1、 ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934 TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934ITEM 1.BusinessITEM 1A.Risk FactorsITEM 1B.Unresolved Staff CommentsITEM 2.PropertiesITEM 3.Legal ProceedingsITEM 4.Mine Safety
2、DisclosuresTABLE OF CONTENTSUNITED STATES SECURITIES 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 30,2018ORFor the transition period from to Commission File Number:001-37759O
3、UTLOOK THERAPEUTICS,INC.(Exact name of registrant as specified in its charter)Delaware38-3982704(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)7 Clarke Drive Cranbury,New Jersey 08512(609)619-3990(Address,including zip code,and telephone number,inclu
4、ding area code,of registrants principal executive offices)Securities registered pursuant to Section 12(b)of the Act:Title of Each ClassName of Each Exchange on Which RegisteredCommon Stock,$0.01 par value per shareThe Nasdaq Capital MarketSeries A warrants to purchase Common StockThe Nasdaq Capital
5、MarketSecurities Registered Pursuant to Section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.YesNoIndicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15
6、(d)of theAct.YesNoIndicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period than the registrant wasrequired to file such reports),and(2)has been subj
7、ect to such filing requirements for the past 90 days.YesNoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for suchshorter pe
8、riod that the registrant was required to submit such files).YesNoIndicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein,andwill not be contained,to the best of the registrants knowledge,in definitive proxy or information statements in
9、corporated byreference in Part III of this Form 10-K or any amendment to this Form 10-K.Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,asmaller reporting company,or an emerging growth company.See the definition of“large acceler
10、ated filer,”“acceleratedfiler,”“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the regis
11、trant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of theExchange Act.Indicate by check mark whether registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).YesNoThe agg
12、regate market value of the registrants common stock,held by non-affiliates of the registrant as of March 30,2018(which is the last business day of registrants most recently completed second fiscal quarter)based upon the closingmarket price of such stock on The Nasdaq Capital Market on that date,was
13、approximately$15.6 million.As of December 14,2018,the registrant had outstanding 85,091,062 shares of common stock,par value$0.01 per share.DOCUMENTS INCORPORATED BY REFERENCENone.TABLE OF CONTENTSOUTLOOK THERAPEUTICS,INC.ANNUAL REPORT ON FORM 10-K TABLE OF CONTENTSPageCautionary Note Regarding Forw
14、ard-Looking Statements and Industry DataiiPART I11959595959PART IIITEM 5.Market for Registrants Common Equity,Related Stockholder Matters,and IssuerPurchases of Equity SecuritiesITEM 6.Selected Financial DataITEM 7.Managements Discussion and Analysis of Financial Condition and Results ofOperationsIT
15、EM 7A.Quantitative and Qualitative Disclosures about Market RiskITEM 8.Consolidated Financial Statements and Supplementary DataITEM 9.Changes in and Disagreements with Accountants on Accounting and FinancialDisclosureITEM 9A.Controls and ProceduresITEM 9B.Other InformationITEM 10.Directors,Executive
16、 Officers and Corporate GovernanceITEM 11.Executive CompensationITEM 12.Security Ownership of Certain Beneficial Owners and Management and RelatedStockholder MattersITEM 13.Certain Relationships and Related Transactions,and Director IndependenceITEM 14.Principal Accounting Fees and ServicesITEM 15.E
17、xhibits and Financial Statement SchedulesITEM 16.Form 10-K Summary6061627879110110110PART III111115122124131PART IV132136In this report,unless otherwise stated or as the context otherwise requires,references to“OutlookTherapeutics,”“Outlook,”“the Company,”“we,”“us,”“our”and similar references refer
18、to OutlookTherapeutics,Inc.(formerly known as Oncobiologics,Inc.)and its consolidated subsidiaries.The Outlooklogo,Oncobiologics logo and other trademarks or service marks of Outlook Therapeutics,Inc.appearing inthis report are the property of Outlook Therapeutics,Inc.This report also contains regis
19、tered marks,trademarks and trade names of other companies.All other trademarks,registered marks and trade namesappearing 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 thenoon buying rate i
20、n New York City for cable transfers in foreign currencies as certified for customspurposes by the Federal Reserve Bank of New York on September 28,2018,or CHF 0.9813=$1.00.Wedo not represent that CHF were,could have been,or could be,converted into U.S.dollars at such rate or atany other rate.iTABLE
21、OF CONTENTSCAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS AND INDUSTRYDATAThis Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27Aof the Securities Act of 1933,as amended,and Section 21E of the Securities Exchange Act of 1934,asamended.Forward-looki
22、ng statements are based on our managements beliefs and assumptions and oninformation currently available to our management.All statements other than statements of historical factsare“forward-looking statements”for purposes of these provisions,including those relating to future eventsor our future fi
23、nancial performance and financial guidance.In some 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 theseor other comp
24、arable terminology,in connection with any discussion of future operating or financialperformance.These statements are only predictions.All forward-looking statements included in this AnnualReport on Form 10-K are based on information available to us on the date hereof,and we assume noobligation to u
25、pdate any such forward-looking statements.Any or all of our forward-looking statements inthis document may turn out to be wrong.Actual events or results may differ materially.Our forward-looking statements can be affected by inaccurate assumptions we might make or by known or unknownrisks,uncertaint
26、ies and other factors.We discuss many of these risks,uncertainties and other factors in thisAnnual Report on Form 10-K in greater detail under the heading“Item 1A Risk Factors.”We cautioninvestors that our business and financial performance are subject to substantial risks and uncertainties.This Ann
27、ual Report on Form 10-K also contains estimates,projections and other information concerningour industry,our business,and the markets for certain diseases,including data regarding the estimated sizeof those markets,and the incidence and prevalence of certain medical conditions.Information that is ba
28、sedon estimates,forecasts,projections,market research or similar methodologies is inherently subject touncertainties and actual events or circumstances may differ materially from events and circumstancesreflected in this information.Unless otherwise expressly stated,we obtained this industry,busines
29、s,marketand other data from reports,research surveys,studies and similar data prepared by market research firmsand other third parties,industry,medical and general publications,government data and similar sources.iiLeveraging the recently added ophthalmic drug development and commercialization exper
30、tise ofour leadership team.We recently appointed a Chief Operating Officer and a Chief CommercialOfficer with extensive expertise in developing and commercializing treatments for retinal diseases,such as wet AMD.We intend to leverage their collective experience to further the development of,and deve
31、lop an optimal commercial strategy for,ONS-5010.Engaging with regulatory agencies to establish clear guidelines for potential approval.We havecontinued our approach to work closely with regulatory authorities to develop and conductclinical trials that we believe will appropriately support approval o
32、f our product candidates if ourclinical trials are successful.We conducted a successful end of Phase 2 meeting with the FDA forONS-5010,and expect to submit an IND in the first quarter of 2019.As an ophthalmicformulation of Avastin,we believe ONS-5010 has a well defined regulatory pathway.Conducting
33、 and efficiently executing adequate and well-controlled clinical trials inside andoutside of the United States to support potential approval.We have designed our ONS-5010clinical programTABLE OF CONTENTSPART IItem 1.BusinessOverviewWe are a late clinical-stage biopharmaceutical company focused on de
34、veloping and commercializing ONS-5010,a complex,technically challenging and commercially attractive monoclonal antibody,or mAb,forvarious ophthalmic indications.Our goal is to launch ONS-5010 as the first,and only,approvedbevacizumab in the United States,Europe,Japan and other markets for the treatm
35、ent of wet age relatedmacular degeneration,or wet AMD,diabetic macular edema,or DME,and branch retinal vein occlusion,orBRVO.ONS-5010 is an innovative mAb therapeutic product candidate currently enrolling patients in a clinical trialoutside the United States designed to serve as the first of two ade
36、quate and well controlled studiesevaluating ONS-5010 as a treatment for wet AMD.We plan to submit an investigational new drug,or IND,application with the U.S.Food and Drug Administration,or FDA,in the first quarter of calendar 2019.TheU.S.portion of the second study is also expected to begin at that
37、 time.Our ONS-5010 wet AMD clinicalprogram was reviewed at a successful end of Phase 2 meeting with the FDA conducted in 2018.If theprogram is successful,it will support our plans to submit for regulatory approval in multiple markets in2020,including the United States,Europe and Japan.Because there
38、are no approved bevacizumab productsfor the treatment of retinal diseases in such major markets,we are developing ONS-5010 as an innovativetherapy and not using the biosimilar drug development pathway.If approved,we believe ONS-5010 haspotential to mitigate risks associated with off-label compoundin
39、g of Avastin or other drugs.Off-labelcompounding of Avastin is currently estimated to account for approximately 50%of all wet AMDprescriptions in the United States.Separately,we have advanced two biosimilar product candidates through Phase 1 clinical trials and intopreparations for Phase 3 clinical
40、trials:ONS-3010,a biosimilar to adalimumab(Humira),and ONS-1045,abiosimilar to bevacizumab(Avastin).We only plan to further advance ONS-3010 and ONS-1045 in majormarkets,including the United States,upon entering into a license or co-development agreement with apartner in the major markets.The emergi
41、ng markets rights to these product candidates have been licensedto third parties for development in those markets.At this time,ONS-5010 is our only product candidate inactive development.Our StrategyOur goal is to launch ONS-5010 as the first,and only,approved bevacizumab for ophthalmic use in theUn
42、ited States,Europe,Japan and other markets.In order to achieve this goal,we have adopted astreamlined clinical and regulatory strategy to quickly and efficiently complete the process required tosubmit a Biologics License Application,or BLA,with the FDA at the earliest opportunity.The key elementsof
43、our strategy include:1Reducing and managing costs to minimize additional investment to complete our developmentprograms.We have made the strategic decision to outsource the commercial manufacturing andfuture clinical trial supply manufacturing for our product candidates.This decision is expected tos
44、ignificantly reduce future overhead costs not directly related to our ONS-5010 program.TABLE OF CONTENTSto take advantage of reduced costs for clinical trials conducted outside of the United States.Weintend to further this strategy,as appropriate,in a manner that will support a BLA submission inthe
45、United States at the earliest opportunity for ONS-5010.Our Product Candidate PortfolioOur product candidate portfolio includes our lead product candidate,ONS-5010,which we are activelydeveloping,as well as our biosimilar product candidates,which we only plan to further advance,uponentering into a li
46、cense or co-development agreement with a partner in the major markets.We refer to theselegacy biosimilar product candidates as our inactive development portfolio.Active Development PortfolioONS-5010 Bevacizumab for Ophthalmic UseONS-5010 is a proprietary ophthalmic formulation of bevacizumab to be a
47、dministered as an intravitreal,orIVT,injection for the treatment of wet AMD and other retina diseases.Bevacizumab is a full lengthhumanized anti-vascular endothelial growth factor,or VEGF,antibody that inhibits VEGF and associatedangiogenic activity.Our proprietary ophthalmic bevacizumab product can
48、didate,ONS-5010,is an anti-VEGF recombinant humanized mAb formulated as a single use vial for IVT injection.By inhibiting theVEGF receptor from binding,bevacizumab prevents the growth of abnormal tumor blood vessels beneaththe retina.Previously,ONS-5010 was being developed by us as a biosimilar(ONS-
49、1045)of the cancer drug Avastinfor use in oncology indications.In the ONS-1045 program,our bevacizumab met the primary andsecondary endpoints in a three-arm single-dose pharmacokinetic,or PK,Phase 1 clinical trial(see“Inactive Development Portfolio ONS-1045 Bevacizumab(Avastin)Biosimilar”).All of th
50、e PKendpoints met the bioequivalency criteria of the geometric mean ratios within 90%confidence interval of80-125%when compared to both U.S.-and E.U.-sourced Avastin reference products.We are developingONS-5010 as an innovative therapy and not using the biosimilar drug development pathway.Thefollowi
51、ng figure demonstrates the concentration-time profile of ONS-1045,U.S.-licensed Avastin,andE.U.-licensed Avastin as the mean.The vertical line at time zero denotes dosing.These results suggest ahigh degree of similarity among the three products.2TABLE OF CONTENTSComparative Potency of ONS-1045 versu
52、s Avastin(U.S.and E.U.)Market OpportunityAge related macular degeneration,or AMD,is a common eye condition and a leading cause of vision lossamong people age 50 and older.Wet AMD is a form of“late stage”AMD,and is also called neovascularAMD.In wet AMD,abnormal blood vessels grow underneath the retin
53、a.These vessels can leak fluid andblood,which may lead to swelling and damage of the macula causing vision loss.With wet AMD,abnormally high levels of VEGF are secreted in the eyes.VEGF is a protein that promotes the growth ofnew abnormal blood vessels.Anti-VEGF injection therapy blocks this growth.
54、Since the advent of anti-VEGF therapy,it has become the standard of care treatment option within the retina community,globally.Wet AMD is a significant disease worldwide,with an estimated prevalence of over 2.8 million patientsdiagnosed in the United States,top five European countries and Japan alon
55、e in 2018(GlobalData).Annualrevenue from anti-VEGFs(Avastin,Lucentis,Eylea and Macugen)is estimated to exceed$9.1 billion inwet AMD,DME and BRVO in 2018(GlobalData).Although bevacizumab is not currently approved by theFDA for use in treating wet AMD,it is believed that bevacizumab currently accounts
56、 for approximately50%of all wet AMD prescriptions in the United States.If approved,we believe ONS-5010 has potential tomitigate risks associated with off-label compounding of Avastin or other drugs.Off-label compounding ofAvastin is currently estimated to account for approximately 50%of all wet AMD
57、prescriptions in the UnitedStates.If approved,we anticipate seeking to promote use of ONS-5010 rather than compounded Avastin orother drugs.DME is caused by a complication of diabetes called diabetic retinopathy.Diabetic retinopathy is the mostcommon diabetic eye disease and the leading cause of irr
58、eversible blindness in working age Americans.Diabetic retinopathy usually affects both eyes and is caused by ongoing damage to the small blood vesselsof the retina.The leakage of fluid into the retina may lead to swelling of the surrounding tissue,includingthe macula.DME is the most common cause of
59、vision loss in people with diabetic retinopathy.DME canoccur at any stage of diabetic retinopathy,although it is more likely to occur in later stages of the disease.There were approximately 1.0 million patients with DME in the United States,top five European countriesand Japan alone in 2018(GlobalDa
60、ta).In BRVO,retinal vein occlusions occur when there is a blockage of veins carrying blood with neededoxygen and nutrients away from the nerve cells in the retina.A blockage in the main vein of the retina isreferred to as a central retinal vein occlusion,or CRVO,while a blockage in a smaller vein is
61、 called abranch retinal vein3TABLE OF CONTENTSocclusion,or BRVO.Per the American Academy of Ophthalmology,retinal vein occlusions are the secondmost common retinal vascular disorder after diabetic retinopathy.There were an estimated 0.3 millionpatients with BRVO in the United States,top five Europea
62、n countries and Japan alone in 2018(GlobalData).Clinical Development StatusONS-5010 is currently enrolling patients in an ex-U.S.clinical trial for wet AMD.This first clinical studyfor ONS-5010 is designed to serve as the first of two adequate and well controlled studies for wet AMD.The second adequ
63、ate and well controlled study is currently being planned and is expected to beginenrolling patients in the United States in the first quarter of 2019 upon the submission of an INDapplication with the FDA.Our wet AMD clinical program was reviewed at a successful end of Phase 2meeting held with the FD
64、A earlier in 2018.If the program is successful,it will support our plans to submitfor regulatory approval in multiple markets in 2020,including the United States,Europe and Japan.Wecurrently expect to report top line data from the first study in the first quarter of 2020,and top line datafrom the se
65、cond study in the third quarter of 2020,and submit a BLA in the fourth quarter of 2020.In addition to the wet AMD clinical program for ONS-5010,we are also planning to begin enrollingpatients in clinical trials for both DME and BRVO in the second half of 2019.Inactive Development PortfolioONS-3010 A
66、dalimumab(Humira)BiosimilarHumira,the reference product for ONS-3010,is a subcutaneous injectable mAb that binds to tumornecrosis factor alpha,or TNF.TNF belongs to a family of pro-inflammatory cytokines,or solubleprotein mediators,that are key initiators of immune-mediated inflammation in many diff
67、erent diseases,suchas rheumatoid arthritis,psoriatic arthritis,psoriasis,ankylosing spondylitis,Crohns disease and ulcerativecolitis.Several biologic agents,including Humira,have been developed to inhibit the inflammatory activityof TNFs in the context of these diseases and are collectively referred
68、 to as the anti-TNF class of therapeutics.We have successfully completed a randomized,double-blind,single-dose and single-center Phase 1 clinicaltrial comparing ONS-3010 to Humira in 198 subjects receiving a 40 mg dose in three treatment arms:ONS-3010,U.S.-Humira and E.U.-Humira.This Phase 1 clinica
69、l trial was performed at the Center for HumanDrug Research in Leiden,The Netherlands under the auspices of the Stichting Beoordeling EthiekBiomedisch Onderzoek.In this trial,ONS-3010 met its primary and secondary endpoints,demonstrating asimilar PK profile,as well as an immunogenicity profile equiva
70、lent to both U.S.-and E.U.-Humira acrossall three treatment arms.ONS-3010 was well tolerated and demonstrated a favorable safety profile,whichwas similar to the safety profile for both U.S.-and E.U.-Humira,and demonstrated a lower injection sitereaction rate than both U.S.-and E.U.-Humira.Regulatory
71、 Status and Development PlanPrior to commencement of our Phase 1 clinical trial in 2014,we received feedback from both FDA and theEuropean Medicines Agency,or EMA,which provided guidance for the design of the clinical trial and oursimilarity testing approach.Since completion of the Phase 1 clinical
72、trial,we had additional regulatorymeetings with the FDA and the EMA,as well as other national regulatory agencies such as the Medicinesand Healthcare Products Regulatory Agency,or MHRA,the Swedish Medical Products Agency,and theCanadian regulatory agency,Health Canada to obtain further guidance on t
73、he Phase 3 clinical trial design inplaque psoriasis and the general similarity development plan for registration.We have out-licensed all ofthe emerging markets development rights to third parties.Future development of ONS-3010 as a biosimilarfor Humira in the United States and other developed marke
74、ts will only occur if we secure a developmentpartner or sell those development rights completely.ONS-1045 Bevacizumab(Avastin)BiosimilarAvastin,the reference product for ONS-1045,is a mAb administered by infusion that interferes with tumorgrowth by binding to VEGF,a protein that stimulates the forma
75、tion of new blood vessels and is approvedfor use in the United States,Europe and elsewhere for the treatment of various forms of cancer.4TABLE OF CONTENTSWe have completed a randomized,double-blind,single-dose and single-center Phase 1 clinical trialcomparing ONS-1045 to U.S.-licensed Avastin and E.
76、U.-licensed Avastin in 135 subjects.This Phase 1 trialwas performed at the Center for Human Drug Research in Leiden,The Netherlands under the auspices ofthe Stichting Beoordeling Ethiek Biomedisch Onderzoek.PK data,safety and immunogenicity werecollected for a total of 98 days after a single 2.0 mg/
77、kg dose.In this trial,ONS-1045 met its primary andsecondary endpoints demonstrating a similar PK profile,as well as an immunogenicity profile equivalent toboth U.S.-and E.U.-Avastin.Safety was comparable across all three groups.Immunogenicity was low withonly one subject in the E.U.-licensed Avastin
78、 arm developing an anti-drug antibody,or ADA,at day 98.No neutralizing antibodies were detected in any arm.The results of the Phase 1 trial(shown in the figureincluded under“Active Development PortfolioONS-5010Bevacizumab for Ophthalmic Use”)suggest a high degree of similarity between the three prod
79、ucts.Regulatory Status and Development PlanPrior to the commencement of the Phase 1 clinical trial in 2015,we received feedback from both the FDAand the EMA,which provided guidance for the clinical trial design and similarity testing approach.Wehave completed the next series of our regulatory intera
80、ctions to obtain further guidance on ourconfirmatory trial design.Based on input from the FDA,EMA,MHRA and the Danish Health andMedicines Agency,we believe we have designed the appropriate confirmatory trial.We have out-licensedall of the emerging markets development rights to third parties.Future d
81、evelopment of ONS-1045 as abiosimilar for Avastin in the United States and other developed markets will only occur if we secure adevelopment partner or sell those development rights completely.Commercialization,Sales and MarketingWe currently own all of the development and commercialization rights t
82、o ONS-5010.Ourcommercialization strategy is to maximize the revenue potential of ONS-5010,which could potentiallyinclude marketing it ourselves if approved,as well as seeking and securing licensing opportunities to fundits continued development.If approved,we believe that ONS-5010 will be entitled t
83、o 12 years marketingexclusivity against biosimilar competition.To provide additional resources to fund the ONS-5010 program,we intend to continue to pursue potentialstrategic collaborations,and partnerships with biotechnology and pharmaceutical companies in the UnitedStates and other regions for our
84、 clinical stage biosimilar assets,or even the outright sale of the developmentrights of those assets outside of the emerging markets territories previously licensed.Currently,we have ajoint participation agreement in place for ONS-3010 with Zhejiang Huahai Pharmaceutical Co.,Ltd.,orHuahai,whereby we
85、 share post-Phase 1 development costs with Huahai,and proportionately share therevenues 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 andcommercialize ONS-3010
86、 with Huahai in the agreed countries,if so requested by Huahai.However,we donot have any other development and commercialization agreements 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-spe
87、cific partnershipsfor ONS-3010 and ONS-1045 in China with Huahai,in India with IPCA Laboratories Limited,or IPCA,and in Mexico with Laboratories Liomont,S.A.de C.V.,or Liomont,and in September 2017 we enteredinto an agreement with BioLexis Pte.Ltd.,or BioLexis(formerly GMS Tenshi Holdings Pte.Limite
88、d),ourcontrolling stockholder,providing for the license of rights to ONS-3010 and ONS-1045 in emergingmarkets excluding China,India and Mexico.In each of these smaller ex-U.S.markets,we have identifiedpotential synergies between our partners strategy to enter the biologics marketplace and access to
89、ourbiosimilar development platform.For many of these emerging market opportunities,our partners may beable to take advantage of differing regulatory requirements that could allow us to begin generating sales asearly as 2020,before we begin to generate commercial revenue in regions like the United St
90、ates,the E.U.and Japan.To date,these agreements have collectively provided an aggregate of$29.0 million in paymentsas of September 30,2018.Collaboration and License AgreementsWe enter into collaboration and license agreements in the ordinary course of our business.We have in-licensed certain technol
91、ogy from Selexis SA,or Selexis,that we used to research and develop our product5TABLE OF CONTENTScandidates.For product candidates developed using the Selexis technology,we enter into commerciallicense agreements with Selexis that give us rights to commercialize,file investigational new drugs,or IND
92、sand enter into collaborative arrangements with third parties for the further development andcommercialization of such biosimilar product candidates.MTTRStrategic Partnership Agreement(ONS-5010)We entered into a strategic partnership agreement with MTTR,LLC,or MTTR,effective February 15,2018,to advi
93、se on regulatory,clinical and commercial strategy and assist in obtaining approval of ONS-5010,our bevacizumab therapeutic product candidate for ophthalmic indications.Under the terms of theagreement,we currently pay MTTR a$58,333 monthly consulting fee.In March 2018,we amended theMTTR agreement and
94、 agreed to pay a one-time fee of$268,553 to MTTR by September 2020 if certainregulatory milestones are achieved earlier than anticipated.Beginning January 2019,the monthly feeincreases to$105,208 per month,and then,after launch of ONS-5010 in the United States,to$170,833 permonth(the amount of which
95、 is reduced by 50%in the event net sales of ONS-5010 are below a certainthreshold million per year).We also agreed to pay MTTR a tiered percentage of the net profits of ONS-5010 ranging in the low-to mid-teens,with the ability to credit monthly fees paid to MTTR.Unless earlierterminated,the MTTR Agr
96、eement expires,on a country-by-country basis,upon the later of expiration ofany regulatory exclusivity in such country and,in certain major market countries,ten years after launch ofONS-5010 in such major market country,and in all other countries in the territory,ten years after launch ofONS-5010 in
97、 any country in the territory.Either party may terminate the MTTR Agreement upon theuncured material breach of the agreement by the other party or upon a bankruptcy or insolvency of theother party.Additionally,we are permitted to terminate the MTTR Agreement in the event of certainspecified developm
98、ent or commercial failures of ONS-5010 and may terminate either the entire MTTRAgreement or with respect to certain consultants in the event that certain consultants are not able to performtheir obligations under the MTTR Agreement and a suitable replacement consultant is not found.Additionally,in t
99、he event of a change of control of our company or sale of our rights to ONS-5010,MTTRwill be entitled to additional consideration equal to its profit sharing percentage multiplied by the value ofthe applicable transaction that relates to ONS-5010(subject to certain adjustments).Our recently appointe
100、dChief Operating Officer has a 16.66%ownership interest in MTTR.For the year ended September 30,2018,MTTR earned an aggregate of$602,629,which includes monthly consulting fees,expensereimbursement and an initial upfront payment of$75,000.Selexis Humira(ONS-3010),Avastin(ONS-1045)and Herceptin(ONS-10
101、50)In October 2011,we entered into a research license agreement with Selexis pursuant to which we acquired anon-exclusive license to conduct research internally or in collaboration with third parties to developrecombinant proteins from mammalian cells lines created using the Selexis expression techn
102、ology,or theSelexis Technology.The original research license had a three-year term,but on October 9,2014,wasextended for an additional three-year term through October 9,2017.A limited scope license was extendedfor one more year through October 9,2018,following which,the research license terminated.A
103、s such,weare no longer using the Selexis Technology in our research.We may sublicense our rights with Selexisprior written consent but are prohibited from making commercial use of the Selexis Technology or theresultant recombinant proteins comprising our biosimilars in humans,or from filing an IND,a
104、bsent acommercial license agreement with Selexis covering the particular biosimilar product candidate developedunder the research license.In connection with the entry into the research license,we paid Selexis an initial fee of CHF 100,000(approximately$0.1 million)and agreed to make additional annua
105、l maintenance payments of the sameamount for each of the three years that the research license agreement term was extended.As ofSeptember 30,2018,we have paid Selexis an aggregate of approximately$0.6 million under the researchlicense agreement.Selexis also granted us a non-transferrable option to o
106、btain a perpetual,non-exclusive,worldwidecommercial license under the Selexis Technology to manufacture,or have manufactured,a recombinantprotein produced by a cell line developed using the Selexis Technology for clinical testing and commercialsale.We exercised this option in April 2013 and entered
107、into three commercial license agreements asdescribed more fully below.6TABLE OF CONTENTSCommercial License AgreementsOn April 11,2013,following the exercise of our option to enter a commercial license under the Selexisresearch license,we entered into commercial license agreements with Selexis for ea
108、ch of the ONS-3010,ONS-1045 and ONS-1050(a biosimilar to Herceptin that we are no longer developing)biosimilar productcandidates that were developed under the research license(which agreements were subsequently amendedon May 21,2014).Under the terms of each commercial license agreement,we acquired a
109、 non-exclusiveworldwide license under the Selexis Technology to use the cell lines developed under the research licenseand related materials,to manufacture and commercialize licensed and final products,with a limited right tosublicense.We were required to pay an upfront licensing fee of CHF 65,000(a
110、pproximately$0.1 million)to Selexisfor each commercial license and also agreed to pay up to CHF 365,000(approximately$0.4 million)inmilestone payments for each licensed product.In addition,we are required to pay a single-digit royalty ona final product-by-final product and country-by-country basis,b
111、ased on worldwide net sales of such finalproducts by us or any of our affiliates or sublicensees during the royalty term.The royalty term for eachfinal product in each country is the period commencing from the first commercial sale of the applicablefinal product in the applicable country and ending
112、on the expiration of the specified patent coverage.Atany time during the term,we have the right to terminate our royalty payment obligation by providingwritten notice to Selexis and paying Selexis a royalty termination fee of CHF 1,750,000(approximately$1.8 million).As of September 30,2018,we have p
113、aid Selexis an aggregate of approximately$0.4 millionunder the commercial license agreements.Each of our commercial agreements with Selexis will expire in its entirety upon the expiration of allapplicable Selexis patent rights.The licensed patent rights consist of two patent families.The first paten
114、tfamily 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 familyclaims DNA compositions of matter useful for having protein production increasing activity.
115、This patentfamily 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 in2025.Either party may terminate the related agreement in the event of an uncured material breac
116、h by theother party or in the event the other party becomes subject to specified bankruptcy,winding up or similarcircumstances.Either party may also terminate the related agreement under designated circumstances if the SelexisTechnology infringes third-party intellectual property rights.In addition,
117、we have the right to terminateeach of the commercial agreements at any time for our convenience;however,with respect to theagreements relating to ONS-3010 and ONS-1045,this right is subject to Liomonts consent pursuant to acorresponding letter we executed in conjunction with the standby agreement en
118、tered into between Selexisand Liomont on November 11,2014.The standby agreement permits Liomont to assume the license underthe applicable commercial agreement for Mexico upon specified triggering events involving ourbankruptcy,insolvency or similar circumstances.Ex-U.S.Collaboration and License Agre
119、ementsAside from our joint participation agreement in place for ONS-3010 with Huahai,whereby we agreed toshare post-Phase 1 clinical development costs,and proportionately share the revenues fromcommercialization of ONS-3010 in the United States,Canada,E.U.and Japan,among other markets,andunder which
120、 we could be required to form a joint venture with Huahai for ONS-3010 if so requested byHuahai,we do not have any commercial license or development agreements for the United States or formajor ex-U.S.markets,such as the E.U.or Japan.We currently have collaboration and license agreementsfor smaller
121、ex-U.S.markets and,collectively,such agreements have provided an aggregate of$29.0 million in payments as of September 30,2018 for our most advanced biosimilar product candidates.Our contracts include agreements with IPCA(for ONS-3010,ONS-1045 and ONS-1050 in India and otherregional markets),Liomont
122、(for ONS-3010 and ONS-1045 in Mexico),Huahai(for ONS-3010 and ONS-1045 in China)and BioLexis(for ONS-3010 and ONS-1045 in emerging markets excluding China,Indiaand Mexico).Our arrangements with these partners generally include a strategic license for a definedterritory for agreed biosimilar product
123、candidates,and may also include agreements to assist with researchand7TABLE OF CONTENTSdevelopment to assist our contract counterparty in establishing their own mAb research,development andmanufacturing capabilities.Under our existing strategic licensing agreements,we generally received anupfront pa
124、yment upon execution,and have the ability to earn additional regular milestone payments andthe right to receive royalties(generally a mid-single digit to low-teens percentage rate)based on net sales inthe agreed territory.Our existing agreements to assist with research and development also included
125、anupfront 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 netsales in the agreed territory.Generally,our agreements expire on a product-by-product basis
126、on the date of the expiration of the royaltyrevenue term for all products in the territory.The royalty revenue term is 10 years from the date of firstcommercial sale and any renewal is subject to good faith negotiation.The license term for the agreedterritory is perpetual.Either party may terminate
127、the agreement in its entirety or with respect to a particularproduct if the other party materially breaches the agreement,subject to specified notice and cure periods.Inaddition,we have the right to terminate the agreement in connection with any interference,opposition orchallenge of our patent righ
128、ts.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 Huahai also includes a joint participation agreement,which provides
129、for the co-funding of development of ONS-3010 in the United States,Canada,E.U.,Japan,Australia and New Zealand and the proportionate sharing of the revenues from commercialization of ONS-3010 in the agreed countries,and also provides for the formation of a joint venture with Huahai to furtherdevelop
130、 and commercialize 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 be entitled to retain its 51%value ownership,with us entitled toretain
131、 our 49%value ownership,of ONS-3010 in the agreed countries.Similarly,revenues from thecommercialization of ONS-3010 in the agreed countries(including major markets such as the United Statesand the E.U.,among others),would also be shared based on such proportional ownership interests.In theevent tha
132、t Huahai does not fund its proportionate share of such development costs,the joint participationagreement provides for a proportionate adjustment to our respective value ownership interests based on ourrespective investments in such development costs,which would increase our value ownership interest
133、 inONS-3010.Throughout the term of the joint participation agreement,we and our affiliates are prohibited from,directlyor indirectly,conducting or having conducted or funding any discovery,research,development,regulatory,manufacturing or commercialization activity,alone or in collaboration with a th
134、ird party,of anybiosimilar product having the same reference product as the ONS-3010 compound or correspondingproducts,for use in the United States,Canada,E.U.,Japan,Australia and New Zealand,other than ONS-3010 with Huahai pursuant to the joint participation agreement.Unless terminated early upon m
135、utual agreement of the parties,or due to a material breach of either partythat is uncured,the joint participation agreement will terminate upon entry into a mutually acceptablecollaboration agreement between us and Huahai for ongoing development and commercialization of ONS-3010 in the agreed countr
136、ies,or we and Huahai enter into an agreed license with a third party for suchongoing development and commercialization of ONS-3010 in the agreed countries.If the jointparticipation agreement is terminated for cause due to our breach,we could be required to refund Huahaiany amounts funded by Huahai t
137、o develop ONS-3010,as well as pay Huahai a 6%royalty on net salesmade by us or an affiliate,as well as 25%of revenues we receive from a sublicensee for commercial salesof ONS-3010 until the aggregate of such payments is equal to 10 times the amount Huahai funded for thedevelopment of ONS-3010.Furthe
138、rmore,if we were to file a voluntary petition in bankruptcy,or have an involuntary petition filed thatwe could not dismiss within 120 days,then Huahai would be granted an exclusive license to continue thedevelopment and commercialization of ONS-3010 in the agreed countries.As of September 30,2018,we
139、 have received an aggregate of$5.0 million of payments from IPCA underour various agreements,an aggregate of$3.0 million of payments from Liomont under our variousagreements,8Abicipar Pegol,a VEGF targeting DARPin molecule being developed by Allergan plc;RTH258,an anti-VEGF agent being developed by
140、Novartis International AG;TABLE OF CONTENTSan aggregate of$16.0 million of payments from Huahai under our various agreements,$10.0 million ofwhich were pursuant to the joint participation agreement and an aggregate of$5.0 million from BioLexisunder our joint development and licensing agreement.Compe
141、titionCompetition in the area of pharmaceutical research and development is intense and significantly depends onscientific and technological factors.These factors include the availability of patent and other protection fortechnology and products,the ability to commercialize technological development
142、s and the ability to obtainregulatory approval for testing,manufacturing and marketing.Our competitors include majorpharmaceutical and specialized biotechnology companies,many of which have financial,technical andmarketing resources significantly greater than ours.In addition,many biotechnology comp
143、anies haveformed collaborations with large,established companies to support research,development andcommercialization of products that may be competitive with ours.Academic institutions,governmentalagencies and other public and private research organizations are also conducting research activities a
144、ndseeking patent protection and may commercialize products on their own or through joint ventures.We areaware of certain other products manufactured or under development by competitors that are used for thetreatment of the health conditions that we have targeted for product development.We can provid
145、e noassurance that developments by others will not render our technology obsolete,noncompetitive or harmour development strategy,that we will be able to keep pace with new technological developments or thatour technology will be able to supplant established products and methodologies in the therapeu
146、tic areas thatare targeted by us.The foregoing factors could have a material adverse effect on our business,prospects,financial condition and results of operations.These companies,as well as academic institutions,governmental agencies and private research organizations,also compete with us in recrui
147、ting and retaininghighly qualified scientific personnel and consultants.We will encounter competition from existing firms that offer competitive solutions in ocular diseases.Thesecompetitive companies could develop products that are superior to,or have greater market acceptance,thanthe products bein
148、g developed by us.We will have to compete against other biotechnology andpharmaceutical companies with greater market recognition and greater financial,marketing and otherresources.Wet AMD MarketAMD is a medical condition that usually affects older adults and generally results in a loss of vision.AM
149、Doccurs in“dry”(non-exudative)and“wet”(exudative)forms.Wet AMD is the advanced form of maculardegeneration that involves the formation of abnormal and leaky blood vessels in the back of the eye behindthe retina,through a process known as choroidal neovascularization.While the wet form accounts forap
150、proximately 15%of all AMD cases,according to NEI,it is responsible for 90%of severe vision lossassociated with AMD.NEI also claims that the prevalence of wet AMD among adults 40 years or older inthe United States is estimated at approximately 1.75 million people.In addition,more than 200,000 newcase
151、s are diagnosed annually in North America.Competitive Landscape in Wet AMDThe current FDA approved market leaders for the treatment of wet AMD are VEGF inhibitors,includingLucentis,Eylea and off-label Avastin.Annual revenue(worldwide)is estimated to be approximately$9.1 billion in 2018 for anti-VEGF
152、 therapeutics(GlobalData).Off-label use of Avastin is estimated to beapproximately 50%of the overall market in the United States.Avastin,Lucentis,and Eylea areadministered via frequent intravitreal injections directly into the eye.We are developing ONS-5010 as areplacement for the use of off-label A
153、vastin in the treatment of wet AMD,as well as DME and BRVO.In addition to the other treatments used in patients with wet AMD,there are various other companies withproduct candidates in Phase 1,2 and 3 clinical trials for the treatment of wet AMD.Programs currently inPhase 2 or Phase 3 clinical trial
154、s include,but are not limited to:9X-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 developed by Ophthotech Corporation;RG7716,a bispecific antibody to both VEGF-A an
155、d Ang2 being developed by F.Hoffman-LaRoche 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.TABLE OF CONTENTSAll of these product candidates in clinical development,with the exception of X-82 a
156、nd PAN-90806,use anintravitreal route of administration much like the current standards of care.We believe that ONS-5010 haspotential competitive advantages through the familiarity of patients and physicians in using off-labelAvastin.We also believe we have reduced the risk in our clinical program b
157、y leveraging our prior work indeveloping a biosmilar drug product candidate for Avastin as a treatment for cancer.However,clinical trialdata from other clinical programs may negatively impact our ability to garner future financing or businesscollaborations,combinations or transactions with other pha
158、rmaceutical and biotechnology companies.Intellectual PropertyOur commercial success depends in part on our ability to avoid infringing the proprietary rights of thirdparties,our ability to obtain and maintain proprietary protection for our technologies where applicable andto prevent others from infr
159、inging our proprietary rights.We seek to protect our proprietary technologiesby,among other methods,evaluating relevant patents,establishing defensive positions,monitoring E.U.oppositions and pending intellectual property rights,preparing litigation strategies in view of the U.S.legislative framewor
160、k and filing U.S.and international patent applications on technologies,inventions andimprovements that are important to our business.As of September 30,2018,we own eight pending U.S.non-provisional applications,and 51 pending international applications that were nationalized from eightPatent Coopera
161、tion Treaty,or PCT,applications,and one pending U.S.provisional application,which relateto formulations developed for ONS-3010,ONS-5010/ONS-1045 and ONS-1050,methods of antibodypurification,methods for purifying antibodies to separate isoforms,methods of use,methods of reducinghigh molecular weight
162、species,and modulating afucosylated species as well as efficiently determining theamino acid sequence of antibodies.Our first PCT application was nationalized in April 2016 in Australia,Canada,China,Europe,Hong Kong,India,Japan,Mexico and the United States.If granted,patents issuingfrom these nine a
163、pplications are expected to expire in 2034,absent any adjustments or extensions.Oursecond PCT application was nationalized in July 2017 in Europe and the United States.If granted,patentsissuing from these two applications are expected to expire in 2036,absent any adjustments or extensions.Our third
164、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 toexpire in 2036,absent any adjustments or extensions.Our fourth PCT application was nationalized inJuly 2018
165、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 orextensions.Our fifth PCT application was nationalized in July 2018 in Australia,Canada,China,Europe,India,Japan,M
166、exico and the United States.If granted,patents issuing from these eight applications areexpected to expire in 2037,absent any adjustments or extensions.Our sixth PCT application wasnationalized in July 2018 in Australia,Canada,China,Europe,India,Japan,Mexico and the United States.If granted,patents
167、issuing from these eight applications are expected to expire in 2037,absent anyadjustments or extensions.Our seventh PCT application was nationalized in August 2018 in Australia,Canada,China,Europe,India,Japan,Mexico and the United States.If granted,patents issuing from theseeight applications are e
168、xpected to expire in 2037,absent any adjustments or extensions.Our eighth PCTapplication was nationalized in August 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 adjustm
169、ents or extensions.Any patents that may eventually issue claiming priority to ourprovisional patent application are expected to expire in 2039.We also rely on trade secrets,know-how andcontinuing technological innovation to develop and maintain our proprietary position.10completion of preclinical la
170、boratory tests and animal studies performed in accordance with theFDAs current Good Laboratory Practices,or GLP,regulation;submission to the FDA of an IND,which must become effective before clinical trials may beginand must be updated annually or when significant changes are made;approval by an inde
171、pendent Institutional Review Board,or IRB,or ethics committee at eachclinical site before the trial is commenced;performance of adequate and well-controlled human clinical trials to establish the safety,purityand potency of the proposed biologic product candidate for its intended purpose;preparation
172、 of and submission to the FDA of a BLA after completion of all pivotal clinical trials;satisfactory completion of an FDA Advisory Committee review,if applicable;a determination by the FDA within 60 days of its receipt of a BLA to file the application forreview;satisfactory completion of an FDA pre-a
173、pproval inspection of the manufacturing facility orfacilities at which the proposed product is produced to assess compliance with cGMP and to assurethat the facilities,methods and controls are adequate to preserve the biological productscontinued safety,purity and potency,and of selected clinical in
174、vestigation sites to assesscompliance with Good Clinical Practices,or GCP;andFDA review and approval of the BLA to permit commercial marketing of the product forparticular indications for use in the United States.TABLE OF CONTENTSThe term of individual patents depends upon the legal term of the pate
175、nts in countries in which they areobtained.In most countries,including the United States,the patent term is generally 20 years from theearliest date of filing a non-provisional patent application in the applicable country.In the United States,apatents term may,in certain cases,be lengthened by paten
176、t term adjustment,which compensates a patenteefor administrative delays by the United States Patent and Trademark Office in examining and granting apatent or may be shortened if a patent is terminally disclaimed over a commonly owned patent or a patentnaming a common inventor and having an earlier e
177、xpiration 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,among other things,the research,development,testing,manufacture,quality control,import,export,safety,effe
178、ctiveness,labeling,packaging,storage,distribution,record keeping,approval,advertising,promotion,marketing,post-approval monitoring,and post-approval reporting of biologicssuch as those we are developing.We,along with third-party contractors,will be required to navigate thevarious preclinical,clinica
179、l and commercial approval requirements of the governing regulatory agencies ofthe countries in which we wish to conduct studies or seek approval or licensure of our product candidates.The process required by the FDA before biologic product candidates may be marketed in the United Statesgenerally inv
180、olves the following:Preclinical and Clinical DevelopmentPrior to beginning the first clinical trial with a product candidate in the United States,we must submit anIND to the FDA.An IND is a request for authorization from the FDA to administer an investigational newdrug product to humans.The central
181、focus of an IND submission is on the general investigational plan andthe protocol(s)for clinical studies.The IND also includes results of animal and in vitro studies assessing thetoxicology,pharmacokinetics,pharmacology,and pharmacodynamic characteristics of the product;chemistry,manufacturing,and c
182、ontrols information;and any available human data or literature to supportthe use of the investigational product.An IND must become effective before human clinical trials maybegin.The IND automatically becomes effective 30 days after receipt by the FDA,unless the FDA,11Phase 1 The investigational pro
183、duct is initially introduced into healthy human subjects orpatients with the target disease or condition.These studies are designed to test the safety,dosagetolerance,absorption,metabolism and distribution of the investigational product in humans,theside effects associated with increasing doses,and,
184、if possible,to gain early evidence oneffectiveness.Phase 2The investigational product is administered to a limited patient population with aspecified disease or condition to evaluate the preliminary efficacy,optimal dosages and dosingschedule and to identify possible adverse side effects and safety
185、risks.Multiple Phase 2 clinicaltrials may be conducted to obtain information prior to beginning larger and more expensivePhase 3 clinical trials.Phase 3 The investigational product is administered to an expanded patient population tofurther evaluate dosage,to provide statistically significant eviden
186、ce of clinical efficacy and tofurther test for safety,generally at multiple geographically dispersed clinical trial sites.Theseclinical trials are intended to establish the overall risk/benefit ratio of the investigational productand to provide an adequate basis for product approval.TABLE OF CONTENT
187、Swithin the 30-day time period,raises safety concerns or questions about the proposed clinical trial.In such acase,the IND may be placed on clinical hold and the IND sponsor and the FDA must resolve anyoutstanding concerns or questions before the clinical trial can begin.Submission of an IND therefo
188、re mayor may not result in FDA authorization to begin a clinical trial.Clinical trials involve the administration of the investigational product to human subjects under thesupervision of qualified investigators in accordance with GCPs,which include the requirement that allresearch subjects provide t
189、heir informed consent for their participation in any clinical study.Clinical trialsare conducted under protocols detailing,among other things,the objectives of the study,the parameters tobe used in monitoring safety and the effectiveness criteria to be evaluated.A separate submission to theexisting
190、IND must be made for each successive clinical trial conducted during product development and forany subsequent protocol amendments.Furthermore,an independent IRB for each site proposing to conductthe clinical trial must review and approve the plan for any clinical trial and its informed consent form
191、before the clinical trial begins at that site,and must monitor the study until completed.Regulatoryauthorities,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 unacceptable health risk or that the trial is
192、 unlikely to meetits stated objectives.Some studies also include oversight by an independent group of qualified expertsorganized by the clinical study sponsor,known as a data safety monitoring board,which providesauthorization for whether or not a study may move forward at designated check points ba
193、sed on access tocertain data from the study and may halt the clinical trial if it determines that there is an unacceptable safetyrisk for subjects or other grounds,such as no demonstration of efficacy.There are also requirementsgoverning the reporting of ongoing clinical studies and clinical study r
194、esults to public registries.For purposes of BLA approval,human clinical trials are typically conducted in three sequential phases thatmay overlap.In some cases,the FDA may require,or companies may voluntarily pursue,additional clinical trials after aproduct is approved to gain more information about
195、 the product.These so-called Phase 4 studies may bemade a condition to approval of the BLA.Concurrent with clinical trials,companies may completeadditional animal studies and develop additional information about the biological characteristics of theproduct candidate,and must finalize a process for m
196、anufacturing the product in commercial quantities inaccordance with cGMP requirements.The manufacturing process must be capable of consistentlyproducing quality batches of the product candidate and,among other things,must develop methods fortesting the identity,strength,quality and purity of the fin
197、al product,or for biologics,the safety,purity andpotency.Additionally,appropriate packaging must be selected and tested and stability studies must beconducted to demonstrate that the product candidate does not undergo unacceptable deterioration over itsshelf life.BLA Submission and ReviewAssuming su
198、ccessful completion of all required testing in accordance with all applicable regulatoryrequirements,the results of product development,nonclinical studies and clinical trials are submitted to the12TABLE OF CONTENTSFDA as part of a BLA requesting approval to market the product for one or more indica
199、tions.The BLAmust include all relevant data available from pertinent preclinical and clinical studies,including negative orambiguous results as well as positive findings,together with detailed information relating to the productschemistry,manufacturing,controls,and proposed labeling,among other thin
200、gs.The submission of a BLArequires 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 itaccepts the application for filing,or,if the application qualifies for
201、 priority review,six months after theFDA accepts the application for filing.In both standard and priority reviews,the review process is oftensignificantly extended by FDA requests for additional information or clarification.The FDA reviews a BLAto determine,among other things,whether a product is sa
202、fe,pure and potent and the facility in which it ismanufactured,processed,packed,or held meets standards designed to assure the products continuedsafety,purity and potency.The FDA may convene an advisory committee to provide clinical insight onapplication review questions.Before approving a BLA,the F
203、DA will typically inspect the facility orfacilities where the product is manufactured.The FDA will not approve an application unless it determinesthat the manufacturing processes and facilities are in compliance with cGMP requirements and adequate toassure consistent production of the product within
204、 required specifications.Additionally,before approving aBLA,the FDA will typically inspect one or more clinical sites to assure compliance with GCP.If the FDAdetermines that the application,manufacturing process or manufacturing facilities are not acceptable,it willoutline the deficiencies in the su
205、bmission and often will request additional testing or information.Notwithstanding the submission of any requested additional information,the FDA ultimately may decidethat the application does not satisfy the regulatory criteria for approval.After the FDA evaluates a BLA and conducts inspections of m
206、anufacturing facilities where theinvestigational product and/or its drug substance will be produced,the FDA may issue an approval letter ora Complete Response letter.An approval letter authorizes commercial marketing of the product withspecific prescribing information for specific indications.A Comp
207、lete Response letter will describe all of thedeficiencies that the FDA has identified in the BLA,except that where the FDA determines that the datasupporting the application are inadequate to support approval,the FDA may issue the Complete Responseletter without first conducting required inspections
208、,testing submitted product lots,and/or reviewingproposed labeling.In issuing the Complete Response letter,the FDA may recommend actions that theapplicant might take to place the BLA in condition for approval,including requests for additionalinformation or clarification.The FDA may delay or refuse ap
209、proval of a BLA if applicable regulatorycriteria are not satisfied,require additional testing or information and/or require post-marketing testing andsurveillance to monitor safety or efficacy of a product.If regulatory approval of a product is granted,such approval will be granted for particular in
210、dications andmay entail limitations on the indicated uses for which such product may be marketed.For example,theFDA may approve the BLA with a Risk Evaluation and Mitigation Strategy,or REMS,to ensure thebenefits of the product outweigh its risks.A REMS is a safety strategy to manage a known or pote
211、ntialserious risk associated with a product and to enable patients to have continued access to such medicines bymanaging their safe use,and could include medication guides,physician communication plans,or elementsto assure safe use,such as restricted distribution methods,patient registries and other
212、 risk minimizationtools.The FDA also may condition approval on,among other things,changes to proposed labeling or thedevelopment of adequate controls and specifications.Once approved,the FDA may withdraw the productapproval if compliance with pre-and post-marketing requirements is not maintained or
213、if problems occurafter the product reaches the marketplace.The FDA may require one or more Phase 4 post-market trials andsurveillance to further assess and monitor the products safety and effectiveness after commercialization,and may limit further marketing of the product based on the results of the
214、se post-marketing studies.Post-Approval RequirementsAny products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive andcontinuing regulation by the FDA,including,among other things,requirements relating to record-keeping,reporting of adverse experiences,periodic rep
215、orting,product sampling and distribution,and advertisingand promotion of the product.After approval,most changes to the approved product,such as adding new13restrictions on the marketing or manufacturing of a product,complete withdrawal of the productfrom the market or product recalls;fines,warning
216、letters or holds on post-approval clinical studies;refusal of the FDA to approve pending applications or supplements to approved applications,orsuspension or revocation of existing product approvals;product seizure or detention,or refusal of the FDA to permit the import or export of products;orinjun
217、ctions or the imposition of civil or criminal penalties.TABLE OF CONTENTSindications or other labeling claims,are subject to prior FDA review and approval.There also arecontinuing user fee requirements,under which FDA assesses an annual program fee for each productidentified in an approved BLA.Biolo
218、gic manufacturers and their subcontractors are required to registertheir establishments with the FDA and certain state agencies,and are subject to periodic unannouncedinspections by the FDA and certain state agencies for compliance with cGMP,which impose certainprocedural and documentation requireme
219、nts upon us and our third-party manufacturers.Changes to themanufacturing process are strictly regulated,and,depending on the significance of the change,may requireprior FDA approval before being implemented.FDA regulations also require investigation and correctionof any deviations from cGMP and imp
220、ose reporting requirements upon us and any third-partymanufacturers that we may decide to use.Accordingly,manufacturers must continue to expend time,money and effort in the area of production and quality control to maintain compliance with cGMP andother aspects of regulatory compliance.The FDA may w
221、ithdraw approval if compliance with regulatory requirements and standards is notmaintained or if problems occur after the product reaches the market.Later discovery of previouslyunknown problems with a product,including adverse events of unanticipated severity or frequency,or withmanufacturing proce
222、sses,or failure to comply with regulatory requirements,may result in revisions to theapproved labeling to add new safety information;imposition of post-market studies or clinical studies toassess new safety risks;or imposition of distribution restrictions or other restrictions under a REMSprogram.Ot
223、her potential consequences include,among other things:The FDA closely regulates the marketing,labeling,advertising and promotion of biologics.A company canmake only those claims relating to safety and efficacy,purity and potency that are approved by the FDAand in accordance with the provisions of th
224、e approved label.The FDA and other agencies actively enforcethe laws and regulations prohibiting the promotion of off-label uses.Failure to comply with theserequirements can result in,among other things,adverse publicity,warning letters,corrective advertisingand potential civil and criminal penaltie
225、s.Physicians may prescribe legally available products for uses thatare not described in the products labeling and that differ from those tested by us and approved by theFDA.Such off-label uses are common across medical specialties.Physicians may believe that such off-labeluses are the best treatment
226、 for many patients in varied circumstances.The FDA does not regulate thebehavior of physicians in their choice of treatments.The FDA does,however,restrict manufacturerscommunications on the subject of off-label use of their products.Biosimilars and Reference Product ExclusivityThe Patient Protection
227、 and Affordable Care Act,as amended by the Health Care and EducationReconciliation Act,or collectively,the ACA,signed into law in 2010,includes a subtitle called the BiologicsPrice Competition and Innovation Act of 2009,or BPCIA,which created an abbreviated approval pathwayfor biological products th
228、at are biosimilar to or interchangeable with an FDA-approved reference biologicalproduct.To date,a number of biosimilars have been licensed under the BPCIA,and numerous biosimilarshave been approved in Europe.The FDA has issued several guidance documents outlining an approach toreview and approval o
229、f biosimilars.Biosimilarity,which requires that there be no clinically meaningful differences between the biologicalproduct and the reference product in terms of safety,purity,and potency,can be shown through analyticalstudies,animal studies,and a clinical study or studies.Interchangeability require
230、s that a product isbiosimilar to the reference product and the product must demonstrate that it can be expected to produce thesame clinical results as the reference product in any given patient and,for products that are administered14TABLE OF CONTENTSmultiple times to an individual,the biologic and
231、the reference biologic may be alternated or switched afterone has been previously administered without increasing safety risks or risks of diminished efficacy relativeto exclusive use of the reference biologic.Complexities associated with the larger,and often more complex,structures of biological pr
232、oducts,as well as the processes by which such products are manufactured,posesignificant hurdles to implementation of the abbreviated approval pathway that are still being worked outby the FDA.Under the BPCIA,an application for a biosimilar product may not be submitted to the FDA until four yearsfoll
233、owing the date that the reference product was first licensed by the FDA.In addition,the approval of abiosimilar product may not be made effective by the FDA until 12 years from the date on which thereference product was first licensed.During this 12-year period of exclusivity,another company may sti
234、llmarket a competing version of the reference product if the FDA approves a full BLA for the competingproduct containing that applicants own preclinical data and data from adequate and well-controlled clinicaltrials to demonstrate the safety,purity and potency of its product.The BPCIA also created c
235、ertainexclusivity 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 current and future arrangements withhealthcare professionals,principal investigators,consultants,custom
236、ers and third-party payors expose us tobroadly applicable healthcare regulation and enforcement by the federal government and the states andforeign governments in which we conduct our business.These laws include,without limitation,state andfederal anti-kickback,fraud and abuse,false claims,privacy a
237、nd security and physician sunshine laws andregulations.The federal Anti-Kickback Statute prohibits,among other things,any person or entity from knowingly andwillfully offering,soliciting,receiving or providing remuneration,directly or indirectly,in cash or in kind,either to induce or award the refer
238、ral of an individual,for an item or service or the purchasing,recommending or ordering of a good or service,for which payment may be made under federal healthcareprograms such as the Medicare and Medicaid programs.The federal Anti-Kickback Statute is subject toevolving interpretations.In the past,th
239、e government has enforced the federal Anti-Kickback Statute toreach large settlements with healthcare companies based on,in certain cases,sham consulting and otherfinancial arrangements with physicians.Further,the Patient Protection and Affordable Care Act,asamended by the Health Care and Education
240、Reconciliation Act,or collectively,the Affordable Care Act,among other things,amends the intent requirement of the federal Anti-Kickback Statute and the criminalstatutes governing healthcare fraud.A person or entity no longer needs to have actual knowledge of thesestatutes or specific intent to viol
241、ate them in order to commit a violation.In addition,the Affordable CareAct provides that the government may assert that a claim including items or services resulting from aviolation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of thecivil False Claims Act
242、 or federal civil monetary penalties statute.Additionally,the federal false claims and civil monetary penalties laws,including the civil False Claims Actprohibit,among other things,knowingly presenting or causing the presentation of a false,fictitious orfraudulent claim for payment to the U.S.govern
243、ment,or making a false statement to avoid,decrease,orconceal an obligation to pay money to the federal government.Actions under the civil False Claims Actmay be brought by the Attorney General or as a qui tam action by a private individual in the name of thegovernment.The federal government has used
244、 the civil False Claims Act,and the accompanying threat ofsignificant liability,in its investigation and prosecution of pharmaceutical and biotechnology companiesthroughout the country,for example,in connection with the promotion of products for unapproved usesand other illegal sales and marketing p
245、ractices.The federal Health Insurance Portability and Accountability Act of 1996,or HIPAA,created additionalfederal criminal statutes that prohibit,among other actions,knowingly and willfully executing,orattempting to execute,a scheme to defraud any healthcare benefit program,including private third
246、-partypayors,knowingly and willfully embezzling or stealing from a healthcare benefit program,willfullyobstructing a criminal investigation of a healthcare offense,and knowingly and willfully falsifying,concealing or covering up a material fact or making any materially false,fictitious or fraudulent
247、 statementin connection with the delivery of or payment for healthcare benefits,items or services.15TABLE OF CONTENTSHIPAA,as amended by the Health Information Technology for Economic and Clinical Health Act,orHITECH,and their implementing regulations,imposes requirements regarding the privacy and s
248、ecurity ofindividually identifiable health information,including mandatory contractual terms,for covered entities,orcertain healthcare providers,health plans,and healthcare clearinghouses,and their business associates thatprovide services to the covered entity that involve individually identifiable
249、health information.HITECHalso increased the civil and criminal penalties that may be imposed against covered entities and businessassociates,and gave state attorneys general new authority to file civil actions for damages or injunctions infederal courts to enforce HIPAA.In addition,there has been a
250、recent trend of increased federal and state regulation of payments made tophysicians and other healthcare providers.The Affordable Care Act,among other things,via the PhysicianPayments Sunshine Act,imposes annual reporting requirements on certain manufacturers of drugs,devices,biologics,and medical
251、supplies for which payment is available under Medicare,Medicaid,or the ChildrensHealth Insurance Program,with specific exceptions,for payments made by them to physicians and teachinghospitals,as well as ownership and investment interests held by physicians and their immediate familymembers.Certain s
252、tates also impose restrictions on pharmaceutical manufacturer marketing practices and/or requirethe tracking and reporting of gifts,compensation and other remuneration to physicians.Certain states andlocal governments require the registration of pharmaceutical sales representatives.Additionally,anal
253、ogousstate and foreign laws and regulations,such as state anti-kickback and false claims laws,may apply to salesor marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors,including private insurers.State laws may also apply that requ
254、irepharmaceutical companies to comply with the pharmaceutical industrys voluntary compliance guidelinesand the relevant compliance guidance promulgated by the federal government,as well as state and foreignlaws governing the privacy and security of health information,many of which differ from each o
255、ther insignificant ways and often are not preempted by HIPAA,thus complicating compliance efforts.The shifting commercial compliance environment and the need to build and maintain robust systems tocomply with different compliance and/or reporting requirements in multiple jurisdictions increase thepo
256、ssibility that a healthcare company may violate one or more of the requirements.If our operations arefound to be in violation of any of such laws or any other governmental regulations that apply to us,wemay be subject to significant penalties,including,without limitation,civil,criminal and administr
257、ativepenalties,damages,fines,disgorgement,additional reporting requirements and oversight if we becomesubject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliancewith these laws,the curtailment or restructuring of our operations,exclusion from participatio
258、n in federaland state healthcare programs and individual imprisonment,any of which could adversely affect our abilityto 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 thehealthcare industry.T
259、he Affordable Care Act was designed to expand coverage for the uninsured while atthe same time containing overall healthcare costs.With regard to pharmaceutical products,among otherthings,the Affordable Care Act expanded and increased industry rebates for drugs covered under Medicaidprograms and mad
260、e changes to the coverage requirements under the Medicare prescription drug benefit.There have been judicial,Congressional and executive branch challenges to certain aspects of theAffordable Care Act,and we expect there will be additional challenges and amendments to the AffordableCare Act in the fu
261、ture.While Congress has not passed comprehensive repeal legislation,it has enacted lawsthat modify certain provisions of the Affordable Care Act such as removing or delaying penalties,startingJanuary 1,2019,for not complying with the Affordable Care Acts individual mandate to carry healthinsurance,d
262、elaying the implementation of certain Affordable Care Act-mandated fees,and increasing thepoint-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D.We continue to evaluate the effect that the Affordable Care Act has on our business.Other legislativechange
263、s have been proposed and adopted in the United States since the Affordable Care Act was enacted.For example,through the process created by the Budget Control Act of 2011,there are automaticreductions of Medicare payments to providers up to 2%per fiscal year,which went into effect inApril 201316TABLE
264、 OF CONTENTSand,due to subsequent legislative amendments,will remain in effect through 2027 unless additionalCongressional action is taken.In January 2013,President Obama signed into law the American TaxpayerRelief Act of 2012,which,among other things,further reduced Medicare payments to several pro
265、viders.Inaddition,there has been heightened governmental scrutiny recently over the manner in which drugmanufacturers set prices for their marketed products,which have resulted in several Congressional inquiriesand proposed and enacted federal and state legislation designed to,among other things,bri
266、ng moretransparency to product pricing,review the relationship between pricing and manufacturer patientprograms,and reform government program reimbursement methodologies for drug products.For example,the current presidential administration released a“Blueprint”to lower drug prices and reduce out of
267、pocketcosts of drugs that contains additional proposals to increase manufacturer competition,increase thenegotiating power of certain federal healthcare programs,incentivize manufacturers to lower the list priceof their products and reduce the out of pocket costs of drug products paid by consumers.A
268、lthough anumber of these,and other proposed measures will require authorization through additional legislation tobecome effective,Congress and the executive branch have each indicated that it will continue to seek newlegislative and/or administrative measures to control drug costs.In the coming year
269、s,additional legislativeand regulatory changes could be made to governmental health programs that could significantly impactpharmaceutical companies and the success of our product candidates.The Affordable Care Act,as well asother federal,state and foreign healthcare reform measures that have been a
270、nd may be adopted in thefuture,could harm our future revenues.International RegulationIn addition to regulations in the United States,foreign regulations also govern clinical trials,commercialsales and distribution of product candidates within their jurisdiction.The regulatory approval process varie
271、sfrom country to country and the time to approval may be longer or shorter than that required for FDAapproval.In the European Union,the approval of a biosimilar for marketing is based on an opinion issuedby the European Medicines Agency and a decision issued by the European Commission.However,substi
272、tution of a biosimilar for the innovator is a decision that is made at the local(national)level on acountry-by-country basis.Additionally,a number of European countries do not permit the automaticsubstitution of biosimilars for the reference product.Many countries also have published their ownlegisl
273、ation outlining a regulatory pathway for the development and approval of biosimilars.In some cases,countries have either adopted European guidance or are following guidance issued by the World HealthOrganization.Although similarities are apparent across these various regulatory guidance,there is als
274、o thepotential for additional country-specific requirements.Pharmaceutical Coverage,Pricing and ReimbursementIn the United States and other countries,sales of any products for which we receive regulatory approval forcommercial sale will depend in part on the availability of coverage and the adequacy
275、 of reimbursementfrom third-party payors,including government health administrative authorities,managed careorganizations,private health insurers and other organizations.Third-party payors are increasinglyexamining the medical necessity and cost effectiveness of drug products and services in additio
276、n to safetyand efficacy and,accordingly,significant uncertainty exists as to the reimbursement status of newly drugproducts.A payors decision to provide coverage for a drug product does not imply that an adequatereimbursement rate will be approved.Further,there is no uniform policy for coverage and
277、reimbursementin the United States.Third-party payors often rely upon Medicare coverage policy and payment limitationsin setting their own reimbursement rates,but also have their own methods and approval process apart fromMedicare determinations.As such,one payors determination to provide coverage fo
278、r a drug product doesnot assure that other payors will also provide coverage for the drug product.Adequate third-partyreimbursement may not be available to enable us to realize an appropriate return on our investment inproduct development.Obtaining and maintaining adequate reimbursement for our prod
279、uct candidates,onceapproved,may be difficult.We may be required to conduct expensive pharmacoeconomic studies to justifycoverage and reimbursement or the level of reimbursement compared to existing approved biologics andother therapies.There may be significant delays in obtaining coverage and reimbu
280、rsement for newlyapproved drugs in the United States,and coverage may be more limited than the indications for which theproduct is approved by the FDA or similar regulatory authorities outside the United States.In addition,the17TABLE OF CONTENTSU.S.government,state legislatures and foreign governmen
281、ts have continued implementing cost-containment programs,including price controls,restrictions on coverage and reimbursement andrequirements for substitution of generic products.Adoption of price controls and cost-containmentmeasures and adoption of more restrictive policies in jurisdictions with ex
282、isting controls and measures couldfurther limit our net revenue and results.Decreases in third-party reimbursement for our product candidatesor a decision by a third-party payor to not cover our product candidates could reduce physician utilizationof our products and have a material adverse effect o
283、n our sales,results of operations and financialcondition.EmployeesAs of November 30,2018,we had 56 full-time employees,37 of whom were primarily engaged inresearch and development activities and seven of whom had an M.D.or Ph.D.degree.None of ouremployees are represented by a labor union or covered
284、by a collective bargaining agreement.FacilitiesWe occupy approximately 66,000 square feet of office,manufacturing and laboratory space in Cranbury,New Jersey,under a lease,as amended,that expires in February 2028.In September 2018,we terminatedthe lease for approximately 82,000 square feet of additi
285、onal office and laboratory space in Cranbury,NewJersey,for approximately$5.8 million in the aggregate.Corporate InformationWe initially incorporated in January 2010 in New Jersey as Oncobiologics,Inc.,and in October 2015,wereincorporated in Delaware by merging with and into a Delaware corporation.In
286、 November 2018,wechanged our name to Outlook Therapeutics,Inc.Our headquarters are located at 7 Clarke Drive,Cranbury,New Jersey,08512,and our telephone number at that location is(609)619-3990.Our website address .The information contained on,or that can be accessed through,our websiteis not part of
287、,and is not incorporated by reference into this Annual Report on Form 10-K.18continue the clinical development of our lead product candidate,ONS-5010;advance ONS-5010 into additional clinical trials;change or add contract manufacturing providers,clinical research service providers,testinglaboratorie
288、s,device suppliers,legal service providers or other vendors or suppliers;seek regulatory and marketing approvals for ONS-5010 in the United States and other markets ifwe successfully complete clinical trials;establish a sales,marketing and distribution infrastructure to commercialize any products fo
289、rwhich we may obtain marketing approval;seek to identify,assess,acquire or develop other product candidates that may be complementaryto ONS-5010;make upfront,milestone,royalty or other payments under any license agreements;seek to create,maintain,protect and expand our intellectual property portfoli
290、o;engage in litigation,including patent litigation,with respect to our product candidates;seek to attract and retain skilled personnel;create additional infrastructure to support our operations as a public company and any futurecommercialization efforts;andTABLE OF CONTENTSItem 1A.Risk FactorsYou sh
291、ould consider carefully the risks and uncertainties described below,together with all of the otherinformation in this Annual Report on Form 10-K.If any of the following risks are realized,our business,financial condition,results of operations and prospects could be adversely affected.The risks descr
292、ibedbelow are not the only risks facing the Company.Risks and uncertainties not currently known to us or thatwe currently deem to be immaterial also may adversely affect our business,financial condition,results ofoperations and/or prospects.Risks Related to Our Financial Condition and Capital Requir
293、ementsWe have a limited operating history,have incurred significant losses and negative cash flows fromoperations since our inception and expect to continue to incur significant losses and negative cash flowsfrom operations for at least the next 12 months.We are a clinical-stage biopharmaceutical co
294、mpany with a limited operating history and we have incurrednet losses in each year since our inception in January 5,2010,including net losses of$30.1 million and$38.8 million for the years ended September 30,2018 and 2017,respectively.We have devoted substantially all of our financial resources to i
295、dentify,develop and manufacture ourproduct candidates,including conducting,among other things,analytical characterization,processdevelopment and manufacture,formulation and clinical trials,regulatory filing and communicationactivities and providing general and administrative support for these operat
296、ions.To date,we have financedour operations primarily through the sale of equity securities and debt financings,as well as to a limiteddegree,payments under our co-development and license agreements with Zhejiang Huahai PharmaceuticalCo.,Ltd.,or Huahai,Laboratorios Liomont,S.A.de C.V.,or Liomont,IPC
297、A Laboratories Limited,orIPCA,and BioLexis Pte.Ltd.,or BioLexis(formerly GMS Tenshi Holdings Pte,Limited).The amount ofour future net losses will depend,in part,on our ability to generate revenue from the rate of our futureexpenditures and our ability to obtain funding through equity or debt financi
298、ng or strategic licensing or co-development collaborations.We expect to continue to incur significant expenses and operating losses for at least the next 12 months.Weanticipate that our expenses may increase substantially if and as we:19experience any delays or encounter issues with any of the above
299、,including but not limited tofailed clinical trials,conflicting results,safety issues or regulatory challenges that may requirelonger follow-up of existing studies,additional major studies or additional supportive studies inorder to pursue marketing pleting clinical development of ONS-5010 for the t
300、reatment of wet AMD and the othertargeted indications,and any other product candidates we may develop in the future;obtaining regulatory and marketing approvals for ONS-5010 and any other product candidatesfor which we or our partners complete clinical trials;securing a manufacturing partner for ONS
301、-5010 and any approved product candidates to supportclinical development,regulatory requirements and the market demand for any such approvedproduct candidates;launching and commercializing ONS-5010 and any other product candidates for which we or ourpartners obtain regulatory and marketing approval;
302、obtaining third-party coverage and adequate reimbursements for our products;obtaining market acceptance of ONS-5010 and any other product candidates for which we obtainregulatory and marketing approval as viable treatment options;negotiating favorable terms in any collaboration,licensing or other ar
303、rangements into which wemay enter;maintaining,protecting and expanding our portfolio of intellectual property rights,includingpatents,trade secrets and know-how;andattracting,hiring and retaining qualified personnel.TABLE OF CONTENTSOur failure to become and remain profitable would decrease the valu
304、e of the company and could impairour ability to raise capital,maintain our research and development efforts,expand our business or continueour operations.A decline in the value of our company could also cause you to lose all or part of yourinvestment.Our independent registered public accounting firm
305、 has expressed substantial doubt about our ability tocontinue as a going concern.As described in their audit report,our auditors have included an explanatory paragraph that states that wehave incurred recurring losses and negative cash flows from operations since inception and have anaccumulated def
306、icit at September 30,2018 of$216.3 million,$13.5 million of senior secured notes thatmay become due in fiscal 2019 and$4.6 million of unsecured indebtedness,$1.0 million of which is dueon demand,and$3.6 million of which matures December 22,2018.These matters raise substantial doubtabout our ability
307、to continue as a going concern.Our consolidated financial statements do not include anyadjustments that might result from the outcome of this uncertainty.If we cannot continue as a viable entity,our securityholders may lose some or all of their investment in our company.We have never generated any r
308、evenue from product sales and may never be profitable.Although we have received upfront and milestone payments from our license and collaborationagreements,we have no products approved for commercialization and have never generated any revenuefrom product sales.Our ability to generate revenue and ac
309、hieve profitability depends on our ability,aloneor with strategic collaboration partners,to successfully complete the development of,and obtain theregulatory and marketing approvals necessary to commercialize,ONS-5010 for the treatment of wet agerelated macular degeneration,or wet AMD,and our other
310、targeted indications,and as appropriate,any ofour other product candidates.We cannot predict when we will begin generating revenue from productsales,as this depends heavily on our success in many areas,including but not limited to:Even if ONS-5010 or one or more of our other product candidates is ap
311、proved for commercialization,weanticipate incurring significant costs to commercialize any such product.Our expenses could increasebeyond our expectations if we are required by the U.S.Food and Drug Administration,or the FDA,the20the size of the markets in the territories for which we gain regulator
312、y approval;the number of competitors in such markets;the market acceptance of our products;the accepted price for the product;the ability to obtain coverage and adequate reimbursement for the product;the quality and performance of our products,including the relative safety and efficacy;andwhether we
313、 own,or have partnered,the commercial rights for that territory.TABLE OF CONTENTSEuropean Medicines Agency,or the EMA,other regulatory agencies,domestic or foreign,or by anyunfavorable outcomes in intellectual property litigation filed against us,to change our manufacturingprocesses or assays or to
314、perform clinical,preclinical or other types of studies in addition to those that wecurrently anticipate.In cases where we are successful in obtaining regulatory approvals to market one ormore of our product candidates,our revenue will be dependent,in part,upon:If the market for ONS-5010 or any other
315、 product candidates we may develop in the future,or our share ofthat market,is not as large as we expect,the number of indications approved by regulatory authorities isnarrower than we expect or the target population for treatment is narrowed by competition,physicianchoice or treatment guidelines,we
316、 may not generate significant revenue from sales of such products tobecome profitable.If we are unable to successfully complete development and obtain regulatory approvalfor ONS-5010,our business will be harmed.We will need to raise substantial additional funding to complete the development of our p
317、roduct candidatepipeline.This additional funding may not be available on acceptable terms or at all.Failure to obtain thisnecessary capital when needed may force us to delay,limit or terminate our product development efforts orother operations.Developing product candidates is an expensive,risky and
318、lengthy process.We are currently advancingONS-5010 through clinical development,but have decided to secure additional development partnersbefore advancing our biosimilar product candidates into and through clinical trials.Our expenses mayincrease in connection with our ongoing activities,particularl
319、y as we continue the research anddevelopment of,continue and initiate clinical trials of,and seek marketing approval for,ONS-5010.As of September 30,2018,our cash balance was$1.7 million.We expect that our current cash resourcesalong with the additional funds from our November 2018 private placement
320、 and anticipated proceeds fromthe sale of New Jersey net operating losses,or NOLs and research and development credits,will besufficient to fund our operations into June 2019,excluding any unscheduled repayment of debt.We willrequire substantial additional capital to complete the clinical developmen
321、t of,obtain regulatory approvalsfor,and commercialize ONS-5010.However,our operating plan may change as a result of many factorscurrently unknown to us,and we may need to seek additional funds sooner than planned,through public orprivate equity or debt financings,third-party funding,marketing and di
322、stribution arrangements,as well asother collaborations,strategic alliances and licensing arrangements,or a combination of these approaches.Even if we believe we have sufficient funds for our current or future operating plans,we may seekadditional capital if market conditions are favorable or if we h
323、ave specific strategic considerations.Any additional fundraising efforts may divert our management from their day-to-day activities,which mayadversely affect our ability to develop and commercialize our product candidates.In addition,we cannotguarantee that future financing will be available in suff
324、icient amounts or on terms acceptable to us,if at all.Moreover,the terms of any financing may negatively impact the holdings or the rights of our stockholders,and the issuance of additional securities,whether equity or debt,by us or the possibility of such issuancemay cause the market price of our s
325、ecurities to decline.The incurrence of indebtedness could result inincreased fixed payment obligations and we may be required to agree to certain restrictive covenants,suchas limitations on our ability to incur additional debt,limitations on our ability to acquire,sell or licenseintellectual propert
326、y rights and other operating restrictions that could adversely impact our ability toconduct our business.For example,our senior secured notes issued between December 2016 and May 2017include restrictions on our ability to incur additional indebtedness and pay stockholder dividends,among21TABLE OF CO
327、NTENTSother restrictions.We could also be required to seek funds through arrangements with collaborative partnersor otherwise at an earlier stage than would be desirable and we may be required to relinquish rights to someof our technologies or product candidates or otherwise agree to terms unfavorab
328、le to us,any of which mayharm our business,operating results and prospects.Even if we believe we have sufficient funds for ourcurrent or future operating plans,we may seek additional capital if market conditions are favorable or forspecific strategic considerations.If we are unable to obtain funding
329、 on a timely basis,we may be requiredto significantly curtail,delay or discontinue one or more of our development programs or thecommercialization of any product candidates.We may also be unable to expand our operations orotherwise capitalize on our business opportunities,as desired,which could harm
330、 our business,financialcondition and results of operations.Raising additional capital may cause dilution to our securityholders,restrict our operations or require us torelinquish rights to our technologies or product candidates.Until such time,if ever,as we can generate product revenues,we expect to
331、 finance our cash needs througha combination of equity and debt financings,as well as selectively continuing to enter into collaborations,strategic alliances and licensing arrangements.We do not currently have any committed external source offunds.To the extent that we raise additional capital throu
332、gh the sale of equity or convertible debt securities,your ownership interest will be diluted,and the terms of these securities may include liquidation or otherpreferences that adversely affect your rights as a securityholder.Debt financing,if available,may involveagreements that include covenants li
333、miting or restricting our ability to take specific actions,such asincurring additional debt,making capital expenditures or declaring dividends,and may be secured by all ora portion of our assets.If we raise funds by selectively continuing to enter into collaborations,strategic alliances or licensingarrangements with third parties,we may have to relinquish additional valuable rights to our technolo
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