30,2020 for our most advanced biosimilar product candidates.Our contracts include agreements with IPCA(for ONS-3010,ONS-1045 and ONS-1050 in India and other regional markets),Liomont(for ONS-3010and ONS-1045 in Mexico),Huahai(for ONS-3010 and ONS-1045 in Chi
154、na)and BioLexis(for ONS-3010 and ONS-1045 in emerging marketsexcluding China,India and Mexico).We have also agreed to license ONS-5010 to our PRC-joint venture with Syntone when formed,which isdiscussed above.Our arrangements with these partners for our biosimilar product candidates generally includ
155、e a strategic license for a definedterritory for agreed biosimilar product candidates and may also include agreements to assist with research and development to assist our contractcounterparty in establishing their own mAb research,development and manufacturing capabilities.Under our existing strate
156、gic licensing agreements,we generally received an upfront payment upon execution,and have the ability to earn additional regular milestone payments and the right to receiveroyalties(generally a mid-single digit to low-teens percentage rate)based on net sales in the agreed territory.Our existing agre
157、ements to assist withresearch and development also included an upfront payment upon execution,and we have the ability to earn additional regular milestone payments,and the right to receive royalties(generally a mid-single digit to low-teens percentage rate)based on net sales in the agreed territory.
158、Generally,our agreements expire on a product-by-product basis on the date of the expiration of the royalty revenue term for all products in the territory.The royalty revenue term is 10 years from the date of first commercial sale and any renewal is subject to good faith negotiation.The license term
159、forthe agreed territory is perpetual.Either party may terminate the agreement in its entirety or with respect to a particular product if the other partymaterially breaches the agreement,subject to specified notice and cure periods.In addition,we have the right to terminate the agreement in connectio
160、nwith any interference,opposition or challenge of our patent rights.If the agreement is terminated due to our breach,our contract counterparty isgenerally free to use all applicable technology and know-how that we have provided under the agreement.As noted above,our collaboration agreements with Hua
161、hai also includes a joint participation agreement,which provides for the co-funding ofdevelopment of ONS-3010 in the United States,Canada,E.U.,Japan,Australia and New Zealand and the proportionate sharing of the revenues fromcommercialization of ONS-3010 in the agreed countries,and also provides for
162、 the formation of a joint venture with Huahai to further develop andcommercialize ONS-3010 with Huahai in the agreed countries,if so requested by Huahai.In the event Huahai funds its proportionate share of development costs incurred after completion of the“Phase-3 Ready Package,”Huahai would beentit
163、led to retain its 51%value ownership,with us entitled to retain our 49%value ownership,of ONS-3010 in the agreed countries.Similarly,revenues from the commercialization of ONS-3010 in the agreed countries(including major markets such as the United States and the E.U.,amongothers),would also be share
164、d based on such proportional ownership interests.In the event that Huahai does not fund its proportionate share of suchdevelopment costs,the joint participation agreement provides for a proportionate adjustment to our respective value ownership interests based on ourrespective investments in such de
165、velopment costs,which would increase our value ownership interest in ONS-3010.Throughout the term of the joint participation agreement,we and our affiliates are prohibited from,directly or indirectly,conducting or havingconducted or funding any discovery,research,development,regulatory,manufacturing
166、 or commercialization activity,alone or in collaboration with athird party,of any biosimilar product having the same reference product as the ONS-3010 compound or corresponding products,for use in the UnitedStates,Canada,E.U.,Japan,Australia and New Zealand,other than ONS-3010 with Huahai pursuant t
167、o the joint participation agreement.Unless terminated early upon mutual agreement of the parties,or due to a material breach of either party that is uncured,the joint participationagreement will terminate upon entry into a mutually acceptable collaboration agreement between us and Huahai for ongoing
168、 development andcommercialization of ONS-3010 in the agreed countries,or we and Huahai enter into an agreed license with a third party for such ongoingdevelopment and commercialization of ONS-3010 in the agreedTable of Contents9countries.If the joint participation agreement is terminated for cause d
169、ue to our breach,we could be required to refund Huahai any amounts funded byHuahai to develop ONS-3010,as well as pay Huahai a 6%royalty on net sales made by us or an affiliate,as well as 25%of revenues we receive from asublicensee for commercial sales of ONS-3010 until the aggregate of such payment
170、s is equal to 10 times the amount Huahai funded for thedevelopment of ONS-3010.Furthermore,if we were to file a voluntary petition in bankruptcy,or have an involuntary petition filed that we could not dismiss within 120 days,thenHuahai would be granted an exclusive license to continue the developmen
171、t and commercialization of ONS-3010 in the agreed countries.As of September 30,2020,we have received an aggregate of$5.0 million of payments from IPCA under our various agreements,an aggregate of$3.0million of payments from Liomont under our various agreements,an aggregate of$16.0 million of payment
172、s from Huahai under our variousagreements,$10.0 million of which were pursuant to the joint participation agreement,and an aggregate of$5.0 million from BioLexis under our jointdevelopment and licensing agreement.ManufacturingWe are working with FujiFilm Diosynth Biotechnologies,or Fuji,and Ajinomot
173、o Bio-pharma Services,or AjiBio,to provide product manufacturing incurrent Good Manufacturing Practices,or cGMP,manufacturing facilities.We have also executed a supply agreement for a best-in-class pre-filledophthalmic syringe,which we believe will provide both ease-of-use for clinicians and add to
174、ONS-5010s safety profile over the current unapprovedtherapies that have caused problems related to syringe malfunction,contamination,etc.We will screen other contract manufacturers to meet ourclinical,commercial and regulatory supply requirements as needed.For a discussion of risks related to our so
175、urces and availability of supplies,pleasesee“Risk FactorsPreviously,we manufactured bulk drug substance for preclinical and clinical supplies of our product candidates in our in-housefacility.Our business could be harmed if our new contract manufacturer is unable to manufacture our product candidate
176、s at the necessary quantity orquality levels,.”and“Risk FactorsWe currently engage single source suppliers for clinical trial services and multiple source suppliers for future drugsubstance manufacturing,fill-finish manufacturing and product testing of ONS-5010.The loss of any of these suppliers,or
177、any future single sourcesuppliers,could harm our business.”CompetitionCompetition in the area of pharmaceutical research and development is intense and significantly depends on scientific and technological factors.Thesefactors include the availability of patent and other protection for technology an
178、d products,the ability to commercialize technological developments andthe ability to obtain regulatory approval for testing,manufacturing and marketing.Our competitors include major pharmaceutical and specializedbiotechnology companies,many of which have financial,technical and marketing resources s
179、ignificantly greater than ours.In addition,manybiotechnology companies have formed collaborations with large,established companies to support research,development and commercialization ofproducts that may be competitive with ours,and we may also compete against other biotechnology companies in our e
180、fforts to find a potential strategicpartner for ONS-5010.Academic institutions,governmental agencies and other public and private research organizations are also conducting researchactivities and seeking patent protection and may commercialize products on their own or through joint ventures.We are a
181、ware of certain other productsmanufactured or under development by competitors that are used for the treatment of the health conditions that we have targeted for productdevelopment.We can provide no assurance that developments by others will not render our technology obsolete,noncompetitive or harm
182、ourdevelopment strategy,that we will be able to keep pace with new technological developments,that our technology will be able to supplant establishedproducts and methodologies in the therapeutic areas that are targeted by us or that we will be able to enter into a strategic partnership arrangement
183、forONS-5010.The foregoing factors could have a material adverse effect on our business,prospects,financial condition and results of operations.Thesecompanies,as well as academic institutions,governmental agencies and private research organizations,also compete with us in recruiting and retaininghigh
184、ly qualified scientific personnel and consultants.We will encounter competition from existing firms that offer competitive solutions in ocular diseases.These competitive companies could developproducts that are superior to,or have greater market acceptance,than the products beingTable of Contents10d
185、eveloped by us.We will have to compete against other biotechnology and pharmaceutical companies with greater market recognition and greaterfinancial,marketing and other resources.Wet-AMD MarketAMD is a medical condition that usually affects older adults and generally results in a loss of vision.AMD
186、occurs in“dry”(non-exudative)and“wet”(exudative)forms.Wet AMD is the advanced form of macular degeneration that involves the formation of abnormal and leaky blood vessels in theback of the eye behind the retina,through a process known as choroidal neovascularization.While the wet form accounts for a
187、pproximately 15%of allAMD cases,according to the National Eye Institute,it is responsible for 90%of severe vision loss associated with AMD.The National Eye Institutealso estimates that the prevalence of wet AMD among adults 40 years or older in the United States is approximately 1.75 million people.
188、In addition,more than 200,000 new cases are diagnosed annually in North America.Competitive LandscapeOff-label use of bevacizumab(Avastin)is estimated to be at least 50%of the overall market in the United States.The current FDA approved marketleaders for the treatment of wet AMD are VEGF inhibitors,
189、including LUCENTIS,EYLEA and BEOVU.Annual revenue(worldwide)for anti-VEGFtherapies is estimated to be$13.1 billion in 2020(GlobalData).Bevacizumab,LUCENTIS,EYLEA and BEOVU are all administered via frequentintravitreal injections directly into the eye.We are developing ONS-5010 as an approved bevaciz
190、umab for the treatment of wet AMD,as well as DMEand BRVO.In addition to the other treatments used in patients with wet AMD,there are various other companies with product candidates in Phase 1,2 and 3clinical trials for the treatment of wet AMD.Programs currently in Phase 2 or Phase 3 clinical trials
191、 include,but are not limited to:Abicipar Pegol,a VEGF targeting DARPin molecule being developed by Allergan plc;X-82,an oral tyrosine kinase inhibitor being developed by Tyrogenex,Inc.;ALG-1001,an integrin targeting peptide being developed by Allegro Ophthalmics LLC;Zimura,a C-3 inhibitor being deve
192、loped by Ophthotech Corporation;RG7716,a bispecific antibody to both VEGF-A and Ang2 being developed by Hoffman-La Roche AG;OPT-302,an inhibitor of VEGF-C and VEGF-D being developed by Opthea Limited;andPAN-90806,a selective inhibitor of VEGF being developed by PanOptica Inc.All of these product can
193、didates in clinical development,with the exception of X-82 and PAN-90806,use an intravitreal route of administration muchlike the current standards of care.We believe that ONS-5010 has potential competitive advantages through the familiarity of patients and physicians inusing off-label Avastin.We al
194、so believe we have reduced the risk in our clinical program by leveraging our prior work in developing a biosmilar drugproduct candidate for Avastin as a treatment for cancer.However,clinical trial data from other clinical programs may negatively impact our ability togarner future financing or busin
195、ess collaborations,combinations or transactions with other pharmaceutical and biotechnology companies.Intellectual PropertyOur commercial success depends in part on our ability to avoid infringing the proprietary rights of third parties,our ability to obtain and maintainproprietary protection for ou
196、r technologies where applicable and to prevent others from infringing our proprietary rights.We seek to protect ourproprietary technologies by,among other methods,evaluating relevantTable of Contents11patents,establishing defensive positions,monitoring E.U.oppositions and pending intellectual proper
197、ty rights,preparing litigation strategies in view ofthe U.S.legislative framework and filing U.S.and international patent applications on technologies,inventions and improvements that are important toour business.As of November 23,2020,we own two U.S.patent,nine foreign patents,five pending U.S.non-
198、provisional applications,and 41 pendinginternational applications that were nationalized from seven Patent Cooperation Treaty,or PCT,applications,which relate to formulations developedfor ONS-3010 and ONS-5010/ONS-1045,methods of antibody purification,methods for purifying antibodies to separate iso
199、forms,methods of use,methods of reducing high molecular weight species,and modulating afucosylated species as well as efficiently determining the amino acid sequence ofantibodies.Our first PCT application was nationalized in April 2016 in Australia,Canada,China,Europe,Hong Kong,India,Japan,Mexico an
200、d theUnited States.If granted,patents issuing from these nine applications are expected to expire in 2034,absent any adjustments or extensions.Our secondPCT application was nationalized in July 2017 in Europe and the United States.If granted,patents issuing from these two applications are expected t
201、oexpire in 2036,absent any adjustments or extensions.Our third PCT application was nationalized in June 2018 in Australia,Canada,China,Europe,India,Japan,Mexico and the United States.If granted,patents issuing from these eight applications are expected to expire in 2036,absent anyadjustments or exte
202、nsions.Our fourth PCT application was nationalized in July 2018 in Australia,Canada,China,Europe,India,Japan,Mexico andthe United States.If granted,patents issuing from these eight applications are expected to expire in 2037,absent any adjustments or extensions.Ourfifth PCT application was nationali
203、zed in August 2018 in Australia,Canada,China,Europe,India,Japan,Mexico and the United States.If granted,patents issuing from these eight applications are expected to expire in 2037,absent any adjustments or extensions.Our sixth PCT application wasnationalized in August 2018 in Australia,Canada,China
204、,Europe,India,Japan,Mexico and the United States.If granted,patents issuing from theseeight applications are expected to expire in 2037,absent any adjustments or extensions.Our seventh PCT application was nationalized in October 2020in Australia,Brazil,Canada,China,Europe,Israel,Japan,Korea,Mexico,N
205、ew Zealand,Russian Federation,Singapore,South Africa and the UnitedStates.If granted,patents issuing from these fourteen applications are expected to expire in 2039,absent any adjustments or extensions.We also relyon trade secrets,know-how and continuing technological innovation to develop and maint
206、ain our proprietary position.The term of individual patents depends upon the legal term of the patents in countries in which they are obtained.In most countries,including theUnited States,the patent term is generally 20 years from the earliest date of filing a non-provisional patent application in t
207、he applicable country.In theUnited States,a patents term may,in certain cases,be lengthened by patent term adjustment,which compensates a patentee for administrative delaysby the United States Patent and Trademark Office in examining and granting a patent or may be shortened if a patent is terminall
208、y disclaimed over acommonly owned patent or a patent naming a common inventor and having an earlier expiration date.RegulatoryGovernment Regulation and Product ApprovalThe FDA and other regulatory authorities at federal,state,and local levels,as well as in foreign countries,extensively regulate,amon
209、g other things,theresearch,development,testing,manufacture,quality control,import,export,safety,effectiveness,labeling,packaging,storage,distribution,recordkeeping,approval,advertising,promotion,marketing,post-approval monitoring,and post-approval reporting of biologics such as those we aredevelopin
210、g.We,along with third-party contractors,will be required to navigate the various preclinical,clinical and commercial approval requirementsof the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or licensure of our product candidates.The process requ
211、ired by the FDA before biologic product candidates may be marketed in the United States generally involves the following:completion of preclinical laboratory tests and animal studies performed in accordance with the FDAs current Good Laboratory Practices,orGLP,regulation;submission to the FDA of an
212、IND,which must become effective before clinical trials may begin and must be updated annually or whensignificant changes are made;Table of Contents12approval by an independent Institutional Review Board,or IRB,or ethics committee at each clinical site before the trial is commenced;performance of ade
213、quate and well-controlled human clinical trials to establish the safety,purity and potency of the proposed biologic productcandidate for its intended purpose;preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials;a determination by the FDA within 60 days of
214、 its receipt of a BLA to file the application for review;satisfactory completion of an FDA Advisory Committee review,if applicable;satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the proposed product isproduced to assess compliance with
215、cGMP and to assure that the facilities,methods and controls are adequate to preserve the biologicalproducts continued safety,purity and potency,and of selected clinical investigation sites to assess compliance with Good Clinical Practices,or GCP;andFDA review and approval of the BLA to permit commer
216、cial marketing of the product for particular indications for use in the United States.Preclinical and Clinical DevelopmentPrior to beginning the first clinical trial with a product candidate in the United States,we must submit an IND to the FDA.An IND is a request forauthorization from the FDA to ad
217、minister an investigational new drug product to humans.The central focus of an IND submission is on the generalinvestigational plan and the protocol(s)for clinical studies.The IND also includes results of animal and in vitro studies assessing the toxicology,pharmacokinetics,pharmacology,and pharmaco
218、dynamic characteristics of the product;chemistry,manufacturing,and controls information;and anyavailable human data or literature to support the use of the investigational product.An IND must become effective before human clinical trials maybegin.The IND automatically becomes effective 30 days after
219、 receipt by the FDA,unless the FDA,within the 30-day time period,raises safetyconcerns or questions about the proposed clinical trial.In such a case,the IND may be placed on clinical hold and the IND sponsor and the FDA mustresolve any outstanding concerns or questions before the clinical trial can
220、begin.Submission of an IND therefore may or may not result in FDAauthorization to begin a clinical trial.Clinical trials involve the administration of the investigational product to human subjects under the supervision of qualified investigators in accordancewith GCPs,which include the requirement t
221、hat all research subjects provide their informed consent for their participation in any clinical study.Clinicaltrials are conducted under protocols detailing,among other things,the objectives of the study,the parameters to be used in monitoring safety and theeffectiveness criteria to be evaluated.A
222、separate submission to the existing IND must be made for each successive clinical trial conducted duringproduct development and for any subsequent protocol amendments.Furthermore,an independent IRB for each site proposing to conduct the clinicaltrial must review and approve the plan for any clinical
223、 trial and its informed consent form before the clinical trial begins at that site and must monitorthe study until completed.Regulatory authorities,the IRB or the sponsor may suspend a clinical trial at any time on various grounds,including afinding that the subjects are being exposed to an unaccept
224、able health risk or that the trial is unlikely to meet its stated objectives.Some studies alsoinclude oversight by an independent group of qualified experts organized by the clinical study sponsor,known as a data safety monitoring board,whichprovides authorization for whether or not a study may move
225、 forward at designated check points based on access to certain data from the study and mayhalt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds,such as no demonstration of efficacy.Thereare also requirements governing the reporting of ongoin
226、g clinical studies and clinical study results to public registries.Table of Contents13For purposes of BLA approval,human clinical trials are typically conducted in three sequential phases that may overlap.Phase 1 The investigational product is initially introduced into healthy human subjects or pati
227、ents with the target disease or condition.These studies are designed to test the safety,dosage tolerance,absorption,metabolism and distribution of the investigational product inhumans,the side effects associated with increasing doses,and,if possible,to gain early evidence on effectiveness.Phase 2 Th
228、e investigational product is administered to a limited patient population with a specified disease or condition to evaluate thepreliminary efficacy,optimal dosages and dosing schedule and to identify possible adverse side effects and safety risks.Multiple Phase 2clinical trials may be conducted to o
229、btain information prior to beginning larger and more expensive Phase 3 clinical trials.Phase 3 The investigational product is administered to an expanded patient population to further evaluate dosage,to provide statisticallysignificant evidence of clinical efficacy and to further test for safety,gen
230、erally at multiple geographically dispersed clinical trial sites.Theseclinical trials are intended to establish the overall risk/benefit ratio of the investigational product and to provide an adequate basis for productapproval.In some cases,the FDA may require,or companies may voluntarily pursue,add
231、itional clinical trials after a product is approved to gain moreinformation about the product.These so-called Phase 4 studies may be made a condition to approval of the BLA.Concurrent with clinical trials,companies may complete additional animal studies and develop additional information about the b
232、iological characteristics of the product candidate andmust finalize a process for manufacturing the product in commercial quantities in accordance with cGMP requirements.The manufacturing processmust be capable of consistently producing quality batches of the product candidate and,among other things
233、,must develop methods for testing theidentity,strength,quality and purity of the final product,or for biologics,the safety,purity and potency.Additionally,appropriate packaging must beselected and tested,and stability studies must be conducted to demonstrate that the product candidate does not under
234、go unacceptable deterioration overits shelf life.BLA Submission and ReviewAssuming successful completion of all required testing in accordance with all applicable regulatory requirements,the results of product development,nonclinical studies and clinical trials are submitted to the FDA as part of a
235、BLA requesting approval to market the product for one or more indications.The BLA must include all relevant data available from pertinent preclinical and clinical studies,including negative or ambiguous results as well aspositive findings,together with detailed information relating to the products c
236、hemistry,manufacturing,controls,and proposed labeling,among otherthings.The submission of a BLA requires payment of a substantial application user fee to FDA,unless a waiver or exemption applies.Once a BLA has been submitted,the FDAs goal is to review standard applications within ten months after it
237、 accepts the application for filing,or,if theapplication qualifies for priority review,six months after the FDA accepts the application for filing.In both standard and priority reviews,the reviewprocess is often significantly extended by FDA requests for additional information or clarification.The F
238、DA reviews a BLA to determine,among otherthings,whether a product is safe,pure and potent and the facility in which it is manufactured,processed,packed,or held meets standards designed toassure the products continued safety,purity and potency.The FDA may convene an advisory committee to provide clin
239、ical insight on applicationreview questions.Before approving a BLA,the FDA will typically inspect the facility or facilities where the product is manufactured.The FDA willnot approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requi
240、rements andadequate to assure consistent production of the product within required specifications.Additionally,before approving a BLA,the FDA will typicallyinspect one or more clinical sites to assure compliance with GCP.If the FDA determines that the application,manufacturing process or manufacturi
241、ngfacilities are not acceptable,it will outline the deficiencies in the submission and often will request additional testing or information.Notwithstandingthe submission of any requested additional information,the FDA ultimately may decide that the application does not satisfy the regulatory criteri
242、a forapproval.After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the investigational product and/or its drug substance will beproduced,the FDA may issue an approval letter or a Complete Response letter.An approval letter authorizes commercial marketing of the pr
243、oductwith specific prescribing information for specificTable of Contents14indications.A Complete Response letter will describe all of the deficiencies that the FDA has identified in the BLA,except that where the FDAdetermines that the data supporting the application are inadequate to support approva
244、l,the FDA may issue the Complete Response letter without firstconducting required inspections,testing submitted product lots,and/or reviewing proposed labeling.In issuing the Complete Response letter,the FDAmay recommend actions that the applicant might take to place the BLA in condition for approva
245、l,including requests for additional information orclarification.The FDA may delay or refuse approval of a BLA if applicable regulatory criteria are not satisfied,require additional testing orinformation and/or require post-marketing testing and surveillance to monitor safety or efficacy of a product
246、.If regulatory approval of a product is granted,such approval will be granted for particular indications and may entail limitations on the indicated usesfor which such product may be marketed.For example,the FDA may approve the BLA with a Risk Evaluation and Mitigation Strategy,or REMS,toensure the
247、benefits of the product outweigh its risks.A REMS is a safety strategy to manage a known or potential serious risk associated with a productand to enable patients to have continued access to such medicines by managing their safe use,and could include medication guides,physiciancommunication plans,or
248、 elements to assure safe use,such as restricted distribution methods,patient registries and other risk minimization tools.TheFDA also may condition approval on,among other things,changes to proposed labeling or the development of adequate controls and specifications.Once approved,the FDA may withdra
249、w the product approval if compliance with pre-and post-marketing requirements is not maintained or ifproblems occur after the product reaches the marketplace.The FDA may require one or more Phase 4 post-market trials and surveillance to furtherassess and monitor the products safety and effectiveness
250、 after commercialization and may limit further marketing of the product based on the results ofthese post-marketing studies.Post-Approval RequirementsAny products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA,including,among
251、 other things,requirements relating to record-keeping,reporting of adverse experiences,periodic reporting,product sampling and distribution,and advertising and promotion of the product.After approval,most changes to the approved product,such as adding new indications or other labelingclaims,are subj
252、ect to prior FDA review and approval.There also are continuing user fee requirements,under which FDA assesses an annual programfee for each product identified in an approved BLA.Biologic manufacturers and their subcontractors are required to register their establishments withthe FDA and certain stat
253、e agencies and are subject to periodic unannounced inspections by the FDA and certain state agencies for compliance withcGMP,which impose certain procedural and documentation requirements upon us and our third-party manufacturers.Changes to the manufacturingprocess are strictly regulated,and,dependi
254、ng on the significance of the change,may require prior FDA approval before being implemented.FDAregulations also require investigation and correction of any deviations from cGMP and impose reporting requirements upon us and any third-partymanufacturers that we may decide to use.Accordingly,manufactu
255、rers must continue to expend time,money and effort in the area of production andquality control to maintain compliance with cGMP and other aspects of regulatory compliance.The FDA may withdraw approval if compliance with regulatory requirements and standards is not maintained or if problems occur af
256、ter the productreaches the market.Later discovery of previously unknown problems with a product,including adverse events of unanticipated severity or frequency,or with manufacturing processes,or failure to comply with regulatory requirements,may result in revisions to the approved labeling to add ne
257、w safetyinformation;imposition of post-market studies or clinical studies to assess new safety risks;or imposition of distribution restrictions or otherrestrictions under a REMS program.Other potential consequences include,among other things:restrictions on the marketing or manufacturing of a produc
258、t,complete withdrawal of the product from the market or product recalls;fines,warning letters or holds on post-approval clinical studies;refusal of the FDA to approve pending applications or supplements to approved applications,or suspension or revocation of existing productapprovals;product seizure
259、 or detention,or refusal of the FDA to permit the import or export of products;orTable of Contents15injunctions or the imposition of civil or criminal penalties.The FDA closely regulates the marketing,labeling,advertising and promotion of biologics.A company can make only those claims relating to sa
260、fetyand efficacy,purity and potency that are approved by the FDA and in accordance with the provisions of the approved label.The FDA and otheragencies actively enforce the laws and regulations prohibiting the promotion of off-label uses.Failure to comply with these requirements can result in,among o
261、ther things,adverse publicity,warning letters,corrective advertising and potential civil and criminal penalties.Physicians may prescribelegally available products for uses that are not described in the products labeling and that differ from those tested by us and approved by the FDA.Such off-label u
262、ses are common across medical specialties.Physicians may believe that such off-label uses are the best treatment for many patients invaried circumstances.The FDA does not regulate the behavior of physicians in their choice of treatments.The FDA does,however,restrictmanufacturers communications on th
263、e subject of off-label use of their products.Biosimilars and Reference Product ExclusivityThe Patient Protection and Affordable Care Act,as amended by the Health Care and Education Reconciliation Act,or collectively,the ACA,signedinto law in 2010,includes a subtitle called the Biologics Price Compet
264、ition and Innovation Act of 2009,or BPCIA,which created an abbreviatedapproval pathway for biological products that are biosimilar to or interchangeable with an FDA-approved reference biological product.To date,anumber of biosimilars have been licensed under the BPCIA,and numerous biosimilars have b
265、een approved in Europe.The FDA has issued severalguidance documents outlining an approach to review and approval of biosimilars.Biosimilarity,which requires that there be no clinically meaningful differences between the biological product and the reference product in terms ofsafety,purity,and potenc
266、y,can be shown through analytical studies,animal studies,and a clinical study or studies.Interchangeability requires that aproduct is biosimilar to the reference product and the product must demonstrate that it can be expected to produce the same clinical results as thereference product in any given
267、 patient and,for products that are administered multiple times to an individual,the biologic and the reference biologicmay be alternated or switched after one has been previously administered without increasing safety risks or risks of diminished efficacy relative toexclusive use of the reference bi
268、ologic.Complexities associated with the larger,and often more complex,structures of biological products,as well asthe processes by which such products are manufactured,pose significant hurdles to implementation of the abbreviated approval pathway that are stillbeing worked out by the FDA.Under the B
269、PCIA,an application for a biosimilar product may not be submitted to the FDA until four years following the date that the referenceproduct 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 thedate on which the refe
270、rence product was first licensed.During this 12-year period of exclusivity,another company may still market a competingversion of the reference product if the FDA approves a full BLA for the competing product containing that applicants own preclinical data and datafrom adequate and well-controlled c
271、linical trials to demonstrate the safety,purity and potency of its product.The BPCIA also created certainexclusivity periods for biosimilars approved as interchangeable products.Other U.S.Healthcare Laws and Compliance RequirementsAlthough we currently do not have any products on the market,our curr
272、ent and future arrangements with healthcare professionals,principalinvestigators,consultants,customers and third-party payors expose us to broadly applicable healthcare regulation and enforcement by the federalgovernment and the states and foreign governments in which we conduct our business.These l
273、aws include,without limitation,state and federal anti-kickback,fraud and abuse,false claims,privacy and security and physician sunshine laws and regulations.The federal Anti-Kickback Statute prohibits,among other things,any person or entity from knowingly and willfully offering,soliciting,receiving
274、orproviding remuneration,directly or indirectly,in cash or in kind,either to induce or award the referral of an individual,for an item or service or thepurchasing,recommending or ordering of a good or service,for which payment may be made under federal healthcare programs such as the Medicareand Med
275、icaid programs.The federal Anti-Kickback Statute is subject to evolving interpretations.In the past,the government has enforced the federalAnti-Kickback Statute to reach large settlements with healthcare companies based on,in certain cases,sham consulting andTable of Contents16other financial arrang
276、ements with physicians.Further,the Patient Protection and Affordable Care Act,as amended by the Health Care and EducationReconciliation Act,or collectively,the Affordable Care Act,among other things,amends the intent requirement of the federal Anti-Kickback Statuteand the criminal statutes governing
277、 healthcare fraud.A person or entity no longer needs to have actual knowledge of these statutes or specific intent toviolate them in order to commit a violation.In addition,the Affordable Care Act provides that the government may assert that a claim including itemsor services resulting from a violat
278、ion of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the civil False ClaimsAct or federal civil monetary penalties statute.Additionally,the federal false claims and civil monetary penalties laws,including the civil False Claims Act prohibit,among other thi
279、ngs,knowinglypresenting or causing the presentation of a false,fictitious or fraudulent claim for payment to the U.S.government,or making a false statement toavoid,decrease,or conceal an obligation to pay money to the federal government.Actions under the civil False Claims Act may be brought by theA
280、ttorney General or as a qui tam action by a private individual in the name of the government.The federal government has used the civil False ClaimsAct,and the accompanying threat of significant liability,in its investigation and prosecution of pharmaceutical and biotechnology companiesthroughout the
281、 country,for example,in connection with the promotion of products for unapproved uses and other illegal sales and marketing practices.The federal Health Insurance Portability and Accountability Act of 1996,or HIPAA,created additional federal criminal statutes that prohibit,amongother actions,knowing
282、ly and willfully executing,or attempting to execute,a scheme to defraud any healthcare benefit program,including private third-party payors,knowingly and willfully embezzling or stealing from a healthcare benefit program,willfully obstructing a criminal investigation of ahealthcare offense,and knowi
283、ngly and willfully falsifying,concealing or covering up a material fact or making any materially false,fictitious orfraudulent statement in connection with the delivery of or payment for healthcare benefits,items or services.HIPAA,as amended by the Health Information Technology for Economic and Clin
284、ical Health Act,or HITECH,and their implementing regulations,imposes requirements regarding the privacy and security of individually identifiable health information,including mandatory contractual terms,forcovered entities,or certain healthcare providers,health plans,and healthcare clearinghouses,an
285、d their business associates that provide services to thecovered entity that involve individually identifiable health information and their subcontractors that use,disclose or otherwise process individuallyidentifiable health information.HITECH also increased the civil and criminal penalties that may
286、 be imposed against covered entities and businessassociates and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA.In addition,there has been a recent trend of increased federal and state regulation of payments made to physi
287、cians and other healthcare providers.TheAffordable Care Act,among other things,via the Physician Payments Sunshine Act,imposes annual reporting requirements on certain manufacturersof drugs,devices,biologics,and medical supplies for which payment is available under Medicare,Medicaid,or the Childrens
288、 Health InsuranceProgram,with specific exceptions,for payments made by them to physicians(defined to include doctors,dentists,optometrists,podiatrists andchiropractors)and teaching hospitals,as well as ownership and investment interests held by physicians and their immediate family members.Beginning
289、 in 2022,applicable manufacturers will also be required to report information related to payments and other transfers of value provided in theprevious year to physician assistants,nurse practitioners,clinical nurse specialists,certified registered nurse anesthetists,and certified nurse midwives.Cert
290、ain states also impose restrictions on pharmaceutical manufacturer marketing practices and/or require the tracking and reporting of gifts,compensation and other remuneration to physicians.Certain states and local governments require the registration of pharmaceutical salesrepresentatives.Additionall
291、y,analogous state and foreign laws and regulations,such as state anti-kickback and false claims laws,may apply to sales ormarketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors,including privateinsurers.State laws may also apply tha
292、t require pharmaceutical companies to comply with the pharmaceutical industrys voluntary complianceguidelines and the relevant compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcareproviders or other potential referral sources.In addit
293、ion,certain states require drug manufacturers to report information related to payments and othertransfers of value to physicians and other healthcare providers or marketing expenditures or drug pricing.In addition,state and local laws may requirethe registration of pharmaceutical sales representati
294、ves.We may also be subject to state and foreign laws governing the privacy and security of healthinformationTable of Contents17in certain circumstances,many of which differ from each other in significant ways and often are not preempted by HIPAA,thus complicatingcompliance efforts.The shifting comme
295、rcial compliance environment and the need to build and maintain robust systems to comply with different compliance and/orreporting requirements in multiple jurisdictions increase the possibility that a healthcare company may violate one or more of the requirements.If ouroperations are found to be in
296、 violation of any of such laws or any other governmental regulations that apply to us,we may be subject to significantpenalties,including,without limitation,civil,criminal and administrative penalties,damages,fines,disgorgement,additional reporting requirementsand oversight if we become subject to a
297、 corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws,the curtailment or restructuring of our operations,exclusion from participation in federal and state healthcare programs and individual imprisonment,any of which could adversely affect our ab
298、ility to operate our business and our financial results.Healthcare ReformThe Affordable Care Act has had,and is expected to continue to have,a significant impact on the healthcare industry.The Affordable Care Act wasdesigned to expand coverage for the uninsured while at the same time containing over
299、all healthcare costs.With regard to pharmaceutical products,among other things,the Affordable Care Act expanded and increased industry rebates for drugs covered under Medicaid programs and made changesto the coverage requirements under the Medicare prescription drug benefit.There remain judicial,Con
300、gressional and executive branch challenges tocertain aspects of the Affordable Care Act,and we expect there will be additional challenges and amendments to the Affordable Care Act in the future.While Congress has not passed comprehensive repeal legislation,it has enacted laws that modify certain pro
301、visions of the Affordable Care Act such asremoving or delaying penalties,starting January 1,2019,for not complying with the Affordable Care Acts individual mandate to carry healthinsurance,delaying the implementation of certain Affordable Care Act-mandated fees,and increasing the point-of-sale disco
302、unt that is owed bypharmaceutical manufacturers who participate in Medicare Part D.Additionally,on December 15,2018,a Texas U.S.District Court Judge ruled thatthe Affordable Care Act is unconstitutional in its entirety because the individual mandate was repealed by Congress.Further,on December 18,20
303、19,the U.S.Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was unconstitutional and remanded the caseback to the District Court to determine whether the remaining provisions of the ACA are invalid as well.On March 2,2020,the United States SupremeCour
304、t granted the petitions for writs of certiorari and held oral arguments on November 10,2020.Accordingly,we continue to evaluate the effect thatthe Affordable Care Act has on our business.Other legislative changes have been proposed and adopted in the United States since the Affordable CareAct was en
305、acted.For example,through the process created by the Budget Control Act of 2011,there are automatic reductions of Medicare payments toproviders up to 2%per fiscal year,which went into effect in April 2013 and,due to subsequent legislative amendments,will remain in effect through2030 unless additiona
306、l Congressional action is taken.However,the Coronavirus Aid,Relief and Economic Security Act,or CARES Act,which wassigned into law in March 2020 and is designed to provide financial support and resources to individuals and businesses affected by the COVID-19pandemic,suspended the 2%Medicare sequeste
307、r from May 1,2020 through December 31,2020,and extended the sequester by one year,through2030.In January 2013,President Obama signed into law the American Taxpayer Relief Act of 2012,which,among other things,further reducedMedicare payments to several providers.In addition,there has been heightened
308、governmental scrutiny recently over the manner in which drugmanufacturers set prices for their marketed products,which have resulted in several Congressional inquiries and proposed and enacted federal and statelegislation designed to,among other things,bring more transparency to product pricing,revi
309、ew the relationship between pricing and manufacturerpatient programs,and reform government program reimbursement methodologies for drug products.At the federal level,the Trump administrationsbudget proposals for fiscal year 2021 includes a$135 billion allowance to support legislative proposals seeki
310、ng to reduce drug prices,increasecompetition,lower out-of-pocket drug costs for patients,and increase patient access to lower-cost generic and biosimilar drugs.In addition,the Trumpadministration previously released a“Blueprint”to lower drug prices and reduce out of pocket costs of drugs that contai
311、ns additional proposals toincrease manufacturer competition,increase the negotiating power of certain federal healthcare programs,incentivize manufacturers to lower the listprice of their products and reduce the out of pocket costs of drug products paid by consumers.The Department of Health and Huma
312、n Services,orHHS,has solicited feedback on some of these measures and implemented others under its existing authority.On July 24,2020 and September 13,2020,President Trump announced several executive orders related to prescription drug pricing that seek to implement several of the administrationspro
313、posals.The FDA also released a final rule on September 24,2020 providingTable of Contents18guidance for states to build and submit importation plans for drugs from Canada.Further,on November 20,2020,HHS finalized a regulation removingsafe harbor protection for price reductions from pharmaceutical ma
314、nufacturers to plan sponsors under Part D,either directly or through pharmacybenefit managers,unless the price reduction is required by law.The rule also creates a new safe harbor for price reductions reflected at the point-of-sale,as well as a safe harbor for certain fixed fee arrangements between
315、pharmacy benefit managers and manufacturers.The likelihood ofimplementation of any of the other Trump administration reform initiatives is uncertain,particularly in light of the recent U.S.presidential election.Inthe coming years,additional legislative and regulatory changes could be made to governm
316、ental health programs that could significantly impactpharmaceutical companies and the success of our product candidates.At the state level,legislatures have increasingly passed legislation andimplemented regulations designed to control pharmaceutical and biological product pricing,including price or
317、 patient reimbursement 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.The Affordable Care Act,as well as other federal,state and foreign h
318、ealthcare reform measuresthat have been and may be adopted in the future,could harm our future revenues.Further,it is also possible that additional governmental action istaken in response to the COVID-19 pandemic.International RegulationIn addition to regulations in the United States,foreign regulat
319、ions also govern clinical trials,commercial sales and distribution of product candidateswithin their jurisdiction.The regulatory approval process varies from country to country and the time to approval may be longer or shorter than thatrequired for FDA approval.In the European Union,the approval of
320、a biosimilar for marketing is based on an opinion issued by the EuropeanMedicines Agency and a decision issued by the European Commission.However,substitution of a biosimilar for the innovator is a decision that ismade at the local(national)level on a country-by-country basis.Additionally,a number o
321、f European countries do not permit the automatic substitutionof biosimilars for the reference product.Many countries also have published their own legislation outlining a regulatory pathway for the developmentand approval of biosimilars.In some cases,countries have either adopted European guidance o
322、r are following guidance issued by the World HealthOrganization.Although similarities are apparent across these various regulatory guidance,there is also the potential for additional country-specificrequirements.Pharmaceutical Coverage,Pricing and ReimbursementIn the United States and other countrie
323、s,sales of any products for which we receive regulatory approval for commercial sale will depend in part on theavailability of coverage and the adequacy of reimbursement from third-party payors,including government health administrative authorities,managedcare organizations,private health insurers a
324、nd other organizations.Third-party payors are increasingly examining the medical necessity and costeffectiveness of drug products and services in addition to safety and efficacy and,accordingly,significant uncertainty exists as to the reimbursementstatus of newly drug products.A payors decision to p
325、rovide coverage for a drug product does not imply that an adequate reimbursement rate will beapproved.Further,there is no uniform policy for coverage and reimbursement in the United States.Third-party payors often rely upon Medicarecoverage policy and payment limitations in setting their own reimbur
326、sement rates,but also have their own methods and approval process apart fromMedicare determinations.As such,one payors determination to provide coverage for a drug product does not assure that other payors will also providecoverage for the drug product.Adequate third-party reimbursement may not be a
327、vailable to enable us to realize an appropriate return on our investmentin product development.Obtaining and maintaining adequate reimbursement for our product candidates,once approved,may be difficult.We may berequired to conduct expensive pharmacoeconomic studies to justify coverage and reimbursem
328、ent or the level of reimbursement compared to existingapproved biologics and other therapies.There may be significant delays in obtaining coverage and reimbursement for newly approved drugs in theUnited States,and coverage may be more limited than the indications for which the product is approved by
329、 the FDA or similar regulatory authoritiesoutside the United States.In addition,the U.S.government,state legislatures and foreign governments have continued implementing cost-containmentprograms,including price controls,restrictions on coverage and reimbursement and requirements for substitution of
330、generic products.Adoption ofprice controls and cost-containment measures and adoption of more restrictive policies in jurisdictions with existing controls and measures couldfurther limit our net revenue and results.Decreases in third-party reimbursement for our product candidates or a decision by a
331、third-party payor to notcover our product candidates could reduce physician utilization of our products and have a material adverse effect on our sales,results of operationsand financial condition.Table of Contents19Employees and Human Capital ResourcesAs of September 30,2020,we had eight full-time
332、employees,four of whom were primarily engaged in research and development activities and threeof whom have a Ph.D.degree.We also have two part-time consultants,who serve as executive officers.None of our employees are represented by alabor union or covered by a collective bargaining agreement.Our hu
333、man capital resources objectives include,as applicable,identifying,recruiting,retaining,incentivizing and integrating our existing and newemployees,advisors and consultants.The principal purposes of our equity and cash incentive plans are to attract,retain and reward personnel throughthe granting of stock-based and cash-based compensation awards,in order to increase stockholder value and the succe
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