Applied Therapeutics, Inc.
Annual Report 2022

Plain-text annual report

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) ☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2022 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission file number 001-38898 Applied Therapeutics, Inc. (Exact name of registrant as specified in its charter) Delaware (State or Other Jurisdiction of Incorporation or Organization) 81-3405262 (I.R.S. Employer Identification No.) 545 Fifth Avenue, Suite 1400, New York, NY (Address of Principal Executive Offices) 10017 (Zip Code) Registrant’s telephone number, including area code (212)-220-9226 Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol(s) Name of each exchange on which registered Common Stock $0.0001 par value APLT The Nasdaq Global Market Securities registered pursuant to Section 12(g) of the Act: None Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒ Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒ Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐ Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐ Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. Large accelerated filer ☐ Accelerated filer ☐ Non-accelerated filer ☒ Smaller reporting company ☒ Emerging growth company ☒ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒ Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐ If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐ Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐ Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒ The approximate aggregate market value of voting stock held by non-affiliates of the registrant, based upon the last sale price of the registrant’s common stock on the last business day of the registrant’s most recently completed second fiscal quarter, June 30, 2022, as reported on The Nasdaq Global Market, was approximately $27,814,183. This calculation excludes approximately 18,677,687 shares held by directors, executive officers and 10% or greater shareholders of the registrant. Exclusion of these shares does not constitute a determination that each such person is an affiliate of the registrant. As of March 22, 2023, the total number of shares outstanding of the registrant’s Common Stock was 48,113,561 shares, net of treasury shares. Documents Incorporated by Reference: Portions of the registrant’s definitive proxy statement for the registrant’s 2023 annual meeting, to be filed within 120 days after the close of the registrant’s fiscal year, are incorporated by reference into Part III of this Annual Report on Form 10-K. APPLIED THERAPEUTICS, INC. 2022 FORM 10-K ANNUAL REPORT TABLE OF CONTENTS PART I Table of Contents Item 1. Business Item 1A. Risk Factors Item 1B. Unresolved Staff Comments Item 2. Properties Item 3. Legal Proceedings Item 4. Mine Safety Disclosures PART II Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Item 6. Reserved Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations Item 7A. Quantitative and Qualitative Disclosures About Market Risk Item 8. Financial Statements and Supplementary Data Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure Item 9A. Controls and Procedures Item 9B. Other Information Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Item 10. Directors, Executive Officers and Corporate Governance Item 11. Executive Compensation PART III Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters Item 13. Certain Relationships and Related Transactions, and Director Independence Item 14. Principal Accountant Fees and Services Item 15. Exhibits and Financial Statement Schedules Item 16. 10-K Summary PART IV i Page 2 38 78 79 79 79 79 80 80 92 93 94 94 94 94 95 95 95 95 95 96 100 Table of Contents CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS This Annual Report on Form 10-K (this “Annual Report”) may contain “forward-looking statements” within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical fact contained in this Annual Report, including statements regarding our strategy, future financial condition, future operations, projected costs, prospects, plans, objectives of management and expected market growth, are forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “design,” “due,” “estimate,” “expect,” “forecast,” “goal,” “intend,” “may,” “objective,” “opportunity,” “plan,” “predict,” “project,” “positioned,” “potential,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements are subject to a number of known and unknown risks, uncertainties and assumptions, including risks described in the section titled “Risk Factors” in this Annual Report: ● our plans to develop, market and commercialize our product candidates; ● the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs; ● our ability to take advantage of expedited regulatory pathways for any of our product candidates; ● our estimates regarding expenses, future revenue, capital requirements and needs for additional financing; ● our ability to successfully acquire or license additional product candidates on reasonable terms and advance product candidates into, and successfully complete, clinical studies; ● our ability to maintain and establish collaborations or obtain additional funding; ● our ability to obtain and timing of regulatory approval of our current and future product candidates; ● the anticipated indications for our product candidates, if approved; ● our expectations regarding the potential market size and the rate and degree of market acceptance of such product candidates; ● our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources; ● the implementation of our business model and strategic plans for our business and product candidates; ● our intellectual property position and the duration of our patent rights; ● developments or disputes concerning our intellectual property or other proprietary rights; ● the potential impact of the Covid-19 pandemic on the timing and progress of our ongoing clinical trials, our business, results of operations, liquidity, and operations and our ability to mitigate those potential impacts; ● our expectations regarding government and third-party payor coverage and reimbursement; ● our ability to compete in the markets we serve; ● the impact of government laws and regulations and liabilities thereunder; ● developments relating to our competitors and our industry; and 1 Table of Contents ● other factors that may impact our financial results. The foregoing list of risks is not exhaustive. Other sections of this Annual Report include additional factors that could harm our business and financial performance. Moreover, we operate in a very competitive and rapidly changing environment. New risk factors emerge from time to time, and it is not possible for our management to predict all risk factors nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in, or implied by, any forward-looking statements. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward- looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward- looking statement contained in this Annual Report, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. You should refer to the sections titled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a discussion of important factors that may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise. Unless the context otherwise requires, the terms “Applied,” “Applied Therapeutics,” “the Company,” “we,” “us,” “our”, “the registrant” and similar references in this Annual Report on Form 10-K refer to Applied Therapeutics, Inc. ITEM 1. BUSINESS. Overview PART I We are a clinical-stage biopharmaceutical company developing a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical need. We focus on molecules and pathways whose role in the disease process is well known based on prior research, but have previously failed to yield successful products due to poor efficacy and tolerability. Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on abbreviated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases. Prior attempts to inhibit this enzyme were hindered by nonselective, nonspecific inhibition, which resulted in limited efficacy and significant off-target safety effects. The detrimental consequences of AR activation have been well established by decades of prior research. Our AR program currently includes three small molecules, which are all potent and selective inhibitors of AR, but are engineered to have unique tissue permeability profiles to target different disease states, including diabetic complications, heart disease and rare metabolic diseases. The result of this unique multifaceted approach to drug development is a portfolio of highly specific and selective product candidates that we believe are significantly de-risked and can move quickly through the development process. 2 Table of Contents AT-007 is a novel central nervous system, or CNS, penetrant ARI that we are developing for the treatment of rare metabolic diseases, including Galactosemia and Sorbitol Dehydrogenase (SORD) Deficiency. Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available. The U.S. Food and Drug Administration, or FDA, has granted both orphan drug designation and rare pediatric disease designation to AT-007 for the treatment of Galactosemia and in June 2021, the FDA granted Fast Track Designation to AT-007 for the treatment of Galactosemia. We have completed an adult study in healthy volunteers and Galactosemia patients, demonstrating that AT-007 is safe and well tolerated, and significantly reduces plasma galactitol levels vs. placebo. Galactitol is a toxic metabolite of galactose, which is formed in Galactosemia patients by aberrant activity of AR when galactose is present at high levels. A pediatric study is underway in children with Galactosemia, assessing the impact of AT-007 vs. placebo on safety, biomarker reduction of galactitol, and long-term functional outcomes. On April 13, 2021, we presented data featuring a cross-sectional analysis of nineteen pediatric patients with Classic Galactosemia, providing meaningful insight on the progressive worsening of the central nervous system phenotype with age. On October 18, 2021, we reported biomarker data from the pediatric ACTION- Galactosemia Kids study. The results demonstrate a substantial reduction in plasma galactitol of approximately 40%, which was statistically significant (p<0.001) vs. placebo. We previously reported a baseline analysis of the 47 children enrolled in the study which demonstrated a clear correlation between baseline galactitol levels and baseline clinical functional outcomes. The long-term functional outcomes portion of the pediatric study is ongoing, and the outcomes are assessed every 6 months by a fire-walled data monitoring committee (DMC). When the study reaches statistical significance in the active treated arm vs. the placebo arm, the DMC will alert the Company and the trial will be unblinded. Statistical modelling suggests that this should occur at approximately the 18-month outcome assessment, based on currently available predictive information. In April 2022, the Company met with the FDA to discuss the design of the ongoing pediatric study prior to the first 6-month outcomes assessment by the DMC. The FDA confirmed that the pediatric study as it is currently designed would support an NDA submission if statistical significance is reached, and there is alignment between the FDA and the Company on the potential path forward to approval. The 12-month clinical outcomes were assessed by the fire- walled DMC, and as expected the data did not yet reach statistical significance, but demonstrated a trend in clinical outcomes favoring AT-007 vs. placebo. A safety analysis showed that AT-007 continued to be safe and well tolerated. The Company is exploring a potential submission for conditional approval based on existing data with the European Medicines Agency (EMA). AT-007 is also being studied in a rare disease caused by deficiency in the enzyme Sorbitol Dehydrogenase, called SORD Deficiency. AR is the first enzyme in the polyol pathway, converting glucose to sorbitol. AR is then followed by Sorbitol Dehydrogenase, which converts sorbitol to fructose. Patients with SORD Deficiency accumulate very high levels of sorbitol in their cells and tissues as a result of the enzyme deficiency, which results in tissue toxicities such as peripheral neuropathy and motor neuron disease. Recent research in drosophila and cell models of SORD Deficiency demonstrated that treatment with an ARI that blocks sorbitol production may provide benefit in this disease. Preclinical studies on AT- 007 have demonstrated significant reduction in sorbitol levels in fibroblasts from SORD deficient patients. Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in 8 SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was safe and well tolerated in all treated patients. In December 2021, we initiated a Phase 2/3 registrational study in patients with SORD Deficiency, which is ongoing at multiple clinical sites in the US and Europe. On February 16, 2023, we announced that in a pre-specified interim analysis of the ongoing Phase 3 INSPIRE trial, AT-007 reduced sorbitol levels by a mean of approximately 52% (or approximately 16,000ng/ml) over 90 days of treatment (p<0.001 vs. placebo) in patients with SORD Deficiency. At baseline, the mean blood sorbitol level of SORD patients included in this interim analysis was approximately 29,000ng/ml, with a range of approximately 22,000ng/ml-38,000ng/ml. In the INSPIRE trial, a baseline cross-sectional analysis of the relationship between sorbitol level, age (or duration of disease) and clinical outcome measures demonstrated a statistically significant correlation between sorbitol level and key clinical outcome measures, including 10-meter-walk/run speed, 4- stair climb speed, and sit-to-stand test (p<0.05). The Company is working with the FDA to determine the appropriate regulatory path forward, as well as data required for an NDA submission, to advance AT-007 towards registration for this indication. The INSPIRE study will continue in blinded format to the 12-month interim clinical outcomes assessment. If the primary clinical outcome measure (10-meter-walk/run) reaches statistical significance at 12 months, the study will be completed and unblinded. If not, the study will continue in blinded format to 24 months, where clinical outcomes will be assessed again in a final statistical analysis. AT-007 continues to be safe and well tolerated to date. 3 Table of Contents We also plan to initiate a clinical development program on AT-007 in another pediatric rare disease, called PMM2- CDG. PMM2-CDG is a glycosylation disorder caused by deficiencies in the enzyme phosphomannomutase 2, which leads to CNS symptoms similar to Galactosemia, including low IQ, tremor, and speech and motor problems. AR is over- activated in this disease as a compensatory consequence of PMM2 deficiency, and a CNS penetrant ARI may be a compelling clinical option. Initial data in fibroblast cell lines derived from PMM2-CDG patients demonstrates that AT-007 treatment increases phosphomannomutase 2 activity. A young child with PMM2-CDG is being treated in a single-patient investigator initiated trial with AT-007 at the University of North Carolina School of Medicine. Data has been presented at medical conferences in 2022 supporting a favorable treatment effect of AT-007 on biomarkers and organ function in this patient. The FDA has granted pediatric rare disease designation and orphan designation for AT-007 in PMM2-CDG. In January 2023 we announced a partnership with Advanz Pharma for commercialization of AT-007 (govorestat) in Europe, and entered into an Exclusive License and Supply Agreement with Advanz Pharma (the Advanz Agreement). Advanz Pharma is a pharmaceutical company with a strategic focus on commercialization of specialty, hospital, and rare disease medicines in Europe. Under the terms of the Advanz Agreement, Advanz Pharma receives exclusive commercial rights in the European Economic Area, Switzerland, and the UK for AT-007 in Galactosemia and SORD Deficiency, with certain rights to future indications for AT-007 in Europe. We will receive certain near-term development milestone payments upon clinical trial completion and marketing authorization in Europe as well as commercial sales milestones, which in the aggregate amount to over €130 million, including €10 million upfront, which was paid upon signing. We will also receive royalties on any future net sales of AT-007 in Europe of 20%. We will continue to be responsible for the development, manufacturing and supply of AT-007, and Advanz Pharma will be responsible for packaging, distribution and commercialization in Europe. AT-001 is a novel ARI with broad systemic exposure and peripheral nerve permeability that we are developing for the treatment of diabetic cardiomyopathy, or DbCM, a fatal fibrosis of the heart, for which no treatments are available. We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug-related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 3 registrational trial of AT-001 in DbCM. The study, called ARISE-HF, is designed to evaluate AT-001’s ability to improve or prevent the decline of functional capacity in patients with DbCM at high risk of progression to overt heart failure. Although we did experience enrollment delays in 2020 associated with the Covid-19 pandemic, modifications were made to the trial to include additional sites and geographies to address Covid-19-related issues. The trial is now fully enrolled with 675 patients. AT-003 is a novel ARI designed to cross through the back of the eye when dosed orally, and has demonstrated strong retinal penetrance, for the treatment of diabetic retinopathy, or DR. DR is an ophthalmic disease that occurs in diabetic patients and for which treatments are currently limited to high-cost biologics requiring intravitreal administration. DR has been linked to AR activity, including elevations in sorbitol and subsequent changes in retinal blood vessels, which distorts vision and leads to permanent blindness. AT-104 is a preclinical dual selective PI3K inhibitor. Due to recent regulatory changes impacting development of the PI3K inhibitor class of compounds, the Company has discontinued its early stage preclinical PI3K program and further development of AT-104. The compound and all rights associated with the technology were returned to Columbia University. Since inception in 2016, our operations have focused on developing our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. We do not have any product candidates approved for sale and have not generated any revenue. We have incurred significant operating losses since inception in 2016. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $82.5 million for the year ended December 31, 2022. As of December 31, 2022, we had an accumulated deficit of $348.8 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future in connection with our ongoing activities. Furthermore, we expect 4 Table of Contents to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. As of December 31, 2022, we had cash and cash equivalents and short-term investments of $30.5 million. Our management team and scientific advisory board are composed of accomplished scientists and clinicians with decades of experience developing drugs for a wide range of diseases. Our view is that drug development does not always need to follow the standard approach, which often requires long and costly development programs before drugs become available to patients. By taking a unique and focused approach to drug development, we believe we can significantly shorten development programs and bring lifesaving drugs to patients in urgent need. In May 2019, we completed our initial public offering (the “IPO”) whereby we sold 4,000,000 shares of common stock at a public offering price of $10.00 per share, resulting in aggregate net proceeds of $34.6 million, after deducting underwriting discounts and commissions and offering expenses. In November 2019, we completed a private placement of 1,380,344 shares of our common stock (the “Private Placement”), which resulted in net proceeds of approximately $18.4 million. In January 2020, we completed a secondary public offering of 2,471,489 shares of our common stock, including 411,223 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares (the “Secondary Public Offering”), pursuant to which we received $134.1 million of proceeds, net of underwriting discounts and commissions and offering expenses. In February 2021, we issued and sold 3,000,000 shares of common stock (the “February Offering”) at a public offering price of $23.00 per share, with an additional 450,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares in the February Offering. We received aggregate net proceeds, net of underwriting discounts and commissions and offering costs of $74.4 million. In June 2022, we completed an underwritten public offering of 20,000,000 shares of our common stock, par value $0.0001 per share, 10,000,000 Pre-Funded Warrants, and accompanying Common Warrants to purchase up to 30,000,000 shares of our common stock. The shares and accompanying Common Warrants were offered at a price to the public of $1.00 per share and warrant, and the Pre-Funded Warrants and accompanying Common Warrants were offered at a price to the public of $0.9999, resulting in aggregate net proceeds of approximately $27.8 million, after deducting underwriting discounts and commissions and offering expenses. We are actively pursuing several potential financing options. While we continue to explore opportunities to raise additional equity capital in the public markets, this has proven to be challenging in the biotech sector recently. Other options for structured finance which we continue to explore include a PIPE, debt, convertible debt, and synthetic royalty financing. Synthetic royalty financing, in particular, has become a favorable option for many companies for funding ongoing clinical development in late-stage and pre-approval programs. We have engaged an investment bank and we are specifically exploring this option in the near term. Additionally, we are in active dialogue with several potential partners regarding business development opportunities related to one or more of our programs. There can be no assurances that our discussions with any of the current counterparties will be successful, and the Company expects to continue to pursue additional opportunities. Our Strategy Our goal is to bring potentially transformative therapies to market across a range of fatal or debilitating diseases for which no treatments are available. The critical components of our strategy include: ● Leveraging our unique approach to develop our pipeline of novel ARIs. We target molecules and pathways that have a proven role in disease, but have previously failed to yield successful products due to poor efficacy and tolerability. Our unique approach to drug development utilizes recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on abbreviated regulatory pathways. We develop product candidates with increased potency and selectivity by leveraging recent technological advances in high throughput crystallography and in silico structural design. Our strategy is also informed by early use of biomarkers to confirm biological activity and target engagement. Early proof of biological activity through biomarkers in clinical trials combined with data from prior clinical development programs on first generation drugs significantly de-risks clinical development in our target indications. AR is our first molecular target that has been implicated in multiple diseases and for which sorbitol levels can be assessed as a biomarker of enzyme activity. Prior AR-targeting compounds produced nonselective inhibitors and failed to demonstrate adequate safety and 5 Table of Contents efficacy. We intend to apply our strategy to a wide range of validated targets across multiple disease indications, which we believe will result in additional pipeline programs. ● Rapidly advancing the development of our ARI product candidates, AT-007, AT-001 and AT-003. Registrational studies for AT-007 in pediatric Galactosemia and SORD Deficiency and for AT-001 for the treatment of DbCM are ongoing. ● Taking advantage of regulatory pathways designed for accelerated drug development in indications with high unmet need and seeking strategic partnerships in other indications. We plan to leverage abbreviated development programs and biomarker-based approaches for rapid drug development and regulatory approval where possible. For indications that require standard development programs, we plan to seek strategic partnerships. ● Expanding our pipeline to products targeting other validated molecules and pathways outside of AR. We will continue leveraging our relationships with academic institutions and universities to acquire or license additional technologies that are consistent with our strategy of applying new technologies to validated molecular pathways. Our Pipeline The following table shows the status of our current ARI and PI3K inhibitor programs: We seek to protect our proprietary and intellectual property position for our product candidates, our core technology, and other know-how through U.S. and foreign patent protection. To the extent that our platform is not patentable, we rely on trade secret protection and confidentiality agreements to protect our interests. For more information, see the section titled “Business — Intellectual Property.” Our Product Candidates Our Aldose Reductase Program AR is the first enzyme and rate-limiting step in the polyol pathway, an alternative glucose metabolism pathway. AR is a redox-regulated enzyme that is activated by an altered redox state within the cell, which occurs during hyperglycemia and ischemia. AR activation is associated with downstream consequences of hyperglycemia, such as diabetic complications, as well as consequences of ischemia in the heart, such as acute myocardial infarction and chronic 6 Table of Contents heart failure. As shown in the figure below, AR activity produces excess sorbitol, which causes osmotic dysregulation within cells and tissues, such as nerve and retina, and is toxic to many cell types, including cardiomyocytes. Sorbitol is also further metabolized to fructose, which initiates a cascade of metabolic dysregulation and inflammatory damage to cells, such as: reactive oxygen species, or ROS, generation; advanced glycation end products, or AGE; protein kinase C, or PKC, activation; and methylglyoxal overproduction. Under non-oxidative, or healthy patient conditions, AR remains largely inactive and less than 3% of a healthy person’s glucose is processed by the polyol pathway. However, when the oxidative environment of the cell changes due to hyperglycemia or ischemia, AR is both activated and upregulated, and greater than 30% of the patient’s glucose is then shunted through the polyol pathway, resulting in significant downstream damage to cells and tissues. The detrimental consequences of AR activation have been well established by decades of prior research. These include broad effects, such as mitochondrial dysfunction and cell death, as well as tissue-specific changes, such as neuronal degeneration in peripheral nerves, collagen crosslinking and fibrosis in cardiac tissue, and damage to blood vessels in the lens of the eye. AR Causes Damage to Tissues Under Conditions of Oxidative Stress * NF-kB is a protein complex that controls transcription of DNA, cytokine production and cell survival. 7 Table of Contents Additionally, as shown in the figure below, abnormal AR activity is associated with conversion of galactose to galactitol in patients with Galactosemia. Galactitol, like sorbitol, does not cross the cell membrane and causes damage to cells across a wide range of tissues, including neurons in the brain, retinal cells in the eye and peripheral nerve tissue. Galactitol Accumulation Results in Tissue Specific Damage * GALK, or galactokinase, and GALT, or galactose-1-phosphate uridyl transferase, are enzymes that metabolize galactose. ** Galactose-1-phosphate is referred to as Gal-1P. During the 1980s and 1990s, AR was a significant target of drug development due to its established role in a wide range of debilitating indications. Although these programs failed to produce effective drugs with a favorable risk/benefit profile, the prior ARI clinical development programs validated the role of AR in the pathogenesis of several diabetic complications and provided useful information on optimal patient criteria and trial design. By applying new techniques in crystallography to better understand how the enzyme works, and applying in silico design and medicinal chemistry approaches, we have developed compounds with logarithmically improved potency and increased selectivity. Our technology includes specific compounds that are in various stages of preclinical and clinical development, and is coupled with an understanding of how the enzyme works and a knowledge base of structural approaches to drug the target while controlling drug characteristics, such as PK, solubility and tissue permeability. 8 Table of Contents The following table summarizes the current status of our AR program and compound differentiation: (1) IC50 is the amount of a compound required to inhibit 50% of enzyme activity. (2) LogD is a log of partition of a chemical compound between the lipid and aqueous phases. LogD often predicts retinal permeability, with compounds with negative LogD passing through the back of the eye. AT-007 for the Treatment of Rare Metabolic Disease (Galactosemia, SORD Deficiency, PMM2-CDG) Overview AT-007 is a novel CNS penetrant ARI for the treatment of CNS rare diseases, including Galactosemia, SORD deficiency and PMM2-CDG. Galactosemia Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available. High levels of galactose circulating in the blood and tissues of Galactosemia patients enable AR to convert galactose to a toxic metabolite, galactitol, which results in long-term complications ranging from CNS dysfunction to cataracts. AT-007 was specifically designed to be CNS penetrant to address AR activity in the brain and potentially prevent CNS consequences of the disease. We have demonstrated that treatment with AT-007 in an animal model of Galactosemia reduces toxic galactitol levels and prevents disease complications. We have also demonstrated that in patients with Galactosemia, plasma galactitol level statistically correlates with disease severity (p=0.004), further supporting the role of toxic galactitol in causing long-term disease complications. In adult and pediatric Galactosemia patients, we have demonstrated that AT 007 treatment resulted in a statistically significant reduction in plasma galactitol versus placebo. A pediatric long-term clinical study is underway. 9 Table of Contents Diagnosis and Standard of Care Galactosemia is caused by severe deficiency in the GALK or GALT enzymes that metabolize galactose. Galactose is a sugar produced endogenously by the body, and is also a metabolite of lactose. Galactosemia is often fatal in infants within the first weeks of life if they are exposed to dietary lactose in the form of breast milk or dairy-based formula. As such, there is mandatory newborn screening for Galactosemia in the United States and many countries in Europe. While prompt identification of infants with Galactosemia and immediate implementation of a lactose-restricted diet prevents many fatalities, long-term consequences of disease persist due to endogenous generation of galactose within the body. We are specifically developing AT-007 for patients with severe enzyme deficiencies in GALK, which is referred to as type 2 Galactosemia, and GALT, which is referred to as classic Galactosemia. In these patients, despite dietary restriction, Galactosemia manifests as a combination of CNS and systemic toxicities in tissues, including cognitive dysfunction and intellectual deficiencies, speech and motor pathologies, pre-senile cataracts and tremor, as well as ovarian insufficiency in females. There are no treatments available for Galactosemia. Due to endogenous production of galactose within the body, infants with Galactosemia develop significant complications even with immediate implementation of, and strict adherence to, a dairy-free diet. CNS complications include cognitive impairment, low IQ, speech and motor deficiencies, and seizures. In addition, nearly all females develop ovarian insufficiency. Further to the damage that occurs in childhood, many adults also develop persistent cataracts, seizures, and experience progressive worsening of tremor, cognitive, behavioral and psychiatric issues due to ongoing tissue deposition of galactitol. AR Activity Causes Toxic Accumulation of Galactitol in Galactosemia We have demonstrated that inhibiting AR activity shifts galactose metabolism to an alternative enzyme called galactose dehydrogenase, which allows galactose to be metabolized to galactonate, a benign substance that is removed in the urine. Market Opportunity The global incidence of Galactosemia is estimated to be 1 in 50,000 to 1 in 90,000, depending on ethnicity. The U.S. Galactosemia population is approximately 3,000 patients, based on newborn screening data identifying 10 Table of Contents 2,500 infants through 2014, and the estimated birth rate of 80 patients per year. Prior studies estimated that the U.S. Galactosemia population was higher based on the incidence rates, because they did not take into account that, prior to newborn screening, most infants with Galactosemia died within a few weeks of birth. As a result, the disease prevalence is significantly lower, and the live population with Galactosemia is largely age 40 and younger. The EU population (including the UK) is slightly larger than the US population, estimated at approximately 4,000 patients, leading to a combined US + EU market opportunity of approximately 7,000 patients. When additional markets, such as Japan and Canada are considered, we believe the overall Market opportunity for Galactosemia is approximately 7,600 patients worldwide. Preclinical Studies A rat model of classic Galactosemia displays similar biochemical and functional abnormalities to those associated with Galactosemia in humans. Treatment with AT-007 significantly reduced galactitol levels in target tissues, including blood, brain and liver, without increasing galactose or Gal-1P levels, and prevented complications associated with galactitol accumulation in tissues, including cataract formation and CNS dysfunction. The effects of AT-007 were dose dependent and corresponded with galactitol reduction. Clinical Development ACTION-Galactosemia Phase 1/2 Study We have evaluated AT-007 in a pivotal Phase 1/2 clinical trial in healthy volunteers and adults with Galactosemia. The Phase 1 portion of the study in healthy volunteers evaluated safety, tolerability, CNS penetrance and PK of AT-007 at doses of 5mg/kg to 40mg/kg for up to seven days of consecutive treatment. The Phase 2 portion in adults with Galactosemia evaluated safety, tolerability, PK and pharmacodynamic reduction in the biomarker galactitol. Patients received AT-007 5mg/kg, 20mg/kg, 40mg/kg or placebo, for 28 days. AT-007 treatment resulted in a statistically significant and robust reduction in plasma galactitol versus placebo in adult Galactosemia patients. Reductions in galactitol were dose dependent, with higher concentrations of AT-007 resulting in a greater magnitude of reduction in galactitol. At the higher doses tested (20mg/kg and 40mg/kg), AT-007 significantly reduced plasma galactitol by approximately 50% from baseline. Results were statistically significant (p value of less than 0.01) vs. placebo. Galactitol reduction was rapid and sustained over time. No substantial change from baseline was observed in placebo treated patients. AT-007 was well tolerated in both Galactosemia patients and healthy volunteers. ACTION-Galactosemia Kids In June 2020, we initiated the ACTION-Galactosemia Kids pediatric Galactosemia study. The study was placed on partial clinical hold in August 2020 while we worked with the FDA to redesign and operationally modify the study to seamless design to ensure continuous treatment and the opportunity to receive clinical benefit. The study re-started in February 2021 and is currently ongoing. The pediatric clinical trial is a 2-part study to evaluate safety, pharmacokinetics, and reduction in the toxic biomarker, galactitol (Part A), as well as impact on functional outcomes in children with Galactosemia over time (Part B). Three age cohorts are being studied in parallel: age 2-6, age 7-12, and age 13-17. An additional cohort of children under 2 years of age may be added following analysis of safety data from the initial pediatric cohorts. We have completed the biomarker portion of the study, demonstrating a 40% reduction in plasma galactitol (p<0.001 vs. placebo). The clinical outcomes portion of the study is ongoing, evaluating the impact of AT-007 on how patients feel and function over time. While we had initially planned to submit an NDA for Accelerated Approval based on galactitol reduction, the FDA has since communicated that clinical outcomes data will be required for approval. The long-term functional outcomes portion of the pediatric study is ongoing, and the outcomes are assessed every 6 months by a fire-walled data monitoring committee (DMC). When the study reaches statistical significance in the active treated arm vs. the placebo 11 Table of Contents arm, the DMC will alert the Company and the trial will be unblinded. Based on discussions with the FDA, the Company believes that the pediatric study as it is currently designed would support an NDA submission if statistical significance is reached. The 12-month clinical outcomes were assessed by the fire-walled DMC, and as expected the data did not yet reach statistical significance, but demonstrated a trend in clinical outcomes favoring AT-007 vs. placebo. A safety analysis showed that AT-007 continued to be safe and well tolerated. The Company is exploring a potential submission for conditional approval based on existing data with the European Medicines Agency (EMA). SORD Deficiency SORD Deficiency is a newly characterized genetic cause of Charcot-Marie-Tooth Type 2 Disease (“CMT2”) and distal hereditary neuropathy, in which patients are deficient in the enzyme Sorbitol Dehydrogenase (“SORD”). SORD is the enzyme which follows AR in the polyol pathway and converts sorbitol to fructose. Patients who are deficient in SORD can’t metabolize sorbitol normally, and sorbitol levels accumulate to unnaturally high levels. Sorbitol, like galactitol, has been shown to be toxic to cells, especially neurons, resulting in progressive neuronal degeneration. Patients with SORD Deficiency develop progressive neuropathy, which greatly impacts mobility and motility, and significantly affects quality of life. Diagnosis and Standard of Care Currently, patients with SORD Deficiency are diagnosed based on neurological symptoms and confirmatory genetic testing, which is available through several commercial labs and hospital systems. There are currently no drugs approved to treat SORD Deficiency. Market Opportunity Genetic studies indicate that approximately 7-9% of CMT2 cases are caused by SORD Deficiency, estimating the US population around 3,300 patients. The EU population (including the UK) is estimated to be approximately 4,400 patients. When additional markets, such as Japan and Canada are considered, we believe the overall Market opportunity for Galactosemia is approximately 8,400 patients worldwide. Preclinical Studies Substrate reduction through AR inhibition in patient fibroblasts and a drosophila model of disease have demonstrated preclinical proof of concept in SORD Deficiency, significantly reducing sorbitol levels and normalizing the drosophila disease phenotype. Preclinical studies in fibroblasts derived from SORD Deficiency patients have demonstrated significant reduction in sorbitol levels with AT-007 treatment. Preclinical studies in the drosophila model of disease have demonstrated a positive impact on the disease phenotype with AT-007 treatment, including mobility (climbing) and prevention of neuronal degeneration. Clinical Development In 2021 we conducted an open-label pilot study in 8 patients with SORD Deficiency. AT-007 treatment significantly reduced sorbitol levels by approximately 66% from baseline, and was safe and well tolerated. In December 2021 we initiated a Phase 2/3 registrational study in patients with SORD Deficiency. The registrational study, called the INSPIRE trial, is designed to demonstrate biomarker efficacy at 3 months through reduction in sorbitol, and long-term clinical efficacy over 2 years of treatment, with an interim clinical outcomes assessment at 12 months. The study is a multicenter placebo controlled trial conducted in the US and Europe in approximately 50 SORD patients age 16 and older. On February 16, 2023, we announced that in a pre-specified interim analysis of the ongoing Phase 3 INSPIRE trial, AT-007 reduced sorbitol levels by a mean of approximately 52% (or approximately 16,000ng/ml) over 90 days of treatment (p<0.001 vs. placebo) in patients with SORD Deficiency. At baseline, the mean blood sorbitol level of SORD patients included in this interim analysis was approximately 29,000ng/ml, with a range of approximately 22,000ng/ml-38,000ng/ml. In the INSPIRE trial, a baseline cross-sectional analysis of the relationship between sorbitol level, age (or duration of disease) and clinical outcome measures demonstrated a statistically significant correlation between sorbitol level and key clinical outcome measures, including 10-meter-walk/run speed, 4-stair climb speed, and sit-to-stand test 12 Table of Contents (p<0.05). The Company is working with the FDA to determine the appropriate regulatory path forward, as well as data required for an NDA submission, to advance AT-007 towards registration for this indication. The INSPIRE study will continue in blinded format to the 12-month interim clinical outcomes assessment. If the primary clinical outcome measure (10-meter-walk/run) reaches statistical significance at 12 months, the study will be completed and unblinded. If not, the study will continue in blinded format to 24 months, where clinical outcomes will be assessed again in a final statistical analysis. AT-007 continues to be safe and well tolerated to date. PMM2-CDG PMM2-CDG is a glycosylation disorder in which patients have only partial function of the phosphomannomutase enzyme (“PMM2”). As a result, patients do not process sugars properly to support protein glycosylation, which results in systemic problems and multi-organ failure. PMM2-CDG is a severe disease, resulting in and high mortality in children, with no FDA approved treatments. PMM2-CDG is an ultra-rare disease, with only approximately 1,000 patients identified worldwide. Recently, AR inhibition was demonstrated to positively impact protein glycosylation in PMM2-CDG patient fibroblasts and a C. elegans model of disease. It is believed that AR inhibition results in increased protein glycosylation by shifting the balance of sugar production to support PMM2 activity. In preclinical studies in PMM2-CDG patient fibroblasts, AT-007 significantly improved PMM2 activity. Based on this data, we have received both Orphan Designation and Pediatric Rare Disease designation from the FDA. AT-001 for the Treatment of Diabetic Cardiomyopathy Overview We are developing AT-001, a novel ARI with broad systemic exposure and peripheral nerve permeability being developed for the treatment of DbCM, a fatal fibrosis of the heart, for which no treatments are available. We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug-related adverse effects or tolerability issues were observed. This trial also demonstrated target engagement and proof of biological activity, as measured by reduction in sorbitol, a biomarker of AR activity and NTproBNP. A registrational Phase 2/3 study in DbCM patients at high risk of progression to overt heart failure (ARISE-HF) is currently ongoing. Diagnosis and Standard of Care DbCM is a fatal fibrosis of the heart that occurs in both type 1 and type 2 diabetic patients, which leads to decreased contractility and decreased heart function, eventually resulting in fulminant heart failure. DbCM is caused by metabolic derangements in cardiomyocytes that result in cell death and fibrosis. AR activity has been shown to be a large contributor to these metabolic derangements, and the downstream effect of AR activation is responsible for the cardiomyocyte cell death and fibrosis. DbCM is diagnosed by increased weight of the heart and decreased contractility, which are identified by echocardiographic screening, as well as by exclusion of other forms of heart disease. Epidemiological studies have shown that approximately 17% to 24% of diabetic patients display DbCM in the absence of any other forms of heart disease. These patients do not have hypertension, atherosclerosis, valvular heart disease or ischemia, and the only cause of the cardiomyopathy is the underlying diabetes. Stages of DbCM range from asymptomatic, or stage 1, to acute heart failure, or stage 4. Most patients are not diagnosed until stage 2, where symptoms manifest as extreme shortness of breath during exercise, referred to as decreased exercise tolerance. Exercise tolerance in these patients (as measured by maximum amount of oxygen a person can utilize during intense exercise known as peak VO2) is approximately 25% lower than diabetic patients without DbCM, and decreases by an additional 30% as the patients progress to overt heart failure in later stages of diseases. Patients quickly progress at a steady state of decline to stage 3, which includes marked cavity dilation and severe limitations in daily activities. The final stage of DbCM, stage 4, is represented by acute heart failure resulting in death. The current standard of care is to target glucose control in these patients, as well as hemodynamic modulation of blood flow, through use of beta blockers and diuretics. Both approaches are largely ineffective, and DbCM often results in death within five to ten years of diagnosis. Approximately 24% of DbCM patients progress to overt heart failure or death within 1.5 years of diagnosis, and 37% within five years of diagnosis. 13 Table of Contents Market Opportunity According to a retrospective epidemiological study, approximately 17% of patients suffering from diabetes develop DbCM. A study completed in France that utilized echocardiographic screening estimates the proportion of diabetic patients to develop DbCM at approximately 24%. The International Diabetes Foundation estimated that there were approximately 451 million patients globally with diabetes in 2017, which is expected to increase to 693 million by 2045. This includes 58.0 million diabetes patients in Europe in 2017, which is expected to increase to 67.0 million in 2045, and 46.0 million in North America, which is expected to increase to 62.0 million in 2045. Based on an estimated prevalence of 17% of diabetic patients who develop DbCM, we estimate that currently there are approximately 77.0 million patients with DbCM globally, with approximately 8.0 million in North America and 10.0 million in Europe. Initially, our development program will target patients at high risk of progression to overt heart failure, which we estimate constitute approximately 50% of all DbCM patients. We believe these patients represent a symptomatic population that is more likely to be responsive to treatment. Prior AR-Based Approaches to Treat DbCM AR activity has been implicated as a strong contributing factor to pathogenesis in DbCM. Pfizer Inc. was developing an ARI, Alond (zopolrestat), for the treatment of DPN and DbCM in a Phase 2 clinical trial that demonstrated favorable outcomes on heart function in DbCM patients, but the clinical trial was discontinued due to an unfavorable risk/benefit profile, with several patients experiencing liver toxicity and significant elevations in both aspartate aminotransferase and alanine aminotransferase, which are enzymes central to identification of liver toxicity and damage. In this trial, patients with early-stage DbCM were identified by echocardiographic screening and were randomized to three treatment groups, which consisted of placebo, 500 mg zopolrestat per day or 1,000 mg zopolrestat per day dosed for one year. Due to liver toxicity seen in another trial with zopolrestat, the 1,000 mg treatment arm was reduced to 500 mg, and the two doses were collapsed into one treatment arm. While patients on placebo displayed decreased heart function over the year of the trial as their disease progressed, patients on zopolrestat displayed a stabilization of heart function and even improvement in heart function in some patients based on hemodynamic endpoints. We believe this data validates the approach of using an ARI to improve outcomes for patients with DbCM and using our compounds, which demonstrate improved potency and have been well tolerated, may lead to greater clinical utility. We have demonstrated that when compared to zopolrestat, AT-001 has significantly higher in vitro enzymatic inhibitory activity and greater specificity for AR. Liver toxicity associated with “old” ARIs such as zopolrestat has been shown to be due to off-target inhibition of a structurally related enzyme, Aldehyde Reductase, which is required for normal liver function. AT-001 demonstrates increased selectivity for AR, and does not inhibit Aldehyde Reductase at any concentration tested. This increased selectivity led to lack of toxicity in cultured hepatocytes, or liver cells, whereas zopolrestat demonstrated significant toxicity in hepatocytes. Thus, we believe that not only is AT-001 a more potent AR inhibitor than prior drugs, but that we have overcome the safety and toxicity limitations from prior compounds, which were due to lack of selectivity and off-target inhibition of Aldehyde Reductase. Preclinical Efficacy Studies In a preclinical model of DbCM AT-001 prevented cardiac damage and dysfunction and normalized cardiac energetics. In a diabetic rat model, AT-001 prevented cardiac damage induced by ischemia/repurfusion. Clinical Development Until recently, development in cardiovascular disease indications often required large outcome-based trials that examined survival and re-hospitalization as primary endpoints. These trials were extremely large, expensive and time- consuming, and were often confounded by comorbidities in the patient population. As a result, very few cardiovascular programs resulted in approved drugs. There has been a recent effort from the Division of Cardiovascular and Renal Products at the FDA, as well as at the European Medicines Agency, or EMA, to streamline drug development for cardiovascular disease to increase the probability of demonstrating a meaningful clinical effect in patients. Specifically, in cardiomyopathies, where there is a direct functional link between hemodynamic endpoints, heart 14 Table of Contents contractility and quality of life, there is a unique opportunity to demonstrate benefit of therapy in a smaller number of patients and shorter treatment period than was previously required. Recent clinical development programs in hereditary cardiomyopathies have pioneered smaller trials examining exercise tolerance and/or heart functional capacity as a primary endpoint. Consistent with these developments, at our pre-IND meeting, the FDA indicated that we would not be required to examine survival and re-hospitalization endpoints, and confirmed that exercise tolerance would qualify as an appropriate primary endpoint in our DbCM trial. This was also recently publicly confirmed by the FDA in a whitepaper entitled “Draft Guidance for Industry: Treatment for Heart Failure: Endpoints for Drug Development.” Accordingly, we designed our pivotal Phase 2/3 clinical trial to target functional capacity, or exercise tolerance, as measured by Peak VO2 on Cardiopulmonary Exercise Testing (CPET) in DbCM patients at high risk of progression to overt heart failure. Phase 1/2 Trial in Adult Type 2 Diabetic Patients We have evaluated AT-001 in a placebo-controlled Phase 1/2 clinical trial in approximately 120 type 2 diabetes patients. The primary objectives of this trial were to explore the safety, tolerability and PK profile of AT-001. Because AR converts glucose to sorbitol, and AR activity is elevated in diabetic patients, sorbitol normalization was also examined as a pharmacodynamic, or PD, biomarker of target engagement, which provided proof of biological activity in patients. The Phase 1/2 clinical trial allowed use of concomitant treatments for glucose control, as well as other standard of care treatments for diabetes, such as statins and ACE inhibitors. The FDA permitted us to directly evaluate diabetic patients due to positive data from the preclinical studies, as well as the urgency to develop drugs quickly due to high unmet need. AT-001 was dosed as an active pharmaceutical ingredient, or API, powder in a rapid release capsule and the trial examined both once-daily and twice-daily, or BID, dosing regimens. AT-001 was safe and well tolerated at all doses tested. Additionally, there were no observed adverse interactions with any concomitant diabetes medications used by patients during the trial. Because AR converts glucose to sorbitol, and AR activity is elevated in diabetic patients, sorbitol normalization to healthy subject levels can be used as a PD biomarker of target engagement and proof of biological activity. Treatment with AT-001 normalized sorbitol levels in diabetic patients to those of healthy volunteers, and prevented post-prandial elevations in sorbitol. Decrease in sorbitol levels was dose- dependent, with higher doses of AT-001 resulting in greater reduction in sorbitol levels. Reduction in sorbitol levels lasted for approximately 10-12 hours post dose, suggesting that twice-daily oral dosing produced optimal pharmacodynamic impact. Placebo-treated patients did not demonstrate any reduction in sorbitol levels, and conversely demonstrated post- prandial increase in sorbitol levels. Within the Phase 1/2 study, approximately 30 patients with early stage DbCM, assessed by echocardiographic abnormalities and elevations in the cardiac stress biomarker, NTproBNP, were treated with AT-001 or placebo for 28 days. Treatment with AT-001 (twice daily or three times daily) resulted in sustained reduction in sorbitol, and significant reduction in NTproBNP, demonstrating that inhibition of AR decreases cardiac stress. This data supported dose selection and advancement into a Phase 2/3 registrational trial for DbCM. In September 2019, we initiated a Phase 3 registrational trial for AT-001 in DbCM called ARISE-HF. ARISE-HF is a global study, recruiting patients at sites in North America, Europe, Australia and Hong Kong. The primary endpoint of the trial is stabilization or decrease in slope of decline on functional capacity, as measured by peak VO2, the rate of oxygen consumption measured during exercise. We are also evaluating heart function by echocardiogram-based hemodynamic endpoints, progression to overt heart failure, and quality of life, as well as biomarkers of heart inflammation and damage. This trial consists of 675 patients in three cohorts of approximately 225 patients each, including a placebo group, a low dose AT-001 group (1,000mg twice daily) and a high dose AT-001 group (1,500mg 15 Table of Contents twice daily). The trial treatment period for evaluation of the primary endpoint is 15 months, with additional endpoints evaluated at 27 months. The trial is fully enrolled and ongoing. AT-001 for the Treatment of Diabetic Peripheral Neuropathy Overview We also intend to develop AT-001 for DPN, a debilitating neurodegenerative disease that significantly reduces patients’ quality of life, and for which there are currently no FDA-approved treatments. We expect this indication will require a standard clinical development path, and as such we plan to pursue a strategic partnership in order to expand into this indication. Since many patients with DbCM also have DPN, we are collecting proof-of-concept data through our DbCM program to support our efforts in our DPN program. We have included a DPN sub-study in our pivotal DbCM study. Diagnosis and Current Standard of Care DPN is diagnosed by a simple neurological assessment, usually the Toronto Neuropathy Scoring System, which is administered in the physician’s office and examines a patient’s ability to feel various types of neurological stimuli on the hands and feet. AR activity has been shown to cause DPN. Epalrestat, an ARI, is approved in Japan, China and India to prevent further neuronal degeneration in DPN patients. However, there are no disease modifying therapies approved in the United States and Europe, and only symptomatic medications, such as Lyrica, are approved for pain associated with DPN. Although epalrestat was approved in Japan in 1992 based on very limited clinical data that would not have been sufficient for other markets, more recent academic studies have demonstrated an effect on MNCV and symptomatic pain endpoints in a wide range of diabetic patients. For example, a multicenter, three-year Phase 3 clinical trial conducted in Japan on epalrestat 150 mg versus placebo demonstrated that epalrestat prevented progression of DPN in diabetic patients versus placebo. Epalrestat prevented degeneration of nerve function, as measured by MNCV, and prevented worsening of symptomatic pain. A statistically significant effect was demonstrated in all patients regardless of low or high levels of glucose attached to their hemoglobin, as tested by a hemoglobin A1C (HbA1C) test. Epalrestat, which is now generic in Japan, reached peak sales of approximately $226 million in 2001. This is indicative of its widespread use in the Japanese diabetic population, which was approximately five million patients at the time of launch despite significant tolerability issues associated with use and five times daily dosing due to a very short half- life. We do not believe, however, that it is likely to be a candidate for further commercialization. Nevertheless, prior research on epalrestat evinces the role of AR in DPN and provides a clinical trial design to demonstrate efficacy in this indication. Market Opportunity Approximately 50% of the global diabetic population, or 226 million diabetic patients, suffer from DPN, with 23.0 million patients in North America and 29.0 million patients in Europe. Due to availability of generic epalrestat in China and India, we view the opportunity in these two markets to be limited as a result of pricing pressures and differentiation requirements with regard to epalrestat. However, we believe a significant market opportunity for a more effective ARI with a favorable dosing regimen still exists in Japan, a less price sensitive market where there is familiarity with the mechanism of action in the disease and use of epalrestat is high. As such, although we are currently focused on the U.S. market, we may expand our efforts into Japan opportunistically. Preclinical Studies In preclinical studies, AT-001 prevented neuronal degeneration in animal models of DPN, as measured by MNCV in sciatic and tail nerves of diabetic rats. AT-001 treatment prevented peripheral neuronal damage, as measured by MNCV after six weeks of treatment. A dose-dependent reduction in neuronal dysfunction was observed in rats treated 16 Table of Contents with AT-001, and treatment at 30 mg/kg of AT-001 completely prevented neuronal degeneration, with no statistical difference from non-diabetic WT rats. Clinical Development Since many DbCM patients often also suffer from DPN, we have incorporated DPN endpoints, such as MNCV, as a sub-study into our DbCM ARISE-HF pivotal study to provide additional proof-of-concept for AT-001 in DPN. We plan to seek a strategic partnership to develop AT-001 for treatment of DPN and advance the program into Phase 3 clinical trial for this indication. AT-003 for the Treatment of Diabetic Retinopathy Overview We are developing AT-003, an ARI designed to cross through the back of the eye when dosed orally, which has demonstrated strong retinal penetrance, for the treatment of DR. DR is an ophthalmic disease that occurs in diabetic patients, and for which treatments are currently limited to intravitreal administration. DR has been linked to AR activity, including elevations in sorbitol and subsequent changes in retinal blood vessels, which distorts vision and leads to permanent blindness. We are currently in late stages of preclinical development and intend to advance AT-003 into a Phase 1 clinical trial for the treatment of DR. Diagnosis and Current Standard of Care DR is diagnosed by routine dilated eye exam by an ophthalmologist. Annual or biennial ophthalmic exams to screen for DR are a recommended standard of care for diabetic patients under current treatment guidelines. Vascular endothelial growth factor, or VEGF, inhibitors, Lucentis (ranibizumab) and Eylea (aflibercept), are approved to treat severe or late-stage DR, but are limited by high cost, the need for intravitreal injection into the eye and the lack of therapeutic benefit in many patients. A need exists for safe, effective and tolerable treatments for DR early in the disease process that provide a benefit to a wide range of patients. AR is an attractive target for DR drug development since AR activity is upstream of VEGF activity in DR pathogenesis. AR has been shown to cause DR by inducing hyperosmolarity in retinal cells due to elevated sorbitol, as well as through fructose-mediated detrimental downstream effects, such as AGE generation and PKC activation. AR knock-out rats are protected from DR development, and several prior ARIs demonstrated efficacy on DR endpoints in clinical trials, but were not approved due to dose-limiting safety concerns. Market Opportunity A recent retrospective epidemiological analysis of diabetic patients globally confirmed that DR affects approximately 35% of diabetics, and is a leading cause of blindness worldwide. Based on the 2017 diabetes numbers, the global market for DR is approximately 158 million patients, with anticipated increase to 243 million by 2045. The current market is approximately 16.0 million in North America and 20.0 million in Europe. Preclinical Studies AT-003 displayed significant retinal penetration when dosed orally in diabetic rats. AT-003 was observed to be well tolerated over a seven-day dosing period in all doses tested, up to 1,000 mg/kg daily, with no adverse effects observed. Efficacy of AT-003 is currently being explored in two animal models of DR — an ischemic injury model (acute damage) and chronic diabetic treatment model. Clinical Development Plan Similar to AT-001, we plan to explore the safety, tolerability, PK profile and biomarker effects of AT-003 in a Phase 1a/1b clinical trial in diabetic patients. Assuming positive data in this trial, we plan to initiate a pivotal Phase 2/3 clinical trial of AT-003 in patients with DR to prevent disease progression versus placebo, as measured by subjective 17 Table of Contents metrics, including fluoroscein angiography and optical coherence tomography, which are scans used in the examination and management of retinal diseases. Exclusive License Agreement with Columbia University On October 26, 2016, we entered into a license agreement with Columbia University (the “2016 Columbia Agreement”). Pursuant to the 2016 Columbia Agreement, Columbia University granted us a royalty-bearing, sublicensable license that is exclusive with respect to certain patents, and non-exclusive with respect to certain know-how, in each case to develop, manufacture, and commercialize ARI products, including AT-001, AT-003 and AT-007. The license grant is worldwide with the exception of a single patent family covering AT-001 and AT-003 for which the license grant excludes China, Taiwan, Hong Kong and Macao. Under the 2016 Columbia Agreement, we are obligated to use commercially reasonable efforts to research, discover, develop and market licensed products for commercial sale in the licensed territory, and to comply with certain obligations to meet specified development and funding milestones within defined time periods. Columbia University retains the right to conduct, and grant third parties the right to conduct, non-clinical academic research using the licensed technology; provided that such research is not funded by a commercial entity or for-profit entity or results in rights granted to a commercial or for-profit entity. As the technology licensed to us under the 2016 Columbia Agreement was developed as a result of a U.S. government grant, the licenses granted to us under the agreement are subject to the terms of such grant, and to standard rights of the U.S. government under the Bayh-Dole Act, including the grant to the government of a non-exclusive, worldwide, freedom to operate license under any patents, and the requirement, absent a waiver, to manufacture products substantially in the United States. As consideration for entering into the 2016 Columbia Agreement, we made a nominal upfront payment to Columbia University and, following the occurrence of certain trigger events, issued to Columbia University shares equal to 5% of our outstanding common stock on a fully diluted basis at the time of issuance. We will be required to make further payments to Columbia University of up to an aggregate of $1.3 million for the achievement of specified development and regulatory milestones, and up to an aggregate of $1.0 million for the achievement of a specified level of aggregate annual net sales, in each case in connection with products covered by the 2016 Columbia Agreement. We will also be required to pay tiered royalties to Columbia University in the low- to mid-single digit percentages on our, our affiliates’ and our sublicensees’ net sales of licensed products, subject to specified offsets and reductions. In addition, we are required to make specified annual minimum royalty payments to Columbia University in the mid six figures beginning on the 10th anniversary of the effective date of the agreement. When we grant sublicenses under the 2016 Columbia Agreement we are required to pay to Columbia University a portion of the net sublicensing revenue received from such third parties, at percentages between 10% and 20%, depending on the stage of development at the time such revenue is received from such third parties. The Advanz Agreement includes a sublicense under the 2016 Columbia Agreement. Columbia University is responsible for the prosecution and maintenance of the licensed patents, in consultation with us, and subject to a requirement to give due consideration to our comments, at our expense. We have the first right, but not the obligation, to control the enforcement of licensed patents exclusively licensed to us against third parties. We are required to indemnify Columbia University for any third party claims that arise from or relate to the 2016 Columbia Agreement. The 2016 Columbia Agreement will terminate upon the expiration of all our royalty payment obligations in all countries. We may terminate the 2016 Columbia Agreement for convenience upon 90 days’ written notice to Columbia University. At its election, Columbia University may terminate the 2016 Columbia Agreement, or convert the licenses granted to us into non-exclusive, non-sublicensable licenses, in the case of (a) our uncured material breach upon 30 days’ written notice (which shall be extended to 90 days if we are diligently attempting to cure such material breach), (b) our failure to achieve the specified development and funding milestone events, or (c) our insolvency. The 2016 Columbia Agreement may not be assigned by us without Columbia University’s consent, except to any successor to all or substantially all of our business to which the 2016 Columbia Agreement relates and upon notice to Columbia University. 18 Table of Contents In January 2019, we entered into a second license agreement with Columbia University (the “2019 Columbia Agreement”). Pursuant to the 2019 Columbia Agreement, Columbia University granted us a royalty-bearing, sublicensable license that is exclusive with respect to certain patents, and non-exclusive with respect to certain know-how, in each case to develop, manufacture and commercialize PI3k inhibitor products. The license grant is worldwide. Under the 2019 Columbia Agreement, we are obligated to use commercially reasonable efforts to research, discover, develop and market licensed products for commercial sale in the licensed territory, and to comply with certain obligations to meet specified development and funding milestones within defined time periods. Columbia University retains the right to conduct, and grant third parties the right to conduct, non-clinical academic research using the licensed technology; provided that such research is not funded by a commercial entity or for-profit entity or results in rights granted to a commercial or for-profit entity. As consideration for entering into the 2019 Columbia Agreement, we made a nominal upfront payment to Columbia University. We will be required to make further payments to Columbia University of up to an aggregate of $1.3 million for the achievement of specified development and regulatory milestones, and up to an aggregate of $1.0 million for the achievement of a specified level of aggregate annual net sales, in each case in connection with products covered by the 2019 Columbia Agreement. We will also be required to pay tiered royalties to Columbia University in the low- to mid- single digit percentages on our, our affiliates’ and our sublicensees’ net sales of licensed products, subject to specified offsets and reductions. In addition, we are required to make specified annual minimum royalty payments to Columbia University, which is contingent upon the approval of the licensed products, in the mid-six figures beginning on the tenth anniversary of the effective date of the 2019 Columbia Agreement. In July 2022, following regulatory changes impacting development of the class of PI3k inhibitors and the Company’s decision to discontinue its early stage preclinical PI3k program, the Company and Columbia entered into an agreement terminating the 2019 Columbia Agreement (the “2022 Columbia Termination Agreement”) as of July 25, 2022. Under the terms of the 2022 Columbia Termination Agreement, the Company assigned certain regulatory documents regarding the preclinical PI3k inhibitor AT-104 to Columbia and granted Columbia a non-exclusive royalty free license (with rights to sublicense any future Columbia licensee) under certain know-how, technical information and data relating to AT-104 that was developed by the Company during the term of the 2019 Columbia Agreement. In March 2019, and in connection with the 2016 Columbia Agreement, the Company entered into a research services agreement (the “2019 Columbia Research Agreement”) with Columbia University with the purpose of analyzing structural and functional changes in brain tissue in an animal model of Galactosemia, and the effects of certain compounds whose intellectual property rights were licensed to the Company as part of the 2016 Columbia Agreement on any such structural and functional changes. The 2019 Columbia Research Agreement had a term of 12 months from its effective date and expired in accordance with its terms. On October 3, 2019, and in connection with the 2019 Columbia Agreement, the Company entered into a research services agreement (the “PI3k Columbia Research Agreement” and collectively with the 2016 Columbia Agreement, 2019 Columbia Agreement and 2019 Columbia Research Agreement, the “Columbia Agreements”) with Columbia University with the purpose of analyzing PI3k inhibitors for the treatment of lymphoid malignancies. The PI3k Columbia Research Agreement had a term of 18 months from its effective date and expired in accordance with its terms. License Agreement with University of Miami On October 28, 2020, we entered into a license agreement (the “2020 Miami License Agreement”) with the University of Miami relating to certain technology that is co-owned by the University of Miami (UM), the University of Rochester (UR) and University College London (UCL Business Ltd. (UCL)). UM was granted an exclusive agency from UR and UCL to license each of their rights in the technology. Pursuant to the 2020 Miami License Agreement, UM, on behalf of itself and UR and UCL, granted us a royalty-bearing, sublicensable license that is exclusive with respect to certain patent applications and patents that may grant from the applications, and non-exclusive with respect to certain know-how, in each case to research, develop, make, have made, use, sell and import products for use in treating and/or detecting certain inherited neuropathies, in particular those caused by mutation in the sorbitol dehydrogenase (SORD) gene. The license grant is worldwide. Under the 2020 Miami License Agreement, we are obligated to use commercially reasonable efforts to develop, manufacture, market and sell licensed products in the licensed territory, and to comply with certain obligations to meet specified development milestones within defined time periods. UM retains for itself UR 19 Table of Contents and UCL the right to use the licensed patent rights and licensed technology for their internal non-commercial educational, research and clinical patient care purposes, including in sponsored research and collaboration with commercial entities. As the technology licensed to us under the 2020 Miami License Agreement was developed as a result of a U.S. government grant, the licenses granted to us under the agreement are subject to the terms of such grant, and to standard rights of the U.S. government under the Bayh-Dole Act, including the grant to the government of a non-exclusive, worldwide, freedom to operate license under any patents, and the requirement, absent a waiver, to manufacture products substantially in the United States. Under the terms of the 2020 Miami License Agreement, we are obligated to pay the University an up-front non- refundable license fee of $1.1 million, and a second non-refundable license fee of $0.5 million due on the first anniversary of the date of the license. We will be required to make further payments to UM of up to an aggregate $2.2 million for the achievement of specified patenting and development milestones, and up to an aggregate of $4.1 million for achievement of late stage regulatory milestones. We will also be required to pay royalties ranging from 0.88% - 5% on ours, our affiliates’ and our sublicensees’ net sales of licensed products. When we sublicense the rights granted under the 2020 Miami License Agreement to one or more third parties, we are required to pay to UM a portion of the non-royalty sublicensing revenue received from such third parties ranging from 15% – 25%. The Advanz Agreement includes a sublicense under the 2020 Miami License Agreement. The 2020 Miami License Agreement terminates upon the expiration of all issued patents and filed patent applications or 10 years after the first commercial sale of the last product or process for which a royalty is due, unless earlier terminated. In addition, the 2020 Miami License Agreement may be terminated by us at any time upon 60 days prior written notice to UM, and may be terminated by either us or UM upon material breach of an obligation if action to cure the breach is not initiated within 60 days of receipt of written notice. On October 28, 2020, we entered into an option agreement with the University of Miami (the “2020 Miami Option Agreement”) concerning certain research activities and technology relating to SORD neuropathy that may be pursued and developed by UM. Under the 2020 Miami Option Agreement, if UM conducts such research activities, then UM is obligated to grant us certain option rights to access and use the research results and to obtain licenses to any associated patent rights upon us making specified payments to UM within specified time limits. If we elect to obtain option rights, we will be required to make payments to UM in the low-six figures to the low-seven figures, depending upon the rights we elect to obtain, and we will be obligated to make certain milestone payments in the high-six figures to mid-seven figures if UM conducts and completes certain research activities within specified time periods and we elect to receive rights to use the results of that research. On December 14, 2020, we entered into a research agreement with the University of Miami (the “2020 Miami Research Agreement”), pursuant to which the University of Miami agreed to conduct a research study relating to SORD neuropathy and deliver a final report on the study to us. The term of the research agreement was from December 14, 2020 through December 30, 2021. The consideration for the 2020 Miami Research Agreement was $0.3 million. Due to COVID- 19 pandemic disruptions certain research under the 2020 Miami Research Agreement was not completed. In January 2022, we amended the 2020 Miami Research Agreement to extend the term of the agreement to August 31, 2022. License Agreement with Advanz Pharma On January 3, 2023, we entered into an Exclusive License and Supply Agreement (the “ Advanz Agreement”) with Mercury Pharma Group Limited (trading as Advanz Pharma Holdings). Pursuant to the Agreement, we granted Advanz Pharma the exclusive right and license to commercialize drug products containing AT-007 (also known as govorestat), our proprietary Aldose Reductase Inhibitor (ARI) (the “Licensed Product”), for use in treatment of Sorbitol Dehydrogenase Deficiency (“SORD”) and Galactosemia (each a “Licensed Indication”) in the European Economic Area, Switzerland and the United Kingdom (the “Territory”). We also granted Advanz Pharma a right of negotiation and “most- favored nation” rights with respect to acquiring the European commercialization rights for any additional indications for which the Licensed Product may be developed in the future (or any other products we may develop solely to the extent used for the Licensed Indications). 20 Table of Contents Advanz Pharma is required to use commercially reasonable efforts to launch and commercialize the Licensed Products in the major markets in the Territory in each Licensed Indication following, and subject to, receipt of marketing authorization therein. Under the Advanz Agreement, Advanz Pharma agreed to pay us (i) an upfront payment of EUR 10 million (approx. USD $10.7 million), and certain development milestone payments upon clinical trial completions and receipt of marketing authorization in the territory, as well as certain commercial milestone payments, totaling EUR 134 million (approx. USD $142.2 million) in the aggregate, and (ii) royalties of 20% of net sales of the Licensed Product. Such royalty rate will be payable on a country-by-country basis until the later of (i) the expiration of the licensed patents covering the composition of matter of AT-007, or (ii) 10 years after the European Medicines Agency’s grant of marketing authorization for the Licensed Product. The royalties are subject to certain deductions, including certain secondary finishing costs, certain step-in establishment costs and a portion of fees for any potential third party patent licenses if applicable in the future. Following the initial term of the license, as described above, the royalty rate shall be reduced to 10% and shall continue in perpetuity unless the Agreement is terminated in various circumstances in accordance with its terms. Certain of the patents licensed to Advanz Pharma under the Advanz Agreement are sub-licensed from the University of Miami and Columbia University, and thus remain subject to certain obligations of the Company (including royalty obligations) to such institutions. For more information on these arrangements see “—Exclusive License Agreement with Columbia University” and “—License Agreements with the University of Miami.” Sales and Marketing Due to the delay in the anticipated Galactosemia commercial launch, external non-essential commercial expenditures have been suspended, including sales and marketing, and we have recognized significant reductions in our commercial spending during the year ended December 31, 2022. Manufacturing We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We depend on third party contract manufacturing organizations, or CMOs, for all of our requirements of raw materials, drug substance and drug product for our preclinical research and our clinical trials for AT-007, AT-001 and AT-003. We have not entered into long-term agreements with our current CMOs. We intend to continue to rely on CMOs for later-stage development and commercialization of our current products, as well as the development and commercialization of any other product candidates that we may identify. Although we rely on CMOs, we have personnel and third party consultants with extensive manufacturing experience to oversee the relationships with our contract manufacturers. We believe the synthesis of the drug substance for AT-007 and AT-001 are reliable and reproducible from readily available starting materials, and the synthetic routes are amenable to large-scale production and do not require unusual equipment or handling in the manufacturing process. We have obtained adequate supplies of the drug substance for AT-007 and AT-001 to satisfy our immediate clinical and preclinical demands. Drug product formulation development for AT-007 and AT-001 are in progress. We have contracted with a third party manufacturer capable of both formulation development and drug product manufacturing through commercialization. We may identify a second drug product manufacturer in the future to add additional capacity and redundancy to our supply chain. Competition The pharmaceutical industry is characterized by rapidly advancing technologies, intense competition and a strong emphasis on proprietary products. While we believe that our technology, the expertise of our executive and scientific team, research, clinical capabilities, development experience and scientific knowledge provide us with competitive advantages, we face potential competition from many different sources, including pharmaceutical and biotechnology companies, academic institutions and governmental agencies and public and private research institutions. 21 Table of Contents Product candidates that we successfully develop and commercialize may compete with existing therapies and new therapies that may become available in the future. Our competitors may have significantly greater financial resources, established presence in the market, expertise in research and development, manufacturing, preclinical and clinical testing, obtaining regulatory approvals and reimbursement and marketing approved products than we do. These competitors also compete with us in recruiting and retaining qualified scientific, sales, marketing and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. Smaller or early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. There are currently no therapies approved to treat Galactosemia. Two companies have announced plans for preclinical or conceptual programs to develop gene therapies in Galactosemia. We believe these potential AAV gene therapies are several years away from entering the clinic, and there is no data to date in preclinical or clinical studies demonstrating efficacy or safety. Additionally, due to safety issues associated with AAV gene therapy in general, and the fact that Galactosemia is a debilitating but not life-threatening disease, we do not believe that the risk appetite of parents or physicians will support substantial competition from gene therapies. There are currently no therapies approved for SORD Deficiency. There are no drugs in development to our knowledge outside of AT-007, and we believe that the IP licensed from University of Miami is sufficiently broad to encompass the entire class of aldose reductase inhibitors for treatment of SORD Deficiency. There are currently no therapies approved to treat DbCM. Sponsors of sodium-glucose cotransporter-2, or SGLT2, inhibitors are pursuing broad cardiovascular labels in type 2 diabetes patients, which may include a subset of DbCM patients as part of the larger diabetic population at risk for heart failure. Many of these programs are sponsored by large pharmaceutical companies with a strong presence in cardiology and metabolic disease. There have been prior studies demonstrating effectiveness in DbCM of off-label use of sildenafil, although we do not believe this represents a commercially viable competitive threat. There are no disease modifying therapies approved to treat DPN outside of Japan, India and China. In these limited markets, epalrestat, another ARI, is approved to prevent worsening of DPN, and despite challenges in compliance due to frequent dosing three to five times daily, the drugs are generic and offer a low cost alternative. A more effective therapy with improved tolerability and dosing may offer an advantage. A re-formulation of proprietary crystalline epalrestat, BNV-222, is in development for DPN in Russia in a 12-month Phase 2/3 clinical trial, which completed enrollment in 2016, but has not yet reported any results. There are several therapies approved to treat severe or late-stage forms of DR, or proliferative DR, such as diabetic macular edema and proliferative DR, including anti-VEGF therapies, Lucentis and Eylea, which represents approximately 20% of the larger DR population. There are currently no therapies approved to treat non-proliferative DR, an earlier stage of the disease upstream of vessel or capillary proliferation. However, there are significant additional clinical development efforts for other mechanistic interventions in early-stage or for non-proliferative DR. Intellectual Property Our intellectual property is critical to our business and we strive to protect it, including by obtaining and maintaining patent protection in the United States and internationally for our product candidates, new therapeutic approaches and potential indications, and other inventions that are important to our business. Our policy is to seek to protect our proprietary and intellectual property position by, among other methods, filing U.S. and foreign patent applications related to our proprietary technology, inventions and improvements that are important for the development and implementation of our business. We also rely on the skills, knowledge and experience of our scientific and technical personnel, as well as that of our advisors, consultants and other contractors. To help protect our proprietary know-how that is not patentable, we rely on confidentiality agreements to protect our interests. We require our employees, consultants and advisors to enter into confidentiality agreements prohibiting the disclosure of confidential information 22 Table of Contents and requiring disclosure and assignment to us of the ideas, developments, discoveries and inventions important to our business. Our patent portfolio includes patents and patent applications that are exclusively licensed from Columbia University and patent applications that are owned by us. Our patent portfolio includes patents and patent applications that cover our product candidates AT-007, AT-001, and AT-003, and the use of these candidates for therapeutic purposes in certain territories. Our proprietary technology has been developed primarily through relationships with academic research centers and contract research organizations. For our product candidates, we will, in general, initially pursue patent protection covering compositions of matter and methods of use. Throughout the development of our product candidates, we seek to identify additional means of obtaining patent protection that would potentially enhance commercial success, including through additional methods of use, process of making, formulation and dosing regimen-related claims. In total, our patent portfolio, including patents licensed from Columbia University and patents owned by us, comprises nine different patent families, filed in various jurisdictions worldwide, including families directed to composition of matter for AR inhibitors, and families directed to methods of treating Galactosemia and complications associated with Galactosemia, SORD Deficiency and PMM2-CDG using AR inhibitors. Our patent portfolio includes issued patents in the United States, Europe, Japan, Australia, Canada, and other jurisdictions. Our patent portfolio is outlined below: Composition of Matter Patents AT-007. We have exclusively licensed a patent family from Columbia University that includes two issued composition of matter patents and two issued method use of patents in the United States, and 40 issued patents in Europe, Japan, Australia, India, Israel, China, Mexico and South Africa, that claim the composition of matter of and certain methods of use with respect to AT 007. In addition, we have pending patent applications in the United States, Europe, Japan, China, Canada, Australia, Russia, Brazil, India, Israel, Mexico, New Zealand, Singapore, South Africa, and Hong Kong. The 20-year term of patents in this family runs through June 2037, absent any available patent term adjustments or extensions. AT-001 and AT-003. We have exclusively licensed from Columbia University a patent family that includes five issued patents in the United States, 82 issued patents in Europe, Japan, Canada, and Australia, a pending application in the United States and a pending application in Europe that claim the composition of matter of and certain methods of use with respect to AT-001 and AT-003. The 20-year term of the patents in this family runs through July 2031, absent any available patent term adjustments or extensions. Methods for Treating Galactosemia We own a family of patent applications that claims methods for treating Galactosemia and preventing complications associated with Galactosemia using AT-007 and other inhibitors of AR. This family currently includes granted patents in the United States and Mexico, and pending patent application in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, Russia, Singapore, South Africa, and Hong Kong. The 20- year term of patents in this family run through July 2038, absent any available patent term adjustments or extensions. Methods for Treating SORD Deficiencies We own a family of patent applications that claims methods for treating SORD Deficiency using AT-007 and other inhibitors of AR. This family currently includes pending patent applications in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, Russia, Singapore, South Africa and South Korea. No patents have issued to date, but we expect that the 20-year term of any patents that do issue in this family will run through 2041, absent any available patent term adjustments or extensions. 23 Table of Contents We have exclusively licensed a patent family from University of Miami that includes pending applications in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, India, Russia, Singapore, South Africa, South Korea and Hong Kong, that claims methods for treating inherited neuropathy using a variety of therapeutic modalities including inhibitors of AR. This patent family is owned by University of Miami, University of Rochester and UCL Business Ltd. and licensed to us by University of Miami pursuant to an exclusive agency granted to University of Miami, by University of Rochester and UCL Business Ltd. No patents have issued to date, but we expect that the 20-year term of any patents that do grant in this family will run through 2040, absent any available patent term adjustments or extensions. Methods for Treating PMM2-CDG We own a family of patent applications that claim methods for treating PMM2-CDG using AT-007 and other inhibitors of AR. This family currently includes pending patent application in the United States, Europe, Japan, Australia, Brazil, Canada, China, Israel, Mexico, New Zealand, Singapore, South Africa and Hong Kong. No patents have issued to date, but we expect that the 20-year term of any patents that do grant in this family will run through 2040, absent any available patent term adjustments or extensions. We expect to file future patent applications on innovations that are developed in the course of advancing our pipeline through preclinical and clinical development. Patent Term and Term Extensions Individual patents have terms for varying periods depending on the date of filing of the patent application or the date of patent issuance and the legal term of patents in the countries in which they are obtained. Generally, utility patents issued for applications filed in the United States are granted a term of 20 years from the earliest effective filing date of a non-provisional patent application. In addition, in certain instances, the term of a U.S. patent can be extended to recapture a portion of the United States Patent and Trademark Office, or the USPTO, delay in issuing the patent as well as a portion of the term effectively lost as a result of the FDA regulatory review period. However, as to the FDA component, the restoration period cannot be longer than five years and the restoration period cannot extend the patent term beyond 14 years from FDA approval. In addition, only one patent applicable to an approved drug is eligible for the extension, and only those claims covering the approved drug, a method for using it, or a method of manufacturing may be extended. The duration of foreign patents varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing date. All taxes, annuities or maintenance fees for a patent, as required by the USPTO and various foreign jurisdictions, must be timely paid in order for the patent to remain in force during this period of time. The actual protection afforded by a patent may vary on a product by product basis, from country to country, and can depend upon many factors, including the type of patent, the scope of its coverage, the availability of regulatory-related extensions and the availability of legal remedies in a particular country and the validity and enforceability of the patent. Our patents and patent applications may be subject to procedural or legal challenges by others. We may be unable to obtain, maintain and protect the intellectual property rights necessary to conduct our business, and we may be subject to claims that we infringe or otherwise violate the intellectual property rights of others, which could materially harm our business. For more information, see the section titled “Risk Factors — Risks Related to Our Intellectual Property.” Trademarks and Know-How In connection with the ongoing development and advancement of our products and services in the United States and various international jurisdictions, we seek to create protection for our marks and enhance their value by pursuing trademarks and service marks where available and when appropriate. In addition to patent and trademark protection, we rely upon know-how and continuing technological innovation to develop and maintain our competitive position. We 24 Table of Contents seek to protect our proprietary information, in part, by using confidentiality agreements with our commercial partners, collaborators, employees and consultants, and invention assignment agreements with our employees and consultants. These agreements are designed to protect our proprietary information and, in the case of the invention assignment agreements, to grant us ownership of technologies that are developed by our employees and through relationships with third parties. These agreements may be breached, and we may not have adequate remedies for any breach. In addition, our trade secrets may otherwise become known or be independently discovered by competitors. To the extent that our contractors, commercial partners, collaborators, employees, and consultants use intellectual property owned by others in their work for us, disputes may arise as to the rights in related or resulting know-how and inventions. For more information, see the section titled “Risk Factors — Risks Related to Our Intellectual Property.” Government Regulation and Product Approval Government authorities in the United States, at the federal, state and local levels, and in other countries, extensively regulate, among other things, the research, development, testing, manufacture, pricing, quality control, packaging, storage, recordkeeping, labeling, advertising, promotion, distribution, marketing, import and export of pharmaceutical products, such as those we are developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial resources. United States Government Regulation In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources. Failure to comply with the applicable United States requirements at any time during the drug development process, approval process or after approval, may subject an applicant to delays and a variety of administrative or judicial sanctions, such as the FDA’s refusal to approve a pending New Drug Application, or NDA, withdrawal of an approval, imposition of a clinical hold, issuance of warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties. The process required by the FDA before a drug may be marketed in the United States generally involves: ● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s good laboratory practice, or GLP, regulations; ● submission to the FDA of an IND, which must become effective before human clinical trials may begin; ● approval by an independent institutional review board, or IRB, at each clinical site before each trial may be initiated; ● performance of adequate and well-controlled clinical trials, in accordance with good clinical practice, or GCP, requirements to establish the safety and efficacy of the proposed drug for each indication; ● submission to the FDA of an NDA for marketing approval, which must include data from preclinical testing and clinical trials; ● satisfactory completion of an FDA advisory committee review, if applicable; ● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which the product is produced to assess compliance with cGMP requirements, and to assure that the facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity; 25 Table of Contents ● satisfactory completion of an FDA inspection of selected clinical sites to assure compliance with GCPs and the integrity of the clinical data; ● payment of user fees; and ● FDA review and approval of the NDA. Preclinical Studies Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal studies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical tests, together with manufacturing information, analytical data and any available clinical data or literature, among other things, to the FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to one or more proposed clinical trials and places the clinical trial on a clinical hold or a partial clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not result in the FDA allowing clinical trials to commence. Clinical Trials Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must review and approve the plan for any clinical trial before it commences at that institution, and the IRB must continue to oversee the clinical trial while it is being conducted and reapprove the study at least annually. Information about certain clinical trials must be submitted within specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov website. The Food and Drug Omnibus Reform Act, or FDORA, which was signed into law on December 29, 2022, made numerous amendments to the FDCA including provisions intended to, among other things, decentralize and modernize clinical trials and enhance diversity in clinical trial populations. Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined. In Phase 1, the drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an initial indication of its effectiveness. In Phase 2, the drug typically is administered to a limited patient population to identify possible adverse effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine dosage tolerance and optimal dosage. In Phase 3, the drug is administered to an expanded patient population, generally at geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate the safety and efficacy of the product for approval, to establish the overall risk-benefit profile of the product and to provide adequate information for the labeling of the product. Progress reports detailing the results of the clinical trials must be submitted, at least annually, to the FDA, and more frequently if serious adverse events occur. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable health risk. In addition, IND safety reports must be submitted to the FDA for any of the following: serious and unexpected suspected adverse reactions, findings from other studies or animal or in vitro testing that suggest a significant risk in humans exposed to the product, and any clinically important increase in the case of a serious suspected adverse reaction over that listed in the protocol or investigator brochure. Similarly, an IRB can suspend or terminate 26 Table of Contents approval of a clinical trial at its institution if the clinical trial is not being conducted in accordance with the IRB’s requirements, or if the drug has been associated with unexpected serious harm to patients. Marketing Approval Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies, together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more indications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under the Prescription Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has a goal of ten months from the date of “filing” of a standard NDA for a new molecular entity to review and act on the submission. This review typically takes 12 months from the date the NDA is submitted to the FDA because the FDA has approximately two months to make a “filing” decision. The FDA may further extend the review process for three additional months to consider new information provided by the applicant to address any outstanding deficiency identified by the FDA following the original submission. In addition, under the Pediatric Research Equity Act, certain NDAs or supplements to an NDA must contain data that are adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data requirements. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with orphan designation. The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to ensure that the benefits of the drug outweigh its risks. The REMS plan could include medication guides, physician communication plans, assessment plans, and/or elements to assure safe use, such as restricted distribution methods, patient registries or other risk minimization tools. The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured, processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity. The FDA may refer an application for a novel drug to an advisory committee. An advisory committee is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions. Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured. These pre-approval inspections may cover all facilities associated with an NDA submission, including component manufacturing, finished product manufacturing and control testing laboratories. The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product within required specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trial sites to assure compliance with GCP requirements. The testing and approval process for an NDA requires substantial time, effort and financial resources, and takes several years to complete. Data obtained from preclinical and clinical testing are not always conclusive and may be 27 Table of Contents susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant approval of an NDA on a timely basis, or at all. After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that must be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order for FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific prescribing information for specific indications. Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution and use restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post- marketing studies or surveillance programs. After approval, some types of changes to the approved product, such as adding new indications, manufacturing changes, and additional labeling claims, are subject to further testing requirements and FDA review and approval. Orphan Drug Designation Under the Orphan Drug Act, the FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is a disease or condition that affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000, there is no reasonable expectation that sales of the drug in the United States will be sufficient to offset the costs of developing and making the drug available in the United States. Orphan drug designation must be requested before submitting an NDA. Orphan drug designation does not convey any advantage in or shorten the duration of the regulatory review and approval process. If the FDA approves a sponsor’s marketing application for a designated orphan drug for use in the rare disease or condition for which it was designated, the sponsor is eligible for a seven-year period of marketing exclusivity, during which the FDA may not approve another sponsor’s marketing application for a drug with the same active moiety and intended for the same use or indication as the approved orphan drug, except in limited circumstances, such as if a subsequent sponsor demonstrates its product is clinically superior. During a sponsor’s orphan drug exclusivity period, competitors, however, may receive approval for drugs with different active moieties for the same indication as the approved orphan drug, or for drugs with the same active moiety as the approved orphan drug, but for different indications. Orphan drug exclusivity could block the approval of one of our product candidates for seven years if a competitor obtains approval for a drug with the same active moiety intended for the same indication before we do, unless we are able to demonstrate that grounds for withdrawal of the orphan drug exclusivity exist, such as that our product is clinically superior. Further, if a designated orphan drug receives marketing approval for an indication broader than the rare disease or condition for which it received orphan drug designation, it may not be entitled to exclusivity. Special FDA Expedited Review and Approval Programs The FDA has various programs, including fast track designation, priority review, accelerated approval and breakthrough therapy designation, which are intended to expedite or simplify the process for the development and FDA review of drugs that are intended for the treatment of serious or life-threatening diseases or conditions and demonstrate the potential to address unmet medical needs. The purpose of these programs is to provide important new drugs to patients earlier than under standard FDA review procedures. To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an 28 Table of Contents unmet medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. The FDA may review sections of the NDA for a fast track product on a rolling basis before the complete application is submitted. The FDA may do so if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon submission of the first section of the NDA. The FDA may give a priority review designation to drugs that are designed to treat serious conditions, and if approved, would provide a significant improvement in treatment, or provide a treatment where no adequate therapy exists. A priority review means that the goal for the FDA to review an application is six months, rather than the standard review of ten months under current PDUFA guidelines. Under the current PDUFA agreement, these six and ten-month review periods are measured from the “filing” date rather than the receipt date for NDAs for new molecular entities, which typically adds approximately two months to the timeline for review and decision from the date of submission. Most products that are eligible for fast track designation are also likely to be considered appropriate to receive a priority review. Rare pediatric disease, or RPD, designation by the FDA enables priority review voucher, or PRV, eligibility upon U.S. market approval of a designated drug for rare pediatric diseases. The RPD-PRV program is intended to encourage development of therapies to prevent and treat rare pediatric diseases. The voucher, which is awarded upon NDA or Biologics License Application, or BLA, approval to the sponsor of a designated RPD can be sold or transferred to another entity and used by the holder to receive priority review for a future NDA or BLA submission, which reduces the FDA review time of such future submission from ten to six months. The RPD-PRV program is currently scheduled to sunset as of September 30, 2026. In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval. To qualify, the FDA must determine that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of alternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug may be subject to accelerated withdrawal procedures. Among FDORA’s provisions are amendments to the accelerated approval program, including new requirements relating to post-approval studies and enhanced enforcement and withdrawal authorities for the FDA. Breakthrough therapy designation is for a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite the development and review of an application for approval of a breakthrough therapy. Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We may explore some of these opportunities for our product candidates as appropriate. Post-Approval Requirements Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most changes to the approved product, such as adding new indications, manufacturing changes or other labeling claims, are subject to further testing requirements and prior FDA review and approval. There also are continuing 29 Table of Contents annual user fee requirements for any marketed products and the establishments at which such products are manufactured, as well as application fees for supplemental applications with clinical data. Even if the FDA approves a product, it may limit the approved indications for use of the product, require that contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results of post-marketing studies or surveillance programs. In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements upon the sponsor and any third party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other regulatory requirements. The FDA may also subject a drug to official lot release, which requires manufacturers to submit several items to the FDA with respect to each lot of a drug before it is released to distribution. These items include samples of each lot, a summary of the manufacturing history of the lot and the results of any tests performed on the lot. Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and standards is not maintained or if problems occur after the product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity or frequency, problems with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential consequences include, among other things: ● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls; ● fines, warning letters or holds on post-approval clinical trials; ● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of product approvals; ● product seizure or detention, or refusal to permit the import or export of products; or ● injunctions or the imposition of civil or criminal penalties. The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. Drugs may be promoted only for the approved indications and in accordance with the provisions of the approved label, although physicians, in the practice of medicine, may prescribe approved drugs for unapproved indications. The FDA and other agencies actively enforce the laws and regulations prohibiting their promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant civil, criminal and administrative liability. 30 Table of Contents In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution. Federal and State Fraud and Abuse, Data Privacy and Security, and Transparency Laws and Regulations In addition to FDA restrictions on marketing of pharmaceutical products, federal and state healthcare laws and regulations restrict business practices in the biopharmaceutical industry. These laws may impact, among other things, our current and future business operations, including our clinical research activities and proposed sales, marketing and education programs and constrain the business or financial arrangements and relationships with healthcare providers and other parties through which we may market, sell and distribute any products for which we obtain marketing approval. These laws include anti-kickback and false claims laws and regulations, data privacy and security, and transparency laws and regulations, including, without limitation, those laws described below. The federal Anti-Kickback Statute prohibits any person or entity from, among other things, knowingly and willfully offering, paying, soliciting or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for or recommending the purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been broadly interpreted to include anything of value. The federal Anti-Kickback Statute has been interpreted to apply to arrangements between pharmaceutical manufacturers on the one hand and prescribers, purchasers and formulary managers on the other. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly. Practices that involve remuneration that may be alleged to be intended to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exception or safe harbor. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been violated. A person or entity does not need to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In addition, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False Claims Act or the civil monetary penalties laws. Federal civil and criminal false claims laws and civil monetary penalties laws, including the federal civil False Claims Act, which can be enforced by individuals through civil whistleblower or qui tam actions, prohibits any person or entity from, among other things, knowingly presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. A claim includes “any request or demand” for money or property presented to the U.S. government. Several pharmaceutical and other healthcare companies have been prosecuted under these laws for allegedly providing free product to customers with the expectation that the customers would bill federal programs for the product. Other companies have been prosecuted for causing false claims to be submitted because of the companies’ marketing of products for unapproved, and thus non-reimbursable, uses. The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third party payors and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Also, many states have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and other state programs, or, in several states, apply regardless of the payor. In addition, we may be subject to data privacy and security regulation by both the federal government and the states in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and 31 Table of Contents Clinical Health Act, or HITECH, and their respective implementing regulations, impose specified requirements on certain types of individuals and entities relating to the privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes HIPAA’s security standards directly applicable to “business associates,” defined as independent contractors or agents of covered entities, which include certain healthcare providers, healthcare clearinghouses and health plans, that create, receive, maintain or transmit individually identifiable health information in connection with providing a service for or on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA and seek attorney’s fees and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health information in certain circumstances, many of which are not pre-empted by HIPAA, differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts. The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other transfers of value made to physicians and teaching hospitals, and applicable manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members. We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, state laws that require drug manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures, and state and local laws that require the registration of pharmaceutical sales representatives. State legislatures are increasingly focused on pharmaceutical company activities, and we may be subject to additional new state or federal legislative requirements in the future that could impact our ability to commercialize our product candidates, if they are approved. Because of the breadth of these laws and the narrowness of available statutory exceptions and regulatory safe harbors, it is possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations are found to be in violation of any of the federal and state laws described above or any other governmental regulations that apply to us, we may be subject to significant criminal, civil and administrative penalties including damages, fines, individual imprisonment, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in government healthcare programs and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our results of operations. To the extent that any of our product candidates are sold in a foreign country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-marketing requirements, including safety surveillance, anti-fraud and abuse laws, implementation of corporate compliance programs, reporting of payments or transfers of value to healthcare professionals, and additional data privacy and security requirements. Coverage and Reimbursement The future commercial success of our product candidates, if approved, will depend in part on the extent to which third party payors, such as governmental payor programs at the federal and state levels, including Medicare and Medicaid, private health insurers and other third party payors, provide coverage of and establish adequate reimbursement levels for our product candidates. Third party payors generally decide which products they will pay for and establish reimbursement levels for those products. In particular, in the United States, no uniform policy for coverage and reimbursement exists. Private health insurers and other third party payors often provide coverage and reimbursement for products based on the level at which the government, through the Medicare program, provides coverage and reimbursement for such products, but also on their own methods and approval process apart from Medicare determinations. Therefore, coverage and reimbursement can differ significantly from payor to payor. 32 Table of Contents In the United States, the European Union, or EU, and other potentially significant markets for our product candidates, government authorities and third party payors are increasingly attempting to limit or regulate the price of products, particularly for new and innovative products, which often has resulted in average selling prices lower than they would otherwise be. Further, the increased emphasis on managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put additional pressure on product pricing, reimbursement and usage. These pressures can arise from rules and practices of managed care groups, judicial decisions and laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical coverage and reimbursement policies and pricing in general. Third party payors are increasingly imposing additional requirements and restrictions on coverage and limiting reimbursement levels for products. For example, federal and state governments reimburse products at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of products. Third party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the FDA- approved products for a particular indication. Third party payors are increasingly challenging the price and examining the medical necessity and cost-effectiveness of products, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of our product candidates, in addition to the costs required to obtain the FDA approvals. Our product candidates may not be considered medically necessary or cost-effective. A payor’s decision to provide coverage for a product does not imply that an adequate reimbursement rate will be approved. Adequate third party payor reimbursement may not be available to enable us to realize an appropriate return on our investment in product development. Legislative proposals to reform healthcare or reduce costs under government insurance programs may result in lower reimbursement for our product candidates, if approved, or exclusion of our product candidates from coverage and reimbursement. The cost containment measures that third party payors and providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any approved product candidates. Healthcare Reform The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates. The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our product candidates profitably, if approved. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major legislative initiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded healthcare programs, and increased governmental control of drug pricing. There have been several U.S. government initiatives over the past few years to fund and incentivize certain comparative effectiveness research, including creation of the Patient-Centered Outcomes Research Institute under the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the PPACA. It is also possible that comparative effectiveness research demonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. The PPACA became law in March 2010 and substantially changed the way healthcare is financed by third party payors, and significantly impacts the U.S. pharmaceutical industry. Among other measures that may have an impact on our business, the PPACA establishes an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic agents; a new Medicare Part D coverage gap discount program; and a new formula that increases the rebates a manufacturer must pay under the Medicaid Drug Rebate Program. Additionally, the PPACA extends manufacturers’ Medicaid rebate liability, expands eligibility criteria for Medicaid programs, and expands entities eligible for discounts under the Public Health Service Act. 33 Table of Contents In addition to these provisions, the Affordable Care Act established a number of bodies whose work may have a future impact on the market for certain pharmaceutical products. These include the Patient-Centered Outcomes Research Institute, established to oversee, identify priorities in, and conduct comparative clinical effectiveness research and the Center for Medicare and Medicaid Innovation within the Centers for Medicare and Medicaid Services, to test innovative payment and service delivery models to lower Medicare and Medicaid spending. At this time, we are unsure of the full impact that the PPACA will have on our business. Since its enactment, there have been judicial and Congressional challenges to certain aspects of the PPACA and we expect such challenges and amendments to continue. Former President Trump implemented certain directives designed to delay the implementation of certain PPACA provisions or otherwise circumvent requirements for health insurance mandated by the PPACA, while Congress has considered legislation that would repeal or repeal and replace all or part of the PPACA. While Congress has not passed comprehensive repeal legislation, bills affecting the implementation of the PPACA have been signed into law. For example, the Tax Act includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate.” On December 19, 2020, former President Trump signed a bill that repealed the PPACA’s so-called “Cadillac” tax on certain high cost employer- sponsored insurance plans. The Bipartisan Budget Act of 2018, or the BBA, among other things, amended the PPACA, effective January 1, 2019, to increase from 50% to 70% the point-of-sale discount that is owed by pharmaceutical manufacturers who participate in Medicare Part D and to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” In December 2018, a U.S. District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the individual mandate is a critical and inseverable feature of the PPACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the PPACA are invalid as well. In December 2019, the U.S. Court of Appeals for the Fifth Circuit upheld the lower court decision, which was then appealed to the U.S. Supreme Court. In June 2021, the U.S. Supreme Court held that state and individual plaintiffs did not have standing to challenge the individual mandate provision of the PPACA; in so holding, the Supreme Court did not consider larger constitutional questions about the validity of this provision or the validity of the PPACA in its entirety. Another case challenging the PPACA’s requirement that private insurers cover certain preventative services is currently pending before the same U.S. District Court Judge in the Northern District of Texas who ruled against the individual mandate in 2018. In September 2022, the judge held that certain preventative services violated the U.S. Constitution and set a schedule for additional briefing regarding the scope of the remedy. That briefing was completed in January 2023 and it is unclear when or how the court will rule. It is also unclear how this or any potential future litigation and other efforts to repeal and replace the PPACA will impact the PPACA, or our business. Further, there has been increasing legislative, executive branch, and enforcement interest in the United States with respect to drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement methodologies for drugs. With respect to executive branch actions, the former Trump administration released a “Blueprint” to lower drug prices and reduce out of pocket costs of drugs that contained proposals to increase manufacturer competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products and reduce the out of pocket costs of drug products paid by consumers. The HHS has implemented some of these measures under its existing authority. For example, in May 2019, CMS issued a final rule to allow Medicare Advantage Plans the option of using step therapy for Part B drugs, beginning January 1, 2020. Although a number of these and other proposed measures will require authorization through additional legislation to become effective, Congress and the Biden administration have each indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. For example, the Inflation Reduction Act of 2022, enacted on August 16, 2022, seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price increases in Medicare, redesigning the Medicare Part D formula, and limiting the cost-sharing for insulin products. It is unclear whether additional drug pricing and other healthcare reform measures will be enacted, and if enacted, what effect they would have on our business. 34 Table of Contents At the state level, legislatures have increasingly passed legislation and implemented regulations designed to control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing. In addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures to determine which drugs and suppliers will be included in their healthcare programs. These measures could reduce future demand for our products or put pressure on our pricing. Additionally, in May 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or the Right to Try Act, was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase I clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a drug manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. Foreign Regulation In order to market any product outside of the United States, we would need to comply with numerous and varying regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials, marketing authorization, commercial sales and distribution of our product candidates. For example, in the EU, we must obtain authorization of a clinical trial application, or CTA, in each member state in which we intend to conduct a clinical trial. Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in those countries. The approval process varies from country to country and can involve additional product testing and additional administrative review periods. The time required to obtain approval in other countries might differ from and be longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory process in others. Facilities We are currently in a five-year lease for the space for our principal executive offices in New York, New York and a three-year lease for the offices in Englewood Cliffs, New Jersey. We believe that our facilities are adequate to meet our current needs. Employees and Human Capital Resources Investing in, developing, and maintaining human capital is critical to our success. As of December 31, 2022, we had 27 full-time employees, 18 of whom were primarily engaged in research and development activities. A total of ten employees have an M.D. or Ph.D. degree. We emphasize a number of measures and objectives in managing our human capital assets, including, among others, employee safety and wellness, talent acquisition and retention, employee engagement, development and training, diversity and inclusion and compensation and pay equity. None of our employees are represented by a labor union and we consider our employee relations to be good. Our human capital resource objectives include, as applicable, identifying, recruiting, retaining, incentivizing and integrating our existing and new employees and advisors. The principal purposes of our equity and cash incentive plans are to attract, retain and reward personnel and increase our success and stockholder value thereby. The success of our business is fundamentally connected to the well-being of our employees. Accordingly, we are committed to their health, safety and wellness. 35 Table of Contents Information About Our Executive Officers The following table sets forth information regarding our executive officers: Name Executive Officers Shoshana Shendelman, Ph.D. Riccardo Perfetti, M.D., Ph.D. Adam Hansard Age 44 63 47 Position(s) President, Chief Executive Officer and Chair of the Board of Directors Chief Medical Officer Chief Commercial Officer Shoshana Shendelman, Ph.D., age 44, is our founder and has served as our President and Chief Executive Officer and as chair of our board of directors since January 2016. Prior to founding our company, she founded Clearpoint Strategy Group LLC, a boutique life sciences consulting firm, where she served as the Managing Director from July 2012 to December 2016, and served as a Senior Advisor from January 2017 to December 2018. Prior to that, she served as a scientific consultant and analyst at Bridge Scientific Consulting LLC. Dr. Shendelman received her B.S. in biochemistry from Brandeis University and a Ph.D. in Cellular, Molecular and Biophysical Studies (CMBS) from Columbia University Vagelos College of Physicians and Surgeons. We believe that Dr. Shendelman’s extensive knowledge of our company as founder, President and Chief Executive Officer and her management background and experience in the healthcare industry qualifies her to serve on our board of directors. Riccardo Perfetti, M.D., Ph.D., age 63, has served as our Chief Medical Officer since August 2018. Prior to joining us, Dr. Perfetti served as a Senior Medical Officer, Vice President and Head of Global Medical Affairs, Diabetes and Cardiovascular Business Unit at Sanofi S.A., a publicly traded pharmaceutical company from October 2007 to September 2018. Prior to joining Sanofi, Dr. Perfetti served in various roles at Amgen Inc., a publicly traded biopharmaceutical company, including as a Director and Global Development Leader in diabetes, obesity, metabolism and endocrinology from December 2004 to August 2007. Dr. Perfetti was previously an associate professor of medicine at University of California in Los Angeles and a professor of medicine at the National Institutes of Health, or NIH. Dr. Perfetti practiced as an endocrinologist at Cedars-Sinai Medical Center and also served as Director of the Diabetes Research Laboratory and Director of the Outpatient Diabetes Program. Dr. Perfetti received his M.D. and Ph.D. in Endocrinology from University La Sapienza in Rome, Italy and received post-graduate training in endocrinology and molecular biology at NIH. Adam Hansard, age 47, has served as our Chief Commercial Officer since March 2020. Prior to joining us, he was Senior Director of New Product Strategy at Alexion Pharmaceuticals, a biopharmaceutical company, from March 2019 to February 2020. From February 2018 to March 2019, he was Vice President of Business Operations at Syntimmune, a clinical-stage biotech purchased by Alexion in November 2018. From January 2012 to March 2018, Mr. Hansard worked at Sanofi Genzyme, a biotechnology company and wholly-owned subsidiary of Sanofi, a publicly traded, multinational pharmaceutical company, where he served as the North American Senior Director, Chief of Staff of MS Oncology and Immunology and the Senior Director of MS Brand Communications. Mr. Hansard received his Master’s in Business Communication from Jones International University and his B.S. in Marketing from the University of West Florida. Other Information We were incorporated in Delaware in January 2016 and completed the IPO in May 2019. Our principal executive offices are located at 545 5th Avenue, Suite 1400, New York, New York 10017, and our telephone number is (212) 220- 9226. 36 Table of Contents We maintain a website at www.appliedtherapeutics.com. The contents of our website are not incorporated in, or otherwise to be regarded as part of this Annual Report. Unless the context otherwise requires, the terms, “Applied Therapeutics,” the “Company,” “we,” “us,” “our” and the “ registrant” refer to Applied Therapeutics, Inc. Investors and others should note that we announce material financial information to our investors using our investor relations website (http://ir.appliedtherapeutics.com), SEC filings, press releases, public conference calls and webcasts. 37 Table of Contents ITEM 1A. RISK FACTORS. An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following information about these risks described below, together with other information appearing elsewhere in this Annual Report, including our financial statements and the related notes and the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” before deciding whether to invest in our common stock. The occurrence of any of the events or developments described below could harm our business, financial condition, results of operations and growth prospects. In such an event, the market price of our common stock could decline and you may lose all or part of your investment. Additional risks and uncertainties not presently known to us or that we currently deem immaterial also may impair our business operations and the market price of our common stock. Risk Factor Summary The following is a summary of the risk factors included in this Item 1A and is qualified entirely by the disclosure included in the rest of this Item 1A: Risks Related to Our Financial Position and Capital Needs ● We have incurred and expect to continue to incur substantial operating losses and our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. ● Our operating history makes evaluating our business and future viability more difficult. ● We will require substantial additional funding to finance our operations, and may suffer consequences to our development programs upon failure to do so. ● Raising additional capital may cause adverse effects. Risks Related to the Development and Commercialization of Our Product Candidates ● Our success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates and may be adversely affected upon failure to do so. ● We or Advanz Pharma may fail to perform under any of the agreements entered into in connection with the partnership for the commercialization of AT-007, which may subject us to liabilities, and we may fail to achieve anticipated benefits of the partnership. ● Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and our results may not be sufficient for the necessary regulatory approvals. ● Clinical drug development involves a lengthy and expensive process and the development of additional product candidates is risky and uncertain. ● We may be unable to obtain/maintain or receive the benefits of regulatory approval, rare pediatric disease designation/exclusivity, accelerated registration pathways, breakthrough therapy designations or fast track designations for our product candidates, as applicable. ● Clinical trials are expensive, time consuming and subject to factors outside our control. ● Our product candidates may cause undesirable side effects, affecting regulatory approval, commercial potential or result in significant negative consequences following any potential marketing approval. ● Interim, “top line” and preliminary data from our clinical trials may be subject to change. ● The market opportunities for our product candidates may be smaller than we believe or approval we obtain may narrow our patient population. ● We may face substantial competition. ● We may face risks related to strategic collaborations to develop our product candidates ● Our product candidates may fail to achieve market acceptance necessary for commercial success. ● We may face risks related to any potential international operations. ● We may be adversely affected by product liability lawsuits. ● Our insurance policies may be inadequate and potentially expose us to unrecoverable risks. 38 Table of Contents Risks Related to Regulatory Compliance ● We are subject to healthcare laws and regulations, which carry substantial penalties for noncompliance. ● Coverage and adequate reimbursement may not be available for our product candidates. ● Healthcare reform measures may have a negative impact on our business and results of operations. Risks Related to Our Dependence on Third Parties ● Third-parties may conduct our preclinical studies and clinical trials in an unsatisfactory manner. ● We intend to rely on third parties to produce supplies of our product candidates. ● We and our third-party affiliates are subject to environmental, health and safety laws and regulations. Risks Related to Our Intellectual Property ● Breaches of our license agreements may result in the adverse effects to our ability to continue the development and commercialization of our product candidates. ● Insufficient patent protection could allow our competitors to develop and commercialize products and technology similar or identical to ours. ● Obtaining and maintaining our patent rights is expensive, complicated and labor intensive and patent terms may be inadequate to protect our competitive position on our product candidates. ● We may be subject to claims alleging violations of intellectual property rights. ● Changes in patent law could impair our ability to protect our product candidates. ● We may be unable to protect our intellectual property rights. ● Intellectual property rights do not necessarily address all potential threats to our business. Risks Related to Our Business Operations, Employee Matters and Managing Growth ● We are highly dependent on the services of our current executive officers. ● We may experience difficulties resulting from the expansion of our organization. ● We may be subject to security breaches in our information technology systems. ● Our employees and the third-parties we deal with may engage in misconduct or improper activities. ● Our business may be adversely affected by the coronavirus outbreak. Risks Related to Ownership of Our Common Stock ● The market price of our common stock is volatile and has fluctuated substantially. ● Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions. ● We do not anticipate paying any cash dividends on our capital stock in the foreseeable future. ● Failure to regain compliance with the continued listing requirements of Nasdaq could result in our common stock being delisted from Nasdaq and the price and liquidity of our common stock could be negatively impacted. General Risk Factors ● We may be affected by unfavorable research or reports. ● We may use our cash and cash equivalents ineffectively or in ways with which you do not agree. ● We are subject to risks as an “emerging growth company” and a public company. ● We may avail ourselves of defensive and forum selection provisions in our governing documents and under Delaware law. 39 Table of Contents Risks Related to Our Financial Position and Capital Needs We have incurred significant operating losses since inception and anticipate that we will continue to incur substantial operating losses for the foreseeable future and may never achieve or maintain profitability. Since inception in January 2016, we have incurred significant operating losses. Our net loss was $82.5 million and $105.6 million for the years ended December 31, 2022 and 2021, respectively. As of December 31, 2022, we had an accumulated deficit of $348.8 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future. Since inception, we have devoted substantially all of our efforts to research and preclinical and clinical development of our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. To date, we have never obtained regulatory approval for, or commercialized, any drugs. It could be several years, if ever, before we have a commercialized drug. The net losses we incur may fluctuate significantly from quarter to quarter and year-to-year. We anticipate that our expenses will increase substantially if, and as, we: ● continue the ongoing and planned development of our product candidates; ● initiate, conduct and complete any ongoing, anticipated or future preclinical studies and clinical trials for our current and future product candidates; ● seek marketing approvals for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any current or future product candidate for which we may obtain marketing approval; ● seek to discover and develop additional product candidates; ● continue to build a portfolio of product candidates through the acquisition or in-license of drugs, product candidates or technologies; ● maintain, protect and expand our intellectual property portfolio; ● meet the requirements and demands of being a public company; ● defend against any product liability claims or other lawsuits related to our products; ● hire additional clinical, regulatory and scientific personnel; and ● add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts. Furthermore, we have incurred additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. To become and remain profitable, we must succeed in developing and eventually commercializing drugs that generate significant revenue. This will require us to be successful in a range of challenging activities, including completing preclinical studies and clinical trials of our current and future product candidates, obtaining regulatory approval, procuring commercial-scale manufacturing, marketing and selling any products for which we obtain regulatory approval (including through third parties), as well as discovering or acquiring and developing additional product candidates. We are only in the preliminary stages of most of these activities. We may never succeed in these activities and, even if we do, may never generate revenues that are sufficient to offset our expenses and achieve profitability. Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately predict the timing or amount of expenses or when, or if, we will be able to achieve profitability. If we are required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in the initiation and completion of our clinical trials or the development of any of our product candidates, our expenses could increase. Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of our company and could impair our ability to raise capital, maintain our research and development efforts, expand our business or continue our operations. A decline in the value of our common stock could also cause you to lose all or part of your investment. 40 Table of Contents The report of our independent registered public accounting firm included a "going concern" explanatory paragraph. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2022 includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern. Our cash and cash equivalents were $30.6 million at December 31, 2022. We also received a $10.7 million upfront payment from Advanz Pharma in January 2023 in conjunction with signing the exclusive licensing agreement for European commercialization rights. We believe that our cash and cash equivalents as of December 31, 2022, along with the upfront payment received in January 2023 and the projected clinical and regulatory milestone payments expected in fiscal year 2023 from Advanz Pharma will be sufficient to fund our operations through year end 2023, and potentially beyond if clinical trial completion and marketing authorization in Europe as well as commercial sales milestones materialize in the expected timelines. However, given our planned expenditures for the next several years, we have concluded, and our independent registered public accounting firm has agreed with our conclusion that there is still a substantial doubt regarding our ability to continue as a going concern for a period of 12 months beyond the filing of this Annual Report on Form 10-K. Any such inability to continue as a going concern may result in our stockholders losing their entire investment. There is no guarantee that we will become profitable or secure additional financing on acceptable terms. Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess our future viability. We are a clinical-stage company with limited operational history, and our operations to date have been largely focused on raising capital, organizing and staffing our company, identifying and developing our product candidates, and undertaking preclinical and clinical development for our product candidates. As an organization, we have not yet demonstrated an ability to successfully complete clinical development, obtain regulatory approvals, manufacture a commercial-scale product or conduct sales and marketing activities necessary for successful commercialization, or arrange for a third party to conduct these activities on our behalf. Consequently, any predictions about our future success or viability may not be as accurate as they could be if we had a longer operating history. We have encountered, and may continue to encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in achieving our business objectives. We will need to transition at some point from a company with a research and development focus to a company capable of supporting commercial activities. We may not be successful in such a transition. Additionally, we expect our financial condition and operating results to continue to fluctuate from quarter to quarter and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon the results of any quarterly or annual periods as indications of future operating performance. We will require substantial additional funding to finance our operations. If we are unable to raise capital when needed, we could be forced to delay, reduce or terminate certain of our development programs or other operations. As of December 31, 2022, our cash, cash equivalents and marketable securities was $30.6 million. We also received a $10.7 million upfront payment from Advanz Pharma in January 2023 in conjunction with signing the exclusive licensing agreement for European commercialization rights. We believe that our cash and cash equivalents as of December 31, 2022, along with the upfront payment received in January 2023 and the projected clinical and regulatory milestone payments expected in fiscal year 2023 from Advanz Pharma will be sufficient to fund our operations through year end 2023, and potentially beyond if drug approvals materialize in the expected timelines. Based on our current operating and research and development plans, a substantial doubt exists regarding whether our existing cash, cash equivalents, and marketable securities will be sufficient to fund our projected operations through the next 12 months from the date the financial statements were issued. We will need to obtain substantial additional funding in connection with our continuing operations and planned research and clinical development activities. Our future capital requirements will depend on many factors, including: 41 Table of Contents ● the timing, progress and results of our ongoing preclinical studies and clinical trials of our product candidates; ● the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials of other product candidates that we may pursue; ● our ability to establish collaborations on favorable terms, if at all; ● the costs, timing and outcome of regulatory review of our product candidates; ● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales and distribution, for any of our product candidates for which we receive marketing approval; ● the revenue, if any, received from commercial sales of our product candidates for which we receive marketing approval; ● the cost of any milestone and royalty payments with respect to any approved product candidates; ● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; ● the costs of operating as a public company; and ● the extent to which we acquire or in-license other product candidates and technologies. Identifying potential product candidates and conducting preclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of drugs that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. We may seek additional capital due to favorable market conditions or strategic considerations even if we believe we have sufficient funds for our current or future operating plans. In addition, our ability to access additional capital has been affected by overall macroeconomic trends, among other things, including rising interest rates, which have caused the price of our common stock to fluctuate significantly and/or decline. These macroeconomic trends have been exacerbated by recent hostilities between Russia and Ukraine, which have contributed to further economic instability in the global financial markets. As a result, adequate additional financing may not be available to us when needed or on attractive terms. If we are unable to raise capital when needed or on attractive terms, we could be forced to delay, reduce, or altogether terminate our research and development programs or future commercialization efforts. Raising additional capital may cause dilution to our stockholders and restrict our operations or require us to relinquish rights to our product candidates. Until such time, if ever, as we can generate substantial product revenue, we expect to finance our cash needs through public or private equity or debt financings, including through the Cowen Equity Distribution Agreement, third party funding, marketing and distribution arrangements, as well as other collaborations, strategic alliances and licensing arrangements, or any combination of these approaches. We do not have any committed external source of funds. To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest in our company may be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect your rights as a stockholder. Debt and equity financings, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as redeeming our shares, making investments, incurring additional debt, making capital expenditures, declaring dividends or placing limitations on our ability to acquire, sell or license intellectual property rights. If we raise additional capital through future collaborations, strategic alliances or third party licensing arrangements, we may have to relinquish valuable rights to our intellectual property, future revenue streams, research programs or product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise additional capital when needed, we may be required to delay, limit, reduce or terminate our drug development or future commercialization efforts, or grant rights to develop and market product candidates that we would otherwise develop and market ourselves. 42 Table of Contents Our ability to use our net operating losses to offset future taxable income may be subject to certain limitations. We have incurred substantial losses since inception and do not expect to become profitable in the near future, if ever. In general, under Section 382 of the United States Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs to offset future taxable income. We may have experienced ownership changes in the past and may experience ownership changes in the future as a result of subsequent changes in our stock ownership (some of which shifts are outside our control). As a result, if, and to the extent that we earn net taxable income, our ability to use our pre-change NOLs to offset such taxable income may be subject to limitations. For NOLs arising in tax years beginning after December 31, 2017, the Code limits a taxpayer’s ability to utilize NOL carryforwards to 80% of taxable income. In addition, NOLs arising in tax years ending after December 31, 2017 can be carried forward indefinitely, but carryback is generally prohibited. NOLs generated in tax years beginning before January 1, 2018 will not be subject to the taxable income limitation, and NOLs generated in tax years ending before January 1, 2018 will continue to have a two-year carryback and 20-year carryforward period. Deferred tax assets for NOLs will need to be measured at the applicable tax rate in effect when the NOL is expected to be utilized. The limitations in the carryforward/carryback periods, as well as the limitation on use of NOLs for NOLs arising in tax years beginning after December 31, 2017 may significantly impact our ability to utilize our NOLs to offset taxable income in the future. In order to realize the future tax benefits of our NOL carryforwards, we must generate taxable income, of which there is no assurance. Accordingly, we have provided a full valuation allowance for deferred tax assets as of December 31, 2021 and 2022. Risks Related to the Development and Commercialization of Our Product Candidates Our future success is substantially dependent on the successful clinical development, regulatory approval and commercialization of our product candidates. If we are not able to obtain required regulatory approvals, we will not be able to commercialize our product candidates and our ability to generate product revenue will be adversely affected. We have invested a significant portion of our time and financial resources in the development of AT-007, AT-001 and AT-003. Our business is dependent on our ability to successfully complete development of, obtain regulatory approval for, and, if approved, successfully commercialize our product candidates in a timely manner. We may face unforeseen challenges in our drug development strategy, and we can provide no assurances that our drug design will prove to be effective, that we will be able to take advantage of expedited regulatory pathways for any of our product candidates, or that we will ultimately be successful in our future clinical trials. We have not obtained regulatory approval for any product candidate, and it is possible that any product candidates we may seek to develop in the future will not obtain regulatory approval. Neither we nor any future collaborator is permitted to market any product candidates in the United States or abroad until we receive regulatory approval from the FDA or applicable foreign regulatory agency. The time required to obtain approval or other marketing authorizations by the FDA and comparable foreign regulatory authorities is unpredictable and typically takes many years following the commencement of clinical trials and depends upon numerous factors, including the substantial discretion of the regulatory authorities. In addition, approval policies, regulations or the type and amount of clinical data necessary to gain approval may change during the course of a product candidate’s clinical development and may vary among jurisdictions. Prior to obtaining approval to commercialize any product candidate in the United States or abroad, we must demonstrate with substantial evidence from well-controlled clinical trials, and to the satisfaction of the FDA or comparable foreign regulatory authorities, that such product candidate is safe and effective for its intended uses. Results from preclinical studies and clinical trials can be interpreted in different ways. Even if we believe that the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA 43 Table of Contents and other regulatory authorities. The FDA may also require us to conduct additional preclinical studies or clinical trials for our product candidates either prior to or post-approval, or it may object to elements of our clinical development program, requiring their alteration. Of the large number of products in development, only a small percentage successfully complete the FDA or comparable foreign regulatory authorities approval processes and are commercialized. The lengthy approval or marketing authorization process as well as the unpredictability of future clinical trial results may result in our failing to obtain regulatory approval or marketing authorization to market our product candidates, which would significantly harm our business, financial condition, results of operations and prospects. Even if we eventually complete clinical testing and receive approval of a new drug application, or NDA, or foreign marketing for our product candidates, the FDA or the comparable foreign regulatory authorities may grant approval or other marketing authorization contingent on the performance of costly additional clinical trials, including post-market clinical trials. The FDA or the comparable foreign regulatory authorities also may approve or authorize for marketing a product candidate for a more limited indication or patient population than we originally request, and the FDA or comparable foreign regulatory authorities may not approve or authorize the labeling that we believe is necessary or desirable for the successful commercialization of a product candidate. Any delay in obtaining, or inability to obtain, applicable regulatory approval or other marketing authorization would delay or prevent commercialization of that product candidate and would adversely impact our business and prospects. In addition, the FDA or comparable foreign regulatory authorities may change their policies, adopt additional regulations or revise existing regulations or take other actions, which may prevent or delay approval of our future product candidates under development on a timely basis. Such policy or regulatory changes could impose additional requirements upon us that could delay our ability to obtain approvals, increase the costs of compliance or restrict our ability to maintain any marketing authorizations we may have obtained. Furthermore, even if we obtain regulatory approval for our product candidates, we will still need to develop a commercial organization, establish a commercially viable pricing structure and obtain approval for coverage and adequate reimbursement from third party and government payors, including government health administration authorities. If we are unable to successfully commercialize our product candidates, we may not be able to generate sufficient revenue to continue our business. We or Advanz Pharma may fail to perform under any of the agreements entered into in connection with the partnership for commercialization of AT-007, which may subject us to liabilities, and we may fail to achieve anticipated benefits of the partnership. In January 2023, we announced a partnership with Advanz Pharma (“Advanz”) for commercialization of AT-007 (govorestat) in Europe, and entered into an Exclusive License and Supply Agreement (the “Advanz Agreement”) with Advanz. Under the terms of the Advanz Agreement, Advanz receives exclusive commercial rights in the European Economic Area, Switzerland, and the UK (the “Territory”) for AT-007 in Galactosemia and SORD Deficiency, with certain rights to future indications for AT-007 in the Territory. In return, we have the right to receive certain near-term development milestone payments upon clinical trial completion and marketing authorization in Europe as well as commercial sales milestones, which in the aggregate are expected to amount to over €130 million. We also have the right to receive royalties on any future net sales of AT-007 in the Territory of 20%. The royalty rate will be payable on a country-by-country basis until the later of (i) the expiration of the licensed patents covering the composition of matter of AT-007, or (ii) 10 years after the European Medicines Agency’s grant of marketing authorization for AT-007. The royalties are subject to certain deductions, including certain secondary finishing costs, certain step-in establishment costs and a portion of fees for any potential third party patent licenses if applicable in the future. Following the initial term of the license, as described above, the royalty rate shall be reduced to 10% and shall continue in perpetuity unless the Advanz Agreement is terminated in various circumstances in accordance with its terms. We will continue to be responsible for the development, manufacturing and supply of AT-007, and Advanz will be responsible for packaging, distribution and commercialization in the Territory. The Advanz Agreement includes a sublicense under the 2016 Columbia Agreement and the 2020 Miami License Agreement. 44 Table of Contents Our partnership with Advanz is subject to various risks, including but not limited to the following: ● If Advanz breaches the contractual obligations owed to us pursuant to the Advanz Agreement or any related agreements, we could be exposed to commercial, regulatory or other liabilities. ● We may be subject to liabilities in connection with the development, manufacturing and supply of AT-007 ● under the Advanz Agreement, including with respect to the 2016 Columbia Agreement and the 2020 Miami License Agreement. ● We may not be able to adequately protect our intellectual property or may become involved in intellectual property enforcement actions, which may cause us to incur substantial costs as a result of litigation or other proceedings relating to patent and other intellectual property rights, and such litigation may divert the attention of our management and scientific personnel and adversely affect our development and commercialization efforts. ● We may have limited control over the commercialization efforts of Advanz, and Advanz may fail to successfully sell and market AT-007. ● Our ability to receive certain economic benefits from the partnership, including the milestone payments and royalties, depends on certain contingencies beyond our control. ● In certain circumstances, Advanz may exercise certain step-in rights, including the ability for Advanz to perform its own supply arrangements, and in some cases, specified development rights in the Territory and assignment of certain contract rights. In all such circumstances, Advanz must continue to pay royalties and milestone payments, but may recoup certain of its manufacturing and development establishment costs, and deduct such costs from royalties owed. Any of these factors could cause us to incur higher costs, disrupt the supply of our product candidates or approved products, delay the approval of our product candidates or prevent or disrupt the commercialization of our approved products. As a result, we may not achieve some or all economic benefits expected from the partnership. The development of additional product candidates is risky and uncertain, and we can provide no assurances that we will be able to replicate our approach to drug development for other disease indications. Efforts to identify, acquire or in-license, and then develop, product candidates require substantial technical, financial and human resources, whether or not any product candidates are ultimately identified. Our efforts may initially show promise in identifying potential product candidates, yet fail to yield product candidates for clinical development, approved products or commercial revenues for many reasons, including the following: ● the methodology used may not be successful in identifying potential product candidates; ● competitors may develop alternatives that render any product candidates we develop obsolete; ● any product candidates we develop may be covered by third parties’ patents or other exclusive rights; ● a product candidate may be shown to have harmful side effects or other characteristics that indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria; ● a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or at all; and ● a product candidate may not be accepted as safe and effective by physicians, patients, the medical community or third party payors. We have limited financial and management resources and, as a result, we may forego or delay pursuit of opportunities with other product candidates or for other indications that later prove to have greater market potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial drugs or profitable market opportunities. If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing or other royalty arrangements in circumstances under which it would have been more advantageous for us to retain sole development and commercialization rights to such product candidate. In addition, we may not be successful in replicating our approach to drug development for other disease indications. If we are unsuccessful in identifying and developing additional product candidates or are unable to do so, our business may be harmed. 45 Table of Contents Success in preclinical studies or earlier clinical trials may not be indicative of results in future clinical trials and we cannot assure you that any ongoing, planned or future clinical trials will lead to results sufficient for the necessary regulatory approvals. Success in preclinical testing and earlier clinical trials does not ensure that later clinical trials will generate the same results or otherwise provide adequate data to demonstrate the efficacy and safety of a product candidate. Preclinical studies and Phase 1 clinical trials are primarily designed to test safety, to study pharmacokinetics and pharmacodynamics and to understand the side effects of product candidates at various doses and schedules. Success in preclinical studies and earlier clinical trials does not ensure that later efficacy trials will be successful, nor does it predict final results. Our product candidates may fail to show the desired safety and efficacy in clinical development despite positive results in preclinical studies or having successfully advanced through earlier clinical trials. In addition, the design of a clinical trial can determine whether its results will support approval of a product, and flaws in the design of a clinical trial may not become apparent until the clinical trial is well advanced. As an organization, we have limited experience designing clinical trials and may be unable to design and execute a clinical trial to support regulatory approval. Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks in late-stage clinical trials even after achieving promising results in preclinical testing and earlier clinical trials. Data obtained from preclinical and clinical activities are subject to varying interpretations, which may delay, limit or prevent regulatory approval. In addition, we may experience regulatory delays or rejections as a result of many factors, including changes in regulatory policy during the period of our product candidate development. Any such delays could negatively impact our business, financial condition, results of operations and prospects. Clinical drug development involves a lengthy and expensive process. We may incur additional costs and encounter substantial delays or difficulties in our clinical trials. We may not commercialize, market, promote or sell any product candidate without obtaining marketing approval from the FDA or other comparable regulatory authority, and we may never receive such approvals. It is impossible to predict when or if any of our product candidates will prove effective or safe in humans and will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must complete preclinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Clinical testing is expensive, is difficult to design and implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can occur at any stage of testing. Moreover, preclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of their products. We may experience numerous unforeseen events prior to, during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates, including the following: ● delays in reaching a consensus with regulatory authorities on the design or implementation of our clinical trials; ● regulators or institutional review boards, or IRBs, may not authorize us or our investigators to commence a clinical trial or conduct a clinical trial at a prospective trial site; ● delays in reaching agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical trial sites; ● the number of patients required for clinical trials of our product candidates may be larger than we anticipate, enrollment in these clinical trials may be slower than we anticipate, participants may drop out of these clinical trials at a higher rate than we anticipate or fail to return for post-treatment follow-up or we may fail to recruit suitable patients to participate in a trial; ● clinical trials of our product candidates may produce negative or inconclusive results; 46 Table of Contents ● imposition of a clinical hold by regulatory authorities as a result of a serious adverse event, concerns with a class of product candidates or after an inspection of our clinical trial operations, trial sites or manufacturing facilities; ● occurrence of serious adverse events associated with the product candidate that are viewed to outweigh its potential benefits; ● changes in regulatory requirements and guidance that require amending or submitting new clinical protocols; or ● we may decide, or regulators may require us, to conduct additional clinical trials or abandon product development programs. Any inability to successfully complete preclinical and clinical development could result in additional costs to us or impair our ability to generate revenue from future drug sales or other sources. In addition, if we make manufacturing or formulation changes to our product candidates, we may need to conduct additional testing to bridge our modified product candidate to earlier versions. Clinical trial delays could also shorten any periods during which we may have the exclusive right to commercialize our product candidates, if approved, or allow our competitors to bring competing drugs to market before we do, which could impair our ability to successfully commercialize our product candidates and may harm our business, financial condition, results of operations and prospects. Additionally, if the results of our clinical trials are inconclusive or if there are safety concerns or serious adverse events associated with our product candidates, we may: ● be delayed in obtaining marketing approval, or not obtain marketing approval at all; ● obtain approval for indications or patient populations that are not as broad as intended or desired; ● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings, including in the form of a risk evaluation and mitigation strategy, or REMS; ● be subject to additional post-marketing testing requirements; ● be required to perform additional clinical trials to support approval or be subject to additional post-marketing testing requirements; ● have regulatory authorities withdraw, or suspend, their approval of the drug or impose restrictions on its distribution in the form of a modified REMS; ● be subject to the addition of labeling statements, such as warnings or contraindications; ● be sued; or ● experience damage to our reputation. Our product development costs will also increase if we experience delays in testing or obtaining marketing approvals. We do not know whether any of our preclinical studies or clinical trials will begin as planned, need to be restructured or be completed on schedule, if at all. Further, we, the FDA or an IRB may suspend our clinical trials at any time if it appears that we or our collaborators are failing to conduct a trial in accordance with regulatory requirements, including the FDA’s current Good Clinical Practice, or GCP, regulations, that we are exposing participants to unacceptable health risks, or if the FDA finds deficiencies in our investigational new drug applications, or INDs, or the conduct of these trials. Therefore, we cannot predict with any certainty the schedule for commencement and completion of future clinical trials. If we experience delays in the commencement or completion of our clinical trials, or if we terminate a clinical trial prior to completion, the commercial prospects of our product candidates could be negatively impacted, and our ability to generate revenues from our product candidates may be delayed. All of our current product candidates that have proceeded to clinical trials target inhibition of aldose reductase. There can be no assurance that aldose reductase inhibitors will ever receive regulatory approval. All of our current product candidates that have proceeded to clinical trials target inhibition of the aldose reductase enzyme. There are no currently approved aldose reductase inhibitors on the market outside of Japan, India and China, and there can be no assurance that aldose reductase inhibitors will ever receive regulatory approval in all other 47 Table of Contents countries, including the United States. Prior attempts to inhibit this enzyme were hindered by nonselective, nonspecific inhibition, which resulted in limited efficacy and significant off-target safety effects. Our current product candidates, including AT-007, AT-001 and AT-003, may face similar or different challenges that prevent their successful commercialization. We may not be able to obtain or maintain rare pediatric disease designation or exclusivity for our product candidates, which could limit the potential profitability of our product candidates. We have obtained orphan drug designation and rare pediatric disease designation, from the FDA for AT-007 for the treatment of Galactosemia and PMM2-CDG. The FDA may grant orphan drug designation to a drug intended to treat a rare disease or condition, which is defined as a disease or condition that either affects fewer than 200,000 individuals in the United States, or if it affects more than 200,000 individuals, there is no reasonable expectation that sales of the drug in the United States will be sufficient to offset the costs of developing and making the drug available in the United States. Orphan drug designation does not convey any advantage in, or shorten the duration of, the regulatory review and approval process. For the purposes of the rare pediatric disease program, a “rare pediatric disease” is a serious or life-threatening disease in which the serious or life-threatening manifestations primarily affect individuals aged from birth to 18 years or a rare disease or conditions within the meaning of the Orphan Drug Act. Under the FDA’s rare pediatric disease priority review voucher, or RPD-PRV, program, upon the approval of an NDA for the treatment of a rare pediatric disease, the sponsor of such application would be eligible for an RPD-PRV that can be used to obtain priority review for a subsequent NDA. The sponsor of the application may transfer (including by sale) the RPD-PRV to another sponsor. The voucher may be further transferred any number of times before the voucher is used, as long as the sponsor making the transfer has not yet submitted the application. Congress has extended the RPD-PRV program until September 30, 2024, with potential for vouchers to be granted until 2026. This program has been subject to criticism, including by the FDA. As such it is possible that even though we have obtained qualification for a RPD-PRV, the program may no longer be in effect at the time of approval. Also, although priority review vouchers may be sold or transferred to third parties, there is no guaranty that we will be able to realize any value if we obtained, and subsequently were able to sell a priority review voucher. The RPD- PRV program is currently scheduled to sunset as of September 30, 2026. A breakthrough therapy designation by the FDA for a product candidate may not lead to a faster development or regulatory review or approval process, and it would not increase the likelihood that the product candidate will receive marketing approval. We may seek a breakthrough therapy designation for one or more product candidates. A breakthrough therapy is defined as a product candidate that is intended, alone or in combination with one or more other drugs, to treat a serious or life-threatening disease or condition, and preliminary clinical evidence indicates that the product candidate may demonstrate substantial improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical development. For product candidates that have been designated as breakthrough therapies, interaction and communication between the FDA and the sponsor of the trial can help to identify the most efficient path for clinical development while minimizing the number of patients placed in ineffective control regimens. Product candidates designated as breakthrough therapies by the FDA are also eligible for priority review if supported by clinical data at the time of the submission of the NDA. Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe that one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and instead determine not to make such designation. In any event, the receipt of a breakthrough therapy designation for a product candidate may not result in a faster development process, review or approval compared to product candidates considered for approval under conventional FDA procedures and it would not assure ultimate approval by the FDA. In addition, even if one or more of our product candidates qualify as breakthrough therapies, the FDA may later decide that the product candidate no longer meets the conditions for qualification or it may decide that the time period for FDA review or approval will not be shortened. 48 Table of Contents We have sought, and may in the future seek, fast track designation from the FDA for our product candidates. Even if granted, fast track designation may not actually lead to a faster development, regulatory review or approval process. If a product candidate is intended for the treatment of a serious or life-threatening condition and demonstrates the potential to address unmet needs for this condition, the sponsor may apply for FDA fast track designation. If fast track designation is obtained, the FDA may prioritize interactions with the sponsor concerning the designated development program and initiate review of sections of an NDA before the application is complete, known as “rolling review.” Fast track designation would not ensure that we would experience a faster development, regulatory review or approval process compared to conventional FDA procedures or that we would ultimately obtain regulatory approval. Additionally, the FDA may withdraw fast track designation if it believes that the designation is no longer supported by data from our clinical development program. We intend to seek approval from the FDA through the use of accelerated registration pathways. If we are unable to obtain approval under an accelerated pathway, we may be required to conduct additional preclinical studies or clinical trials, which could increase the expense of obtaining, reduce the likelihood of obtaining and/or delay the timing of obtaining, necessary marketing approvals. Even if we receive approval from the FDA to utilize an accelerated registration pathway, if our confirmatory trials do not verify clinical benefit, or if we do not comply with rigorous post- marketing requirements, the FDA may seek to withdraw accelerated approval. We intend to seek an accelerated approval development pathway for our product candidates. Under the accelerated approval provisions of the Federal Food, Drug, and Cosmetic Act, or the FDCA, and the FDA’s implementing regulations, the FDA may grant accelerated approval to a product designed to treat a serious or life-threatening condition that provides meaningful therapeutic advantage over available therapies and demonstrates an effect on a surrogate endpoint or intermediate clinical endpoint that is reasonably likely to predict clinical benefit. The FDA considers a clinical benefit to be a positive therapeutic effect that is clinically meaningful in the context of a given disease. For the purposes of accelerated approval, a surrogate endpoint is a marker, such as a laboratory measurement, radiographic image, physical sign or other measure that is thought to predict clinical benefit, but is not itself a measure of clinical benefit. An intermediate clinical endpoint is a clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality that is reasonably likely to predict an effect on irreversible morbidity or mortality or other clinical benefit. The accelerated approval development pathway may be used in cases in which the advantage of a new drug over available therapy may not be a direct therapeutic advantage, but is a clinically important improvement from a patient and public health perspective. If granted, accelerated approval is contingent on the sponsor’s agreement to conduct, in a diligent manner, additional post- approval confirmatory studies to verify and describe the drug’s clinical profile or risks and benefits for accelerated approval. The FDA may require that any such confirmatory studies be initiated or substantially underway prior to the submission of an application for accelerated approval. If such post-approval studies fail to confirm the drug’s clinical profile or risks and benefits, the FDA may withdraw its approval of the drug. FDORA made amendments to the accelerated approval program, among them new requirements relating to post-approval studies and enhanced enforcement and withdrawal authorities for the FDA, including in the event that a sponsor fails to comply with applicable requirements under the program. Because we are still in early stages of our clinical trials, we can provide no assurances that our biomarker-based approach will be successful in demonstrating a causal link to the relevant outcomes we are evaluating. If our approach is not successful, we may be required to conduct longer clinical trials. If we choose to pursue accelerated approval, we intend to seek feedback from the FDA or will otherwise evaluate our ability to seek and receive such accelerated approval. There can be no assurance that, after our evaluation of the feedback from the FDA or other factors, we will decide to pursue or submit an NDA for accelerated approval or any other form of expedited development, review or approval. Furthermore, even if we submit an application for accelerated approval, there can be no assurance that the application will be accepted or that approval will be granted on a timely basis, or at all. The FDA also could require us to conduct further studies or trials prior to considering our application or granting approval of any type. We might not be able to fulfill the FDA’s requirements in a timely manner, which would cause delays, or approval might not be granted because our submission is deemed incomplete by the FDA. A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate would result in a longer time period to commercialize such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace. 49 Table of Contents Even if we receive accelerated approval from the FDA, we will be subject to rigorous post-marketing requirements, including the completion of confirmatory post-market clinical trial(s) to verify the clinical benefit of the product, and submission to the FDA of all promotional materials prior to their dissemination. The FDA could seek to withdraw accelerated approval for multiple reasons, including if we fail to conduct any required post-market study with due diligence, a post-market study does not confirm the predicted clinical benefit, other evidence shows that the product is not safe or effective under the conditions of use, or we disseminate promotional materials that are found by the FDA to be false or misleading. A failure to obtain accelerated approval or any other form of expedited development, review or approval for a product candidate that we may choose to develop would result in a longer time period prior to commercializing such product candidate, could increase the cost of development of such product candidate and could harm our competitive position in the marketplace. Enrollment and retention of patients in clinical trials is an expensive and time-consuming process and could be delayed, made more difficult or rendered impossible by multiple factors outside our control. Identifying and qualifying patients to participate in our clinical trials is critical to our success. We may encounter difficulties in enrolling patients in our clinical trials, thereby delaying or preventing development and approval of our product candidates. Even once enrolled, we may be unable to retain a sufficient number of patients to complete any of our trials. Patient enrollment and retention in clinical trials depends on many factors, including the size of the patient population, the nature of the trial protocol, the existing body of safety and efficacy data, the number and nature of competing treatments and ongoing clinical trials of competing therapies for the same indication, the proximity of patients to clinical sites and the eligibility criteria for the trial. Because our focus includes rare disorders, there are limited patient pools from which to draw in order to complete our clinical trials in a timely and cost-effective manner. Accordingly, enrollment of our clinical trials could take significantly longer than projected, which would delay any potential approval of our product candidates. Furthermore, even if we are able to enroll a sufficient number of patients for our clinical trials, we may have difficulty maintaining enrollment of such patients in our clinical trials. Our efforts to build relationships with patient communities may not succeed, which could result in delays in patient enrollment in our clinical trials. Any negative results we may report in clinical trials of our product candidates may make it difficult or impossible to recruit and retain patients in other clinical trials of that same product candidate. Delays or failures in planned patient enrollment or retention may result in increased costs, program delays or both, which could have a harmful effect on our ability to develop our product candidates or could render further development impossible. In addition, we may rely on CROs and clinical trial sites to ensure proper and timely conduct of our future clinical trials and, while we intend to enter into agreements governing their services, we will be limited in our ability to ensure their actual performance. For additional information regarding delays in enrollment and retention of patients, see “Risks Related to Our Business Operations, Employee Matters and Managing Growth—Our business may be adversely affected by the coronavirus outbreak.” Our product candidates may cause undesirable side effects or have other properties that could delay or prevent their regulatory approval, limit their commercial potential or result in significant negative consequences following any potential marketing approval. During the conduct of clinical trials, patients report changes in their health, including illnesses, injuries and discomforts, to their doctor. Often, it is not possible to determine whether or not the product candidate being studied caused these conditions. Regulatory authorities may draw different conclusions or require additional testing to confirm these determinations, if they occur. In addition, it is possible that as we test our product candidates in larger, longer and more extensive clinical trials, or as use of these product candidates becomes more widespread if they receive regulatory approval, illnesses, injuries, discomforts and other adverse events that were observed in earlier trials, as well as conditions that did not occur or went undetected in previous trials, will be reported by subjects or patients. Many times, side effects are only 50 Table of Contents detectable after investigational drugs are tested in large-scale pivotal trials or, in some cases, after they are made available to patients on a commercial scale after approval. If additional clinical experience indicates that any of our product candidates have side effects or cause serious or life-threatening side effects, the development of the product candidate may fail or be delayed, or, if the product candidate has received regulatory approval, such approval may be revoked, which would harm our business, prospects, operating results and financial condition. Interim, “top-line” and preliminary data from our clinical trials that we announce or publish from time to time may change as more patient data become available and are subject to audit and verification procedures that could result in material changes in the final data. From time to time, we may publish interim, “top-line” or preliminary data from our clinical trials. Interim data from clinical trials that we may complete are subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment continues and more patient data become available. Preliminary or “top-line” data also remain subject to audit and verification procedures that may result in the final data being materially different from the preliminary data we previously published. As a result, interim and preliminary data should be viewed with caution until the final data are available. Differences between preliminary or interim data and final data could significantly harm our business prospects and may cause the trading price of our common stock to fluctuate significantly. The incidence and prevalence for target patient populations of our product candidates have not been established with precision. If the market opportunities for our product candidates are smaller than we believe they are or any approval we obtain is based on a narrower definition of the patient population, our business may suffer. We currently focus our drug development on product candidates for the treatment of diseases with high unmet medical need. Our eligible patient population and pricing estimates may differ significantly from the actual market addressable by our product candidates. Our estimates of both the number of people who have these diseases, as well as the subset of people with these diseases who have the potential to benefit from treatment with our product candidates, are based on our beliefs and analyses. These estimates have been derived from a variety of sources, including the scientific literature, patient foundations or market research, and may prove to be incorrect. Further, new studies may change the estimated incidence or prevalence of the diseases we are targeting. The number of patients may turn out to be lower than expected. Likewise, the potentially addressable patient population for each of our product candidates may be limited or may not be receptive to treatment with our product candidates, and new patients may become increasingly difficult to identify or access. If the market opportunities for our product candidates are smaller than we estimate, we may not be able to achieve our forecast revenue, which could hinder our business plan and adversely affect our business and results of operations. We may face substantial competition, which may result in others developing or commercializing drugs before or more successfully than us. The development and commercialization of new drugs is highly competitive. We may face potential competition with respect to our current product candidates and may face competition with respect to any other product candidates that we may seek to develop or commercialize in the future from pharmaceutical and biotechnology companies, academic institutions, government agencies and other public and private research institutions. Our competitors may have an advantage over us due to their greater size, resources and institutional experience. In particular, these companies have greater experience and expertise in securing reimbursement, government contracts and relationships with key opinion leaders, conducting testing and clinical trials, obtaining and maintaining regulatory approvals and distribution relationships to market products and marketing approved drugs. These companies also have significantly greater research and marketing capabilities than we do. If we are not able to compete effectively against existing and potential competitors, our business and financial condition may be harmed. As a result of these factors, our competitors may obtain regulatory approval of their drugs before we are able to, which may limit our ability to develop or commercialize our product candidates. Our competitors may also develop therapies that are safer, more effective, more widely accepted or less expensive than ours, and may also be more successful than we are in manufacturing and marketing their drugs. These advantages could render our product 51 Table of Contents candidates obsolete or non-competitive before we can recover the costs of such product candidates’ development and commercialization. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third- parties compete with us in recruiting and retaining qualified scientific, management and commercial personnel, establishing clinical trial sites and subject registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs. We may explore strategic collaborations that may never materialize or we may be required to relinquish important rights to and control over the development and commercialization of our product candidates to any future collaborators. Over time, our business strategy includes acquiring or in-licensing additional product candidates for treatments of diseases with high unmet medical need. As a result, we intend to periodically explore a variety of possible strategic collaborations in an effort to gain access to additional product candidates or resources. These strategic collaborations may include partnerships with large strategic partners, particularly for the development of DPN treatments using AT-001. At the current time however, we cannot predict what form such a strategic collaboration might take. We are likely to face significant competition in seeking appropriate strategic collaborators, and strategic collaborations can be complicated and time consuming to negotiate and document. We may not be able to negotiate strategic collaborations on acceptable terms, or at all. We are unable to predict when, if ever, we will enter into any strategic collaborations because of the numerous risks and uncertainties associated with establishing them. Future collaborations could subject us to a number of risks, including: ● we may be required to undertake the expenditure of substantial operational, financial and management resources; ● we may be required to issue equity securities that would dilute our stockholders’ percentage ownership of our company; ● we may be required to assume substantial actual or contingent liabilities; ● we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development or commercialization of our product candidates; ● strategic collaborators may select indications or design clinical trials in a way that may be less successful than if we were doing so; ● strategic collaborators may delay clinical trials, provide insufficient funding, terminate a clinical trial or abandon a product candidate, repeat or conduct new clinical trials or require a new version of a product candidate for clinical testing; ● strategic collaborators may not pursue further development and commercialization of products resulting from the strategic collaboration arrangement or may elect to discontinue research and development programs; ● strategic collaborators may not commit adequate resources to the marketing and distribution of our product candidates, limiting our potential revenues from these products; ● disputes may arise between us and our strategic collaborators that result in the delay or termination of the research, development or commercialization of our product candidates or that result in costly litigation or arbitration that diverts management’s attention and consumes resources; ● strategic collaborators may experience financial difficulties; ● strategic collaborators may not properly maintain, enforce or defend our intellectual property rights or may use our proprietary information in a manner that could jeopardize or invalidate our proprietary information or expose us to potential litigation; ● business combinations or significant changes in a strategic collaborator’s business strategy may adversely affect a strategic collaborator’s willingness or ability to complete its obligations under any arrangement; 52 Table of Contents ● strategic collaborators could decide to move forward with a competing product candidate developed either independently or in collaboration with others, including our competitors; and ● strategic collaborators could terminate the arrangement or allow it to expire, which would delay the development and may increase the cost of developing our product candidates. Even if any product candidates receive marketing approval, they may fail to achieve market acceptance by physicians, patients, third party payors or others in the medical community necessary for commercial success. Even if any product candidates receive marketing approval, they may fail to gain market acceptance by physicians, patients, third party payors and others in the medical community. If such product candidates do not achieve an adequate level of acceptance, we may not generate significant drug revenue and may not become profitable. The degree of market acceptance of any product candidate, if approved for commercial sale, will depend on a number of factors, including but not limited to: ● the convenience and ease of administration compared to alternative treatments and therapies; ● the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies; ● the efficacy and potential advantages compared to alternative treatments and therapies; ● the effectiveness of sales and marketing efforts; ● the strength of our relationships with patient communities; ● the cost of treatment in relation to alternative treatments and therapies, including any similar generic treatments; ● our ability to offer such drug for sale at competitive prices; ● the strength of marketing and distribution support; ● the availability of third party coverage and adequate reimbursement; ● the prevalence and severity of any side effects; and ● any restrictions on the use of the drug together with other medications. Our efforts to educate physicians, patients, third-party payors and others in the medical community on the benefits of our product candidates may require significant resources and may never be successful. Such efforts may require more resources than are typically required due to the complexity and uniqueness of our product candidates. Because we expect sales of our product candidates, if approved, to generate substantially all of our revenues for the foreseeable future, the failure of our product candidates to find market acceptance would harm our business. Even if we obtain regulatory approvals for our product candidates, they will remain subject to ongoing regulatory oversight. Even if we obtain regulatory approvals for our product candidates, such approvals will be subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising, promotion, sampling, record keeping and submission of safety and other post-market information. Any regulatory approvals that we receive for our product candidates may also be subject to a REMS, limitations on the approved indicated uses for which the drug may be marketed or to the conditions of approval, or contain requirements for potentially costly post-marketing testing, including Phase 4 trials, and surveillance to monitor the quality, safety and efficacy of the drug. Such regulatory requirements may differ from country to country depending on where we have received regulatory approval. In addition, drug manufacturers and their facilities are subject to payment of user fees and continual review and periodic inspections by the FDA and other regulatory authorities for compliance with current good manufacturing practices, or cGMP, requirements and adherence to commitments made in the NDA or foreign marketing application. If we, or a regulatory authority, discover previously unknown problems with a drug, such as adverse events of unanticipated severity or frequency, or problems with the facility where the drug is manufactured or if a regulatory authority disagrees with the promotion, marketing or labeling of that drug, a regulatory authority may impose restrictions relative to that drug, the manufacturing facility or us, including requesting a recall or requiring withdrawal of the drug from the market or suspension of manufacturing. 53 Table of Contents If we fail to comply with applicable regulatory requirements following approval of our product candidates, a regulatory authority may, among other actions: ● issue an untitled letter or warning letter asserting that we are in violation of the law; ● seek an injunction or impose administrative, civil or criminal penalties or monetary fines; ● suspend or withdraw regulatory approval; ● suspend any ongoing clinical trials; ● refuse to approve a pending NDA or comparable foreign marketing application or any supplements thereto submitted by us or our partners; ● restrict the marketing or manufacturing of the drug; ● seize or detain the drug or otherwise require the withdrawal of the drug from the market; ● refuse to permit the import or export of product candidates; or ● refuse to allow us to enter into supply contracts, including government contracts. Moreover, the FDA strictly regulates the promotional claims that may be made about drug products. In particular, a product may not be promoted for uses that are not approved by the FDA as reflected in the product’s approved labeling. The FDA and other agencies actively enforce the laws and regulations prohibiting the promotion of off-label uses, and a company that is found to have improperly promoted off-label uses may be subject to significant civil, criminal and administrative penalties. Any government investigation of alleged violations of law could require us to expend significant time and resources in response and could generate negative publicity. The occurrence of any event or penalty described above may inhibit our ability to commercialize our product candidates and harm our business, financial condition, results of operations and prospects. The FDA’s and other regulatory authorities’ policies may change and additional laws or government regulations may be enacted that could prevent, limit or delay regulatory approval of our product candidates. If we are not able to maintain regulatory compliance with the FDCA, Cures Act, or other applicable requirements, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations. In addition, we cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative or executive action, either in the United States or abroad. For example, certain policies of the U.S. administration may impact our business and industry. It is difficult to predict how executive actions, including executive orders, may be implemented and the extent to which they will affect the FDA’s ability to exercise its regulatory authority. If executive actions impose constraints on the FDA’s ability to engage in oversight and implementation activities in the normal course, our business may be negatively impacted. If we are unable to establish sales and marketing capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be successful in commercializing them, if and when they are approved. To successfully commercialize any product candidate that may result from our development programs, we will need to build out our sales and marketing capabilities, either on our own or with others. The establishment and development of our own commercial team or the establishment of a contract sales force to market any product candidate we may develop will be expensive and time-consuming and could delay any drug launch. Moreover, we cannot be certain that we will be able to successfully develop this capability. We may seek to enter into collaborations with other entities to utilize their established marketing and distribution capabilities, but we may be unable to enter into such agreements on favorable terms, if at all. If any current or future collaborators do not commit sufficient resources to commercialize our product candidates, or we are unable to develop the necessary capabilities on our own, we may be unable to generate sufficient revenue to sustain our business. We compete with many companies that currently have extensive, experienced and well-funded marketing and sales operations to recruit, hire, train and retain marketing and sales personnel. We will likely also face competition if we seek third parties to assist us with the sales and marketing 54 Table of Contents efforts of our product candidates. Without an internal team or the support of a third party to perform marketing and sales functions, we may be unable to compete successfully against these more established companies. Even if we obtain and maintain approval for our product candidates from the FDA, we may never obtain approval outside the United States, which would limit our market opportunities. Approval of a product candidate in the United States by the FDA does not ensure approval of such product candidate by regulatory authorities in other countries or jurisdictions, and approval by one foreign regulatory authority does not ensure approval by regulatory authorities in other foreign countries or by the FDA. Sales of our product candidates outside the United States will be subject to foreign regulatory requirements governing clinical trials and marketing approval. Even if the FDA grants marketing approval for a product candidate, comparable foreign regulatory authorities also must approve the manufacturing and marketing of the product candidate in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and more onerous than, those in the United States, including additional preclinical studies or clinical trials. In many countries outside the United States, a product candidate must be approved for reimbursement before it can be approved for sale in that country. In some cases, the price that we intend to charge for any product candidates, if approved, is also subject to approval. Obtaining approval for our product candidates in the European Union from the European Commission following the opinion of the European Medicines Agency, or the EMA, if we choose to submit a marketing authorization application there, would be a lengthy and expensive process. Even if a product candidate is approved, the EMA may limit the indications for which the drug may be marketed, require extensive warnings on the drug labeling or require expensive and time-consuming additional clinical trials or reporting as conditions of approval. Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our product candidates in certain countries. Further, clinical trials conducted in one country may not be accepted by regulatory authorities in other countries. Also, regulatory approval for our product candidates may be withdrawn. If we fail to comply with the applicable regulatory requirements, our target market will be reduced and our ability to realize the full market potential of our product candidates will be harmed and our business, financial condition, results of operations and prospects could be harmed. If we commercialize our product candidates outside the United States, a variety of risks associated with international operations could harm our business. We intend to seek approval to market our product candidates outside the United States, and may do so for future product candidates. If we market approved products outside the United States, we expect that we will be subject to additional risks in commercialization, including: ● different regulatory requirements for approval of therapies in foreign countries; ● reduced protection for intellectual property rights; ● unexpected changes in tariffs, trade barriers and regulatory requirements; ● economic weakness, including inflation, or political instability in particular foreign economies and markets; ● compliance with tax, employment, immigration and labor laws for employees living or traveling abroad; ● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and other obligations incident to doing business in another country; ● foreign reimbursement, pricing and insurance regimes; ● workforce uncertainty in countries where labor unrest is more common than in the United States; ● production shortages resulting from any events affecting raw material supply or manufacturing capabilities abroad; and ● business interruptions resulting from geopolitical actions, including war and terrorism, international hostilities, or natural disasters including earthquakes, typhoons, floods and fires. 55 Table of Contents We have no prior experience in these areas. In addition, there are complex regulatory, tax, labor and other legal requirements imposed by many of the individual countries in which we may operate, with which we will need to comply. Many biopharmaceutical companies have found the process of marketing their products in foreign countries to be challenging. Product liability lawsuits against us could cause us to incur substantial liabilities and could limit commercialization of any product candidate that we may develop. We face an inherent risk of product liability exposure related to the testing of our product candidates in clinical trials and may face an even greater risk if we commercialize any product candidate that we may develop. If we cannot successfully defend ourselves against claims that any such product candidates caused injuries, we could incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in: ● decreased demand for any product candidate that we may develop; ● loss of revenue; ● substantial monetary awards to trial participants or patients; ● significant time and costs to defend the related litigation; ● withdrawal of clinical trial participants; ● increased insurance costs; ● the inability to commercialize any product candidate that we may develop; and ● injury to our reputation and significant negative media attention. Any such outcomes could negatively impact our business, financial condition, results of operations and prospects. Our insurance policies may be inadequate and potentially expose us to unrecoverable risks. Although we maintain product liability insurance coverage, such insurance may not be adequate to cover all liabilities that we may incur. We anticipate that we will need to increase our insurance coverage each time we commence a clinical trial and if we successfully commercialize any product candidate. Insurance availability, coverage terms and pricing continue to vary with market conditions. We endeavor to obtain appropriate insurance coverage for insurable risks that we identify; however, we may fail to correctly anticipate or quantify insurable risks, we may not be able to obtain appropriate insurance coverage and insurers may not respond as we intend to cover insurable events that may occur. We have observed rapidly changing conditions in the insurance markets relating to nearly all areas of traditional corporate insurance. Such conditions have resulted in higher premium costs, higher policy deductibles, and lower coverage limits. For some risks, we may not have or maintain insurance coverage because of cost or availability. Risks Related to Regulatory Compliance Our relationships with customers, physicians, and third party payors are subject, directly or indirectly, to federal and state healthcare fraud and abuse laws, false claims laws, health information privacy and security laws, and other healthcare laws and regulations. If we are unable to comply, or have not fully complied, with such laws, we could face substantial penalties. Healthcare providers, physicians and third-party payors in the United States and elsewhere will play a primary role in the recommendation and prescription of any product candidates for which we obtain marketing approval. Our current and future arrangements with healthcare professionals, principal investigators, consultants, customers and third- party payors subject us to various federal and state fraud and abuse laws and other healthcare laws, including, without limitation, the federal Anti-Kickback Statute, the federal civil and criminal false claims laws and the law commonly referred to as the Physician Payments Sunshine Act and regulations. Ensuring that our business arrangements with third-parties comply with applicable healthcare laws and regulations will likely be costly. It is possible that governmental authorities will conclude that our business practices 56 Table of Contents may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations. If the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs. Even if resolved in our favor, litigation or other legal proceedings relating to healthcare laws and regulations may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a substantial adverse effect on the price of our common shares. Such litigation or proceedings could substantially increase our operating losses and reduce the resources available for development, manufacturing, sales, marketing or distribution activities. Uncertainties resulting from the initiation and continuation of litigation or other proceedings relating to applicable healthcare laws and regulations could have an adverse effect on our ability to compete in the marketplace. Coverage and adequate reimbursement may not be available for our product candidates, which could make it difficult for us to sell profitably, if approved. Market acceptance and sales of any product candidates that we commercialize, if approved, will depend in part on the extent to which reimbursement for these drugs and related treatments will be available from third-party payors, including government health administration authorities, managed care organizations and other private health insurers. Third-party payors decide which therapies they will pay for and establish reimbursement levels. While no uniform policy for coverage and reimbursement exists in the United States, third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own coverage and reimbursement policies. However, decisions regarding the extent of coverage and amount of reimbursement to be provided for any product candidates that we develop will be made on a payor-by-payor basis. Therefore, one payor’s determination to provide coverage for a drug does not assure that other payors will also provide coverage, and adequate reimbursement, for the drug. Additionally, a third-party payor’s decision to provide coverage for a therapy does not imply that an adequate reimbursement rate will be approved. Each payor determines whether or not it will provide coverage for a therapy, what amount it will pay the manufacturer for the therapy, and on what tier of its formulary it will be placed. The position on a payor’s list of covered drugs, or formulary, generally determines the co-payment that a patient will need to make to obtain the therapy and can strongly influence the adoption of such therapy by patients and physicians. Patients who are prescribed treatments for their conditions and providers prescribing such services generally rely on third-party payors to reimburse all or part of the associated healthcare costs. Patients are unlikely to use our product candidates, if approved, unless coverage is provided and reimbursement is adequate to cover a significant portion of the cost of our products. Third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. We cannot be sure that coverage and reimbursement will be available for any drug that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Inadequate coverage and reimbursement may impact the demand for, or the price of, any drug for which we obtain marketing approval. If coverage and adequate reimbursement are not available, or are available only at limited levels, we may not be able to successfully commercialize any product candidates that we develop. Healthcare reform measures may have a negative impact on our business and results of operations. In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes, as well as judicial challenges, regarding the healthcare system that could prevent or delay marketing approval of product candidates, restrict or regulate post-approval activities, and affect our ability to profitably sell any product candidates for which we obtain marketing approval. In particular, there have been 57 Table of Contents and continue to be a number of initiatives at the U.S. federal and state levels that seek to reduce healthcare costs and improve the quality of healthcare. For example, the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, or the MMA, changed the way Medicare covers and pays for pharmaceutical products. The legislation expanded Medicare coverage for drug purchases by the elderly and introduced a new reimbursement methodology based on average sales prices for physician-administered drugs. In addition, this legislation provided authority for limiting the number of drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this legislation could decrease the coverage and price that we receive for any approved products. While the MMA applies only to drug benefits for Medicare beneficiaries, private payors often follow Medicare coverage policy and payment limitations in setting their own reimbursement rates. Therefore, any reduction in reimbursement that results from the MMA may result in a similar reduction in payments from private payors. Further, in March 2010, the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the PPACA, was passed, which substantially changed the way healthcare is financed by both governmental and private payors in the United States. Some of the provisions of the PPACA have yet to be fully implemented, while certain provisions have been subject to executive, judicial and Congressional challenges. For example, the Tax Cuts and Jobs Act of 2017, or Tax Act includes a provision that repealed, effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who fail to maintain qualifying health coverage for all or part of a year, which is commonly referred to as the “individual mandate.” Additionally, on January 22, 2018, then-President Trump signed a continuing resolution on appropriations for fiscal year 2018 that delayed the implementation of certain PPACA-mandated fees, including the so-called “Cadillac” tax on certain high-cost employer-sponsored insurance plans, the annual fee imposed on certain health insurance providers based on market share, and the medical device excise tax on non-exempt medical devices. Further, the Bipartisan Budget Act of 2018, or the BBA, among other things, amended the PPACA, effective January 1, 2019, to close the coverage gap in most Medicare drug plans, commonly referred to as the “donut hole.” In July 2018, CMS published a final rule permitting further collections and payments to and from certain PPACA-qualified health plans and health insurance issuers under the PPACA adjustment program in response to the outcome of federal district court litigation regarding the method CMS uses to determine this risk adjustment. On December 14, 2018, a U.S. District Court Judge in the Northern District of Texas, or Texas District Court Judge, ruled that the individual mandate was a critical and inseverable feature of the PPACA, and therefore, because it was repealed as part of the Tax Act, the remaining provisions of the PPACA were invalid as well. In December 2019, the U.S. Court of Appeals for the Fifth Circuit upheld the lower court decision, which was then appealed to the U.S. Supreme Court. The U.S. Supreme Court heard arguments in the case in November 2020 and issued its decision in June 2021, ruling that the plaintiffs lacked the standing to challenge the individual mandate provision. In so holding, the Supreme Court did not consider larger constitutional questions about the validity of this provision or the validity of the PPACA in its entirety. Another case challenging the PPACA’s requirement that insurers cover certain preventative services is currently pending before the same U.S. District Court Judge in the Northern District of Texas who ruled against the individual mandate in 2018. In September 2022, the judge held that certain preventative services violated the U.S. Constitution and set a schedule for additional briefing that will expand into January 2023. It is unclear how this or any potential future litigation and other efforts to repeal and replace the PPACA will impact the PPACA. Congress may consider additional legislation to repeal or repeal and replace other elements of the PPACA. We continue to evaluate the effect that the PPACA and its possible repeal and replacement may have on our business and the potential profitability of our product candidates. Other legislative changes have been proposed and adopted since the PPACA was enacted. These changes include aggregate reductions to Medicare payments to providers of 2% per fiscal year pursuant to the Budget Control Act of 2011, which began in 2013, and due to subsequent legislative amendments to the statute, including the BBA, which will remain in effect through 2027 unless additional Congressional action is taken. The American Taxpayer Relief Act of 2012, among other things, further reduced Medicare payments to several providers, including hospitals and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. Additional changes that may affect our business include the expansion of programs such as Medicare payment for performance initiatives for physicians under the Medicare Access and CHIP Reauthorization Act of 2015. At this time, the full impact of the introduction of the Medicare quality payment program on overall physician reimbursement is unclear. 58 Table of Contents Further, in the United States there has been heightened governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted in several Congressional inquiries and proposed and enacted federal and state legislation designed to, among other things, bring more transparency to drug pricing, reduce the cost of prescription drugs under government payor programs, and review the relationship between pricing and manufacturer patient programs. While some of the proposed measures will require authorization through additional legislation to become effective, the U.S. Congress have indicated that they will continue to seek new legislative and/or administrative measures to control drug costs. For example, the Inflation Reduction Act of 2022 also seeks to reduce prescription drug costs by, among other provisions, allowing Medicare to negotiate prices for certain high-cost prescription drugs in Medicare Parts B and D, imposing an excise tax on pharmaceutical manufacturers that refuse to negotiate pricing with Medicare, requiring inflation rebates to limit annual drug price increases in Medicare, redesigning the Medicare Part D formula, and limiting cost-sharing for insulin products. It is unclear whether additional drug pricing and other healthcare reform measures will be enacted, and if enacted, what effect they would have on our business. We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that the U.S. federal government will pay for healthcare products and services, which could result in reduced demand for our current or any future product candidates or additional pricing pressures. We cannot predict the likelihood, nature or extent of government regulation that may arise from future legislation or administrative action in the United States or any other jurisdiction. If we or any third parties we may engage are slow or unable to adapt to changes in existing or new requirements or policies, or if we or such third parties are not able to maintain regulatory compliance, our current or any future product candidates we may develop may lose any regulatory approval that may have been obtained and we may not achieve or sustain profitability. Further, on May 30, 2018, the Trickett Wendler, Frank Mongiello, Jordan McLinn, and Matthew Bellina Right to Try Act of 2017, or the Right to Try Act, was signed into law. The law, among other things, provides a federal framework for certain patients to access certain investigational new drug products that have completed a Phase 1 clinical trial and that are undergoing investigation for FDA approval. Under certain circumstances, eligible patients can seek treatment without enrolling in clinical trials and without obtaining FDA permission under the FDA expanded access program. There is no obligation for a pharmaceutical manufacturer to make its drug products available to eligible patients as a result of the Right to Try Act. We expect that these and other healthcare reform measures that may be adopted in the future may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved drug, which could have an adverse effect on demand for our product candidates if they are approved. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability or commercialize our product candidates. Risks Related to Our Dependence on Third Parties We intend to rely on third parties to produce clinical and commercial supplies of our product candidates. We do not own or operate facilities for drug manufacturing, storage and distribution, or testing. We are dependent on third parties to manufacture the clinical supplies of our current and any future product candidates. The facilities used by our contract manufacturers to manufacture our product candidates must be approved by the FDA pursuant to inspections that will be conducted after we submit our NDA to the FDA. We do not control the manufacturing process of, and are completely dependent on, our contract manufacturing partners for compliance with the cGMP requirements, for manufacture of both active drug substance and finished drug product. If our contract manufacturers cannot successfully manufacture material that conforms to our specifications and the strict regulatory requirements of the FDA or others, we will not be able to secure and/or maintain regulatory approval for our product candidates. In addition, we have no control over the ability of our contract manufacturers to maintain adequate quality control, quality assurance and qualified personnel. If the FDA or a comparable foreign regulatory authority does not approve these facilities for the manufacture of our product candidates or if it withdraws any such approval in the future, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain regulatory approval for or market our product candidates, if approved. Any significant delay in the supply of a product candidate, or the raw material components thereof, for an ongoing clinical trial due to the need to replace a third-party 59 Table of Contents manufacturer could considerably delay completion of our clinical trials, product testing and potential regulatory approval of our product candidates. We also intend to rely on third-party manufacturers to supply us with sufficient quantities of our product candidates to be used, if approved, for commercialization. We do not yet have a commercial supply agreement for commercial quantities of drug substance or drug product. If we are not able to meet market demand for any approved product, it would negatively impact our ability to generate revenue, harm our reputation, and could have an adverse effect on our business and financial condition. Further, our reliance on third-party manufacturers entails risks to which we would not be subject if we manufactured product candidates ourselves, including: ● inability to meet our product specifications and quality requirements consistently; ● delay or inability to procure or expand sufficient manufacturing capacity; ● issues related to scale-up of manufacturing; ● costs and validation of new equipment and facilities required for scale-up; ● our third party manufacturers may not be able to execute our manufacturing procedures and other logistical support requirements appropriately; ● our third party manufacturers may fail to comply with cGMP requirements and other inspections by the FDA or other comparable regulatory authorities; ● our inability to negotiate manufacturing agreements with third parties under commercially reasonable terms, if at all; ● breach, termination or nonrenewal of manufacturing agreements with third parties in a manner or at a time that is costly or damaging to us; ● reliance on single sources for drug components; ● lack of qualified backup suppliers for those components that are currently purchased from a sole or single- source supplier; ● our third party manufacturers may not devote sufficient resources to our product candidates; ● we may not own, or may have to share, the intellectual property rights to any improvements made by our third party manufacturers in the manufacturing process for our product candidates; ● operations of our third party manufacturers or suppliers could be disrupted by conditions unrelated to our business or operations, including the bankruptcy of the manufacturer or supplier; and ● carrier disruptions or increased costs that are beyond our control. In addition, if we enter into a strategic collaboration with a third party for the commercialization of our current or any future product candidates, we will not be able to control the amount of time or resources that they devote to such efforts. If any strategic collaborator does not commit adequate resources to the marketing and distribution of our product candidates, it could limit our potential revenues. Any of these events could lead to clinical trial delays or failure to obtain regulatory approval, or impact our ability to successfully commercialize our current or any future product candidates once approved. Some of these events could be the basis for FDA action, including injunction, request for recall, seizure, or total or partial suspension of production. Our business involves the use of hazardous materials and we and our third-party manufacturers and suppliers must comply with environmental, health and safety laws and regulations, which can be expensive and restrict how we do, or interrupt our, business. Our research and development activities and our third-party manufacturers’ and suppliers’ activities involve the generation, storage, use and disposal of hazardous materials, including the components of our product candidates and other hazardous compounds and wastes. We and our manufacturers and suppliers are subject to environmental, health and safety laws and regulations governing, among other matters, the use, manufacture, generation, storage, handling, transportation, discharge and disposal of these hazardous materials and wastes and worker health and safety. In some 60 Table of Contents cases, these hazardous materials and various wastes resulting from their use are stored at our and our manufacturers’ facilities pending their use and disposal. We cannot eliminate the risk of contamination or injury, which could result in an interruption of our commercialization efforts, research and development efforts and business operations, damages and significant cleanup costs and liabilities under applicable environmental, health and safety laws and regulations. We also cannot guarantee that the safety procedures utilized by our third-party manufacturers for handling and disposing of these materials and wastes generally comply with the standards prescribed by these laws and regulations. We may be held liable for any resulting damages, costs or liabilities, which could exceed our resources, and state or federal or other applicable authorities may curtail our use of certain materials and/or interrupt our business operations. Furthermore, environmental, health and safety laws and regulations are complex, change frequently and have tended to become more stringent. We cannot predict the impact of such changes and cannot be certain of our future compliance. Failure to comply with these environmental, health and safety laws and regulations may result in substantial fines, penalties or other sanctions. We do not currently carry environmental insurance coverage. We rely on third-parties to conduct, supervise and monitor our preclinical studies and clinical trials, and if those third parties perform in an unsatisfactory manner, it may harm our business. We do not currently have the ability to independently conduct any clinical trials. We intend to rely on CROs and clinical trial sites to ensure the proper and timely conduct of our preclinical studies and clinical trials, and we expect to have limited influence over their actual performance. We rely upon CROs to monitor and manage data for our clinical programs, as well as the execution of future preclinical studies. We expect to control only certain aspects of our CROs’ activities. Nevertheless, we will be responsible for ensuring that each of our preclinical studies and clinical trials is conducted in accordance with the applicable protocol, legal, regulatory and scientific standards, and our reliance on the CROs does not relieve us of our regulatory responsibilities. We and our CROs are required to comply with the good laboratory practices, or GLPs, and GCPs, which are regulations and guidelines enforced by the FDA and comparable foreign regulatory authorities in the form of International Conference on Harmonization guidelines for any of our product candidates that are in preclinical and clinical development. The regulatory authorities enforce GCPs through periodic inspections of trial sponsors, principal investigators and clinical trial sites. Although we rely on CROs to conduct GCP-compliant clinical trials, we remain responsible for ensuring that each of our GLP preclinical studies and clinical trials is conducted in accordance with its investigational plan and protocol and applicable laws and regulations. If we or our CROs fail to comply with GCPs, the clinical data generated in our clinical trials may be deemed unreliable, and the FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before approving our marketing applications. Accordingly, if our CROs fail to comply with these regulations or fail to recruit a sufficient number of subjects, we may be required to repeat clinical trials, which would delay the regulatory approval process. Our reliance on third parties to conduct clinical trials will result in less direct control over the management of data developed through clinical trials than would be the case if we were relying entirely upon our own staff. Communicating with CROs and other third parties can be challenging, potentially leading to mistakes as well as difficulties in coordinating activities. Such parties may: ● have staffing difficulties; ● fail to comply with contractual obligations; ● experience regulatory compliance issues; or ● undergo changes in priorities or become financially distressed. These factors may adversely affect the willingness or ability of third parties to conduct our clinical trials and may subject us to unexpected cost increases that are beyond our control. If our CROs do not successfully carry out their contractual duties or obligations, fail to meet expected deadlines, or fail to comply with regulatory requirements, or if the quality or accuracy of the clinical data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for any other reasons, our clinical trials may be extended, delayed or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, any product candidate that we develop. As a result, our financial results and the commercial prospects for any product candidate that we develop would be harmed, our costs could increase, and our ability to generate revenue could be delayed. While we will have agreements governing 61 Table of Contents their activities, our CROs will not be our employees, and we will not control whether or not they devote sufficient time and resources to our future clinical and preclinical programs. These CROs may also have relationships with other commercial entities, including our competitors, for whom they may also be conducting clinical trials, or other drug development activities which could harm our business. We face the risk of potential unauthorized disclosure or misappropriation of our intellectual property by CROs, which may reduce our trade secret protection and allow our potential competitors to access and exploit our proprietary technology. If our relationship with any of these CROs terminates, we may not be able to enter into arrangements with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves substantial cost and requires management time and focus. In addition, there is a natural transition period when a new CRO commences work. As a result, delays occur, which can negatively impact our ability to meet our desired clinical development timelines. While we intend to carefully manage our relationships with our CROs, there can be no assurance that we will not encounter challenges or delays in the future or that these delays or challenges will not have a negative impact on our business, financial condition and prospects. In addition, principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services. Under certain circumstances, we may be required to report some of these relationships to the FDA. The FDA may conclude that a financial relationship between us and a principal investigator has created a conflict of interest or otherwise affected interpretation of the trial. The FDA may therefore question the integrity of the data generated at the applicable clinical trial site and the utility of the clinical trial itself may be jeopardized. This could result in a delay in approval, or rejection, of our marketing applications by the FDA and may ultimately lead to the denial of marketing approval of our product candidates. Risks Related to Our Intellectual Property Licensing of intellectual property is of critical importance to our business and involves complex legal, business and scientific issues. If we breach our license agreements with Columbia University or any of the other agreements under which we acquired, or will acquire, the intellectual property rights to our product candidates, we could lose the ability to continue the development and commercialization of the related product. The licensing of intellectual property is of critical importance to our business and to our current and future product candidates, and we expect to enter into additional such agreements in the future. In particular, our current product candidates AT-007, AT-001 and AT-003 are dependent on our license agreement with The Trustees of Columbia University in the City of New York, or Columbia University. Pursuant to that license agreement with Columbia University, or the 2016 Columbia Agreement, Columbia University granted us an exclusive license under two important patent families, and a nonexclusive license to certain know-how, owned by Columbia University to develop, manufacture or commercialize certain compounds, including AT-001, AT-003 and AT-007, for the diagnosis and treatment of human and animal diseases and conditions. The license grant is worldwide, with the exception of the patent family that covers AT-001 and AT-003. The license grant for the patent family that covers AT-001 and AT-003 excludes patent rights in China, Taiwan, Hong Kong and Macao, which Columbia University has exclusively licensed to a third party. We cannot prevent Columbia University’s third party licensee from developing, manufacturing or commercializing certain compounds, including AT-001 and AT-003, but not including AT-007, in China, Taiwan, Hong Kong and Macao, and we cannot develop, manufacture or commercialize AT-001 or AT-003 in these territories, which could have a negative effect on our business. We do not have the right to control the preparation, filing, prosecution and maintenance of patents and patent applications covering the technology that we license under either of the Columbia Agreements. Therefore, we cannot always be certain that these patents and patent applications will be prepared, filed, prosecuted and maintained in a manner consistent with the best interests of our business. Although we have a right to have our comments considered in connection with the prosecution process, if Columbia University fails to prosecute and maintain such patents, or loses rights to those patents or patent applications as a result of its control of the prosecution activities, the rights we have licensed may be reduced or eliminated, and our right to develop and commercialize any of our product candidates that are the subject of such licensed rights could be adversely affected. 62 Table of Contents If we fail to meet our obligations under the Columbia Agreement in any material respect and fail to cure such breach in a timely fashion, then Columbia University may terminate the Columbia Agreement. If the Columbia Agreement is terminated, and we lose our intellectual property rights under the Columbia Agreement, this may result in complete termination of our product development and any commercialization efforts for the product candidates that are subject to the agreement, including AT-007, AT-001, and AT-003. While we would expect to exercise all rights and remedies available to us, including seeking to cure any breach by us, and otherwise seek to preserve our rights under the Columbia Agreement, we may not be able to do so in a timely manner, at an acceptable cost or at all. Furthermore, license agreements we enter into in the future may not provide exclusive rights to use intellectual property and technology in all relevant fields of use and in all territories in which we may wish to develop or commercialize our technology and products. As a result, we may not be able to prevent competitors from developing and commercializing competitive products in territories included in all of our licenses. If we are unable to obtain and maintain patent protection for our product candidates and technology, or if the scope of the patent protection obtained is not sufficiently broad or robust, our competitors could develop and commercialize products and technology similar or identical to ours, and our ability to successfully commercialize our product candidates and technology may be adversely affected. Our success depends, in large part, on our ability to obtain and maintain patent protection in the United States and other countries with respect to our product candidates and our technology. We and our licensors have sought, and intend to seek, to protect our proprietary position by filing patent applications in the United States and abroad related to our product candidates and our technology that are important to our business. The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has, in recent years, been the subject of much litigation. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or product candidates or which effectively prevent others from commercializing competitive technologies and product candidates. Since patent applications in the United States and most other countries are confidential for a period of time after filing, and some remain so until issued, we cannot be certain that we or our licensors were the first to file a patent application relating to any particular aspect of a product candidate. Furthermore, if third parties have filed such patent applications, an interference proceeding in the United States can be initiated by such third party, or by the U.S. Patent and Trademark Office, or USPTO, itself, to determine who was the first to invent any of the subject matter covered by the patent claims of our applications. The patent prosecution process is expensive, time-consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. We or our licensors have not pursued or maintained, and may not pursue or maintain in the future, patent protection for our product candidates in every country or territory in which we may sell our products, if approved. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as federal and state laws in the United States. Consequently, we may not be able to prevent third parties from infringing our patents in all countries outside the United States, or from selling or importing products that infringe our patents in and into the United States or other jurisdictions. Moreover, the coverage claimed in a patent application can be significantly reduced before the patent is issued, and its scope can be reinterpreted after issuance. Even if the patent applications we license or own do issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors or other third parties from competing with us or otherwise provide us with any competitive advantage. Our competitors or other third parties may be able to circumvent our patents by developing similar or alternative products in a non-infringing manner. 63 Table of Contents The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss of exclusivity or in patent claims being narrowed, invalidated or held unenforceable, which could limit our ability to stop others from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of our technology and product candidates. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our intellectual property may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours. Furthermore, our owned and in-licensed patents may be subject to a reservation of rights by one or more third parties. For example, the research resulting in certain of our owned and in-licensed patent rights and technology was funded in part by the U.S. government. As a result, the government may have certain rights, or march-in rights, to such patent rights and technology. When new technologies are developed with government funding, the government generally obtains certain rights in any resulting patents, including a nonexclusive license authorizing the government to use the invention for noncommercial purposes. These rights may permit the government to disclose our confidential information to third parties and to exercise march-in rights to use or allow third parties to use our licensed technology. The government can exercise its march-in rights if it determines that action is necessary because we fail to achieve practical application of the government-funded technology, because action is necessary to alleviate health or safety needs, to meet requirements of federal regulations, or to give preference to U.S. industry. In addition, our rights in such inventions may be subject to certain requirements to manufacture products embodying such inventions in the United States. Any exercise by the government of such rights could harm our competitive position, business, financial condition, results of operations and prospects. Obtaining and maintaining our patent rights depends on compliance with various procedural, document submission, fee payment and other requirements imposed by government patent agencies, and our patent protection could be reduced or eliminated for noncompliance with these requirements. The USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees, renewal fees, annuity fees and various other government fees on patents and/or patent applications will have to be paid to the USPTO and various government patent agencies outside the United States over the lifetime of our owned and licensed patents and/or applications and any patent rights we may own or license in the future. We rely on our service providers or our licensors to pay these fees. The USPTO and various non-U.S. government patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. We employ reputable law firms and other professionals to help us comply, and we are also dependent on our licensors to take the necessary action to comply with these requirements with respect to our licensed intellectual property. Noncompliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, nonpayment of fees and failure to properly legalize and submit formal documents. If we or our licensors fail to maintain the patents and patent applications covering our products or technologies, we may not be able to stop a competitor from marketing products that are the same as or similar to our product candidates, which would have an adverse effect on our business. In many cases, an inadvertent lapse can be cured by payment of a late fee or by other means in accordance with the applicable rules. There are situations, however, in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, potential competitors might be able to enter the market and this circumstance could harm our business. In addition, if we fail to apply for applicable patent term extensions or adjustments, we will have a more limited time during which we can enforce our granted patent rights. In addition, if we are responsible for patent prosecution and maintenance of patent rights in-licensed to us, any of the foregoing could expose us to liability to the applicable patent owner. 64 Table of Contents Patent terms may be inadequate to protect our competitive position on our product candidates for an adequate amount of time. Given the amount of time required for the development, testing and regulatory review of product candidates such as AT-007, AT-001, and AT-003, patents protecting such candidates might expire before or shortly after such candidates are commercialized. We expect to seek extensions of patent terms in the United States and, if available, in other countries where we have or will obtain patent rights. In the United States, the Drug Price Competition and Patent Term Restoration Act of 1984 permits a patent term extension of up to five years beyond the normal expiration of the patent; provided that the patent is not enforceable for more than 14 years from the date of drug approval, which is limited to the approved indication (or any additional indications approved during the period of extension). Furthermore, only one patent per approved product can be extended and only those claims covering the approved product, a method for using it or a method for manufacturing it may be extended. However, the applicable authorities, including the FDA and the USPTO in the United States, and any equivalent regulatory authority in other countries, may not agree with our assessment of whether such extensions are available, and may refuse to grant extensions to our patents, or may grant more limited extensions than we request. If this occurs, our competitors may be able to take advantage of our investment in development and clinical trials by referencing our clinical and preclinical data and launch their drug earlier than might otherwise be the case. Third-parties may initiate legal proceedings alleging that we are infringing, misappropriating or otherwise violating their intellectual property rights, the outcome of which would be uncertain and could have a negative impact on the success of our business. Our commercial success depends, in part, upon our ability and the ability of others with whom we may collaborate to develop, manufacture, market and sell our current and any future product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights and intellectual property of third parties. The biotechnology and pharmaceutical industries are characterized by extensive and complex litigation regarding patents and other intellectual property rights. We may in the future become party to, or be threatened with, adversarial proceedings or litigation regarding intellectual property rights with respect to our current and any future product candidates and technology, including interference proceedings, post grant review and inter partes review before the USPTO. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future, regardless of their merit. There is a risk that third parties may choose to engage in litigation with us to enforce or to otherwise assert their patent rights against us. Even if we believe such claims are without merit, a court of competent jurisdiction could hold that these third-party patents are valid, enforceable and infringed, which could have a negative impact on our ability to commercialize our current and any future product candidates. In order to successfully challenge the validity of any such U.S. patent in federal court, we would need to overcome a presumption of validity. As this is a high burden and requires us to present clear and convincing evidence as to the invalidity of any such U.S. patent claim, there is no assurance that a court of competent jurisdiction would invalidate the claims of any such U.S. patent. Moreover, given the vast number of patents in our field of technology, we cannot be certain that we do not infringe existing patents or that we will not infringe patents that may be granted in the future. Other companies and research institutions have filed, and may file in the future, patent applications related to AR inhibitors and their therapeutic use. Some of these patent applications have already been allowed or issued, and others may issue in the future. While we may decide to initiate proceedings to challenge the validity of these or other patents in the future, we may be unsuccessful, and courts or patent offices in the United States and abroad could uphold the validity of any such patent. Furthermore, because patent applications can take many years to issue and may be confidential for 18 months or more after filing, and because pending patent claims can be revised before issuance, there may be applications now pending which may later result in issued patents that may be infringed by the manufacture, use or sale of our product candidates. Regardless of when filed, we may fail to identify relevant third-party patents or patent applications, or we may incorrectly conclude that a third-party patent is invalid or not infringed by our product candidates or activities. If a patent holder believes that our product candidate infringes its patent, the patent holder may sue us even if we have received patent protection for our technology. Moreover, we may face patent infringement claims from nonpracticing entities that have no relevant drug revenue and against whom our own patent portfolio may thus have no deterrent effect. If a patent infringement suit were threatened or brought against us, we could be forced to stop or delay research, development, manufacturing or sales of the drug or product candidate that is the subject of the actual or threatened suit. 65 Table of Contents If we are found to infringe a third party’s valid and enforceable intellectual property rights, we could be required to obtain a license from such third party to continue developing, manufacturing and marketing our product candidate(s) and technology. Under any such license, we would most likely be required to pay various types of fees, milestones, royalties or other amounts. Moreover, we may not be able to obtain any required license on commercially reasonable terms or at all. The licensing or acquisition of third-party intellectual property rights is a competitive area, and more established companies may also pursue strategies to license or acquire third-party intellectual property rights that we may consider attractive or necessary. These established companies may have a competitive advantage over us due to their size, capital resources and greater clinical development and commercialization capabilities. In addition, companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment or at all. If we are unable to successfully obtain rights to required third-party intellectual property rights or maintain the existing intellectual property rights we have, we may have to abandon development of the relevant program or product candidate, which could have an adverse effect on our business, financial condition, results of operations and prospects. Furthermore, even if we were able to obtain a license, it could be nonexclusive, thereby giving our competitors and other third-parties access to the same technologies licensed to us, and it could require us to make substantial licensing and royalty payments. We could be forced, including by court order, to cease developing, manufacturing and commercializing the infringing technology or product candidate. In addition, we could be found liable for monetary damages, including treble damages and attorneys’ fees, if we are found to have willfully infringed a patent or other intellectual property right. We may be required to indemnify collaborators or contractors against such claims. A finding of infringement could prevent us from manufacturing and commercializing our current or any future product candidates or force us to cease some or all of our business operations, which could harm our business. Even if we are successful in defending against such claims, litigation can be expensive and time-consuming and would divert management’s attention from our core business. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. Claims that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business, financial condition, results of operations and prospects. We may be subject to claims asserting that our employees, consultants or advisors have wrongfully used or disclosed alleged trade secrets of their current or former employers or claims asserting ownership of what we regard as our own intellectual property. Certain of our employees, consultants or advisors are currently, or were previously, employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees, consultants and advisors do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that these individuals or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such individual’s current or former employer. Litigation may be necessary to defend against these claims. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management. In addition, we may in the future be subject to claims by our former employees or consultants asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf. Although it is our policy to require our employees and contractors who may be involved in the conception or development of intellectual property to execute agreements assigning such intellectual property to us, we may be unsuccessful in executing such an agreement with each party who, in fact, conceives or develops intellectual property that we regard as our own, and we cannot be certain that our agreements with such parties will be upheld in the face of a potential challenge or that they will not be breached, for which we may not have an adequate remedy. The assignment of intellectual property rights may not be self-executing or the assignment agreements may be breached, and we may be 66 Table of Contents forced to bring claims against third parties, or defend claims that they may bring against us, to determine the ownership of what we regard as our intellectual property. We may be involved in lawsuits to protect or enforce our patents, the patents of our licensors or our other intellectual property rights, which could be expensive, time-consuming and unsuccessful. Competitors may infringe, misappropriate or otherwise violate our patents, the patents of our licensors or our other intellectual property rights. To counter infringement or unauthorized use, we may be required to file legal claims, which can be expensive and time-consuming and are likely to divert significant resources from our core business, including distracting our technical and management personnel from their normal responsibilities. In addition, in an infringement proceeding, a court may decide that a patent of ours or our licensors is not valid or is unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our owned or licensed patents at risk of being invalidated or interpreted narrowly and could put our owned or licensed patent applications at risk of not issuing. The initiation of a claim against a third party might also cause the third-party to bring counterclaims against us, such as claims asserting that our patent rights are invalid or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity or unenforceability are commonplace. Grounds for a validity challenge could be an alleged failure to meet any of several statutory requirements, including lack of novelty, obviousness, non-enablement or lack of statutory subject matter. Grounds for an unenforceability assertion could be an allegation that someone connected with prosecution of the patent withheld relevant material information from the USPTO, or made a materially misleading statement, during prosecution. Third parties may also raise similar validity claims before the USPTO in post-grant proceedings such as ex parte reexaminations, inter partes review, post-grant review, or oppositions or similar proceedings outside the United States, in parallel with litigation or even outside the context of litigation. The outcome following legal assertions of invalidity and unenforceability is unpredictable. We cannot be certain that there is or will be no invalidating prior art, of which we and the patent examiner were unaware during prosecution. For the patents and patent applications that we have licensed, we may have limited or no right to participate in the defense of any licensed patents against challenge by a third party. If a defendant were to prevail on a legal assertion of invalidity or unenforceability, we would lose at least part, and perhaps all, of any future patent protection on our current or future product candidates. Such a loss of patent protection could harm our business. We may not be able to prevent, alone or with our licensors, misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States. Our business could be harmed if in litigation the prevailing party does not offer us a license, or if the license offered as a result is not on commercially reasonable terms. Any litigation or other proceedings to enforce our intellectual property rights may fail, and even if successful, may result in substantial costs and distract our management and other employees. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the price of our common stock. We may not have sufficient financial or other resources to adequately conduct such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or proceedings more effectively than we can because of their greater financial resources and more mature and developed intellectual property portfolios. Accordingly, despite our efforts, we may not be able to prevent third parties from infringing upon or misappropriating or from successfully challenging our intellectual property rights. Uncertainties resulting from the initiation and continuation of patent litigation or other proceedings could have an adverse effect on our ability to compete in the marketplace. Changes in U.S. patent law or the patent law of other countries or jurisdictions could diminish the value of patents in general, thereby impairing our ability to protect our current and any future product candidates. Changes in either the patent laws or interpretation of the patent laws in the United States could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued 67 Table of Contents patents. Assuming that other requirements for patentability are met, prior to March 2013, in the United States, the first to invent the claimed invention was entitled to the patent, while outside the United States, the first to file a patent application was entitled to the patent. After March 2013, under the Leahy-Smith America Invents Act, or the America Invents Act, the United States transitioned to a first inventor to file system in which, assuming that other requirements for patentability are met, the first inventor to file a patent application will be entitled to the patent on an invention regardless of whether a third- party was the first to invent the claimed invention. The America Invents Act also includes a number of significant changes that affect the way patent applications are prosecuted and also may affect patent litigation. These include allowing third- party submission of prior art to the USPTO during patent prosecution and additional procedures to attack the validity of a patent by USPTO-administered post-grant proceedings, including post-grant review, inter partes review, and derivation proceedings. However, the America Invents Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have an adverse effect on our business, financial condition, results of operations, and prospects. In addition, the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations. In addition to increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on actions by the U.S. Congress, the federal courts, and the USPTO, the laws and regulations governing patents could change in unpredictable ways that could weaken our ability to obtain new patents or to enforce patents that we own, have licensed or might obtain in the future. Similarly, changes in patent law and regulations in other countries or jurisdictions, changes in the governmental bodies that enforce them or changes in how the relevant governmental authority enforces patent laws or regulations may weaken our ability to obtain new patents or to enforce patents that we own or have licensed or that we may obtain in the future. We may not be able to protect our intellectual property rights throughout the world, which could negatively impact our business. Filing, prosecuting and defending patents covering our current and any future product candidates in all countries throughout the world would be prohibitively expensive. Competitors may use our technologies in jurisdictions where we or our licensors have not obtained patent protection to develop their own products and, further, may export otherwise infringing products to territories where we may obtain patent protection but where patent enforcement is not as strong as that in the United States. These products may compete with our products in jurisdictions where we do not have any issued or licensed patents, and any future patent claims or other intellectual property rights may not be effective or sufficient to prevent them from so competing. Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection, particularly those relating to biotechnology products, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our intellectual property and proprietary rights generally. Proceedings to enforce our intellectual property and proprietary rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate, and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property and proprietary rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license. Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In addition, many countries limit the enforceability of patents against government agencies or government contractors. In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent. If we or any of our licensors is forced to grant a license to third parties with respect to 68 Table of Contents any patents relevant to our business, our competitive position may be impaired, and our business, financial condition, results of operations and prospects may be adversely affected. Reliance on third parties requires us to share our trade secrets, which increases the possibility that a competitor will discover them or that our trade secrets will be misappropriated or disclosed. Since we rely on third parties to help us discover, develop and manufacture our current and any future product candidates, or if we collaborate with third parties for the development, manufacturing or commercialization of our current or any future product candidates, we must, at times, share trade secrets with them. We may also conduct joint research and development programs that may require us to share trade secrets under the terms of our research and development partnerships or similar agreements. We seek to protect our proprietary technology in part by entering into confidentiality agreements and, if applicable, material transfer agreements, consulting agreements or other similar agreements with our advisors, employees, third-party contractors and consultants prior to beginning research or disclosing proprietary information. These agreements typically limit the rights of the third parties to use or disclose our confidential information, including our trade secrets. Despite the contractual provisions employed when working with third parties, the need to share trade secrets and other confidential information increases the risk that such trade secrets become known by our competitors, are inadvertently incorporated into the technology of others, or are disclosed or used in violation of these agreements. Given that our proprietary position is based, in part, on our know-how and trade secrets, a competitor’s discovery of our trade secrets or other unauthorized use or disclosure could have an adverse effect on our business and results of operations. In addition, these agreements typically restrict the ability of our advisors, employees, third-party contractors and consultants to publish data potentially relating to our trade secrets. Despite our efforts to protect our trade secrets, we may not be able to prevent the unauthorized disclosure or use of our technical know-how or other trade secrets by the parties to these agreements. Moreover, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our confidential information or proprietary technology and processes. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective. If any of the collaborators, scientific advisors, employees, contractors and consultants who are parties to these agreements breaches or violates the terms of any of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets as a result. Moreover, if confidential information that is licensed or disclosed to us by our partners, collaborators, or others is inadvertently disclosed or subject to a breach or violation, we may be exposed to liability to the owner of that confidential information. Enforcing a claim that a third-party illegally or unlawfully obtained and is using our trade secrets, like patent litigation, is expensive and time-consuming, and the outcome is unpredictable. In addition, courts outside the United States are sometimes less willing to protect trade secrets. If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed. In addition to seeking patent and trademark protection for our product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. We seek to protect our trade secrets, in part, by entering into nondisclosure and confidentiality agreements with parties who have access to them, such as our employees, corporate collaborators, outside scientific collaborators, contract manufacturers, consultants, advisors and other third parties. We also enter into confidentiality and invention or patent assignment agreements with our employees, advisors and consultants. Despite these efforts, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective. In addition, we may not be able to obtain adequate remedies for any such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time- consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. Moreover, our competitors may independently develop knowledge, methods and know-how equivalent to our trade secrets. Competitors could purchase our products and replicate some or all of the competitive advantages we derive 69 Table of Contents from our development efforts for technologies on which we do not have patent protection. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed. We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached, and detecting the disclosure or misappropriation of confidential information and enforcing a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive and time-consuming, and the outcome is unpredictable. Further, we may not be able to obtain adequate remedies for any breach. In addition, our confidential information may otherwise become known or be independently discovered by competitors, in which case we would have no right to prevent them, or those to whom they communicate it, from using that technology or information to compete with us. Any trademarks we may obtain may be infringed or successfully challenged, resulting in harm to our business. We expect to rely on trademarks as one means to distinguish any of our product candidates that are approved for marketing from the products of our competitors. We have selected trademarks for some of our later stage product candidates and filed applications to register those trademarks for our current or any future product candidates. For other earlier stage product candidates, we have not yet selected trademarks or begun the process of applying to register trademarks. Our pending trademark applications, and any future trademark applications may not be approved. Third parties may oppose our trademark applications or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks, and we may not have adequate resources to enforce our trademarks. In addition, any proprietary name we propose to use with our current or any other product candidate in the United States must be approved by the FDA, regardless of whether we have registered it, or applied to register it, as a trademark. The FDA typically conducts a review of proposed product names, including an evaluation of the potential for confusion with other product names. If the FDA objects to any of our proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of third parties and be acceptable to the FDA. Intellectual property rights do not necessarily address all potential threats to our business. The degree of future protection afforded by our intellectual property rights is uncertain because intellectual property rights have limitations and may not adequately protect our business. The following examples are illustrative: ● others may be able to make compounds or formulations that are similar to our product candidates but that are not covered by the claims of any patents, should they issue, that we own or license; ● we or our licensors might not have been the first to make the inventions covered by the issued patents or pending patent applications that we own or license; ● we or our licensors might not have been the first to file patent applications covering certain of our inventions; ● others may independently develop similar or alternative technologies or duplicate any of our technologies without infringing our intellectual property rights; ● it is possible that our pending patent applications will not lead to issued patents; ● issued patents that we own or license may not provide us with any competitive advantages, or may be held invalid or unenforceable as a result of legal challenges; ● our competitors might conduct research and development activities in the United States and other countries that provide a safe harbor from patent infringement claims for certain research and development activities, 70 Table of Contents as well as in countries where we do not have patent rights, and then use the information learned from such activities to develop competitive drugs for sale in our major commercial markets; ● we may not develop additional proprietary technologies that are patentable; and ● the patents of others may have an adverse effect on our business. Risks Related to Our Business Operations, Employee Matters and Managing Growth We are highly dependent on the services of our Chief Executive Officer and Chairman, Dr. Shoshana Shendelman, and our Chief Medical Officer, Dr. Riccardo Perfetti, and if we are not able to retain these members of our management team or recruit and retain additional management, clinical and scientific personnel, our business will be harmed. We are highly dependent on our Chief Executive Officer and Chairman, Dr. Shoshana Shendelman, and our Chief Medical Officer, Dr. Riccardo Perfetti. Each of them may currently terminate their employment with us at any time. The loss of the services of either of these persons could impede the achievement of our research, development and commercialization objectives. Recruiting and retaining other senior executives, qualified scientific and clinical personnel and, if we progress the development of any of our product candidates, commercialization, manufacturing and sales and marketing personnel, will be critical to our success. The loss of the services of our executive officers or other key employees could impede the achievement of our research, development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of and commercialize our product candidates. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are unable to continue to attract and retain high-quality personnel, our ability to pursue our growth strategy will be limited. Our future performance will also depend, in part, on our ability to successfully integrate newly hired executive officers into our management team and our ability to develop an effective working relationship among senior management. Our failure to integrate these individuals and create effective working relationships among them and other members of management could result in inefficiencies in the development and commercialization of our product candidates, harming future regulatory approvals, sales of our product candidates and our results of operations. Additionally, we do not currently maintain “key person” life insurance on the lives of our executives or any of our employees. We expect to expand our organization, and we may experience difficulties in managing this growth, which could disrupt our operations. As of December 31, 2022, we had 27 full-time employees. As the clinical development of our product candidates progresses, we also expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of research, drug development, regulatory affairs and, if any of our product candidates receives marketing approval, sales, marketing and distribution. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities, and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations. 71 Table of Contents Our internal computer systems, or those of our collaborators or other contractors or consultants, may fail or suffer security breaches, which could result in a significant disruption of our product development programs and our ability to operate our business effectively, and adversely affect our business and operating results. Our internal computer systems, cloud-based computing services and those of our current and any future collaborators and other contractors or consultants are vulnerable to damage or interruption from computer viruses, data corruption, cyber-based attacks (including phishing attempts, denial of service attacks, and malware or ransomware incidents), unauthorized access, natural disasters, terrorism, war, international hostilities and telecommunication and electrical failures. While we have not experienced any significant system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a disruption of our development programs and our business operations, whether due to a loss of our trade secrets or other proprietary information or other similar disruptions. For example, the loss of clinical trial data from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. Furthermore, federal, state and international laws and regulations, such as the European Union’s General Data Protection Regulation, which took effect in May 2018, can expose us to enforcement actions and investigations by regulatory authorities, and potentially result in regulatory penalties and significant legal liability, if our information technology security efforts fail. In addition, our software systems include cloud-based applications that are hosted by third-party service providers with security and information technology systems subject to similar risks. To the extent that any disruption or security breach were to result in a loss of, or damage to, our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability, our competitive position could be harmed and the further development and commercialization of our product candidates could be delayed. Risks of unauthorized access and cyber-attacks have increased as most of our personnel, and the personnel of many third-parties with which we do business, have adopted remote working arrangements as a result of the Covid-19 pandemic, and may increase as a result of recent hostilities between Russia and Ukraine. Improper or inadvertent employee behavior, including data privacy breaches by employees, contractors and others with permitted access to our systems, may also pose a risk that sensitive data may be exposed to unauthorized persons or to the public. If a system failure or security breach occurs and interrupts our operations or the operations at one of our third-party vendors, it could result in intellectual property and other proprietary or confidential information being lost or stolen or a material disruption of our drug development programs. For example, the loss of clinical trial data from ongoing or planned clinical trials could result in delays in our regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a loss of or damage to our data or applications, loss of trade secrets or inappropriate disclosure of confidential or proprietary information, including protected health information or personal data of employees or former employees, access to our clinical data, or disruption of the manufacturing process, we could incur liability and the further development of our drug candidates could be delayed. We may also be vulnerable to cyber-attacks by hackers or other malfeasance. This type of breach of our cybersecurity may compromise our confidential information and/or our financial information and adversely affect our business or reputation or result in legal or regulatory proceedings. In addition, if a ransomware attack or other cyber-attack occurs, either internally or at our third-party vendors, it is possible we could be prevented from accessing our systems or data, which may cause interruptions or delays in our business, cause us to incur remediation costs or subject us to demands to pay ransom, or adversely affect our business reputation. Our employees, principal investigators, consultants and commercial partners may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements and insider trading. We are exposed to the risk of fraud or other misconduct by our employees, principal investigators, consultants and commercial partners. Misconduct by these parties could include intentional failures to comply with FDA regulations or the regulations applicable in other jurisdictions, provide accurate information to the FDA and other regulatory authorities, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self- dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs, and other business arrangements. Such misconduct also could involve the improper use of information obtained in the course of 72 Table of Contents clinical trials or interactions with the FDA or other regulatory authorities, which could result in regulatory sanctions and cause serious harm to our reputation. It is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from government investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in significant civil, criminal and administrative penalties, damages, fines, disgorgement, imprisonment, exclusion from participating in government-funded healthcare programs, such as Medicare and Medicaid, additional reporting requirements and oversight if we become subject to a corporate integrity agreement or similar agreement to resolve allegations of noncompliance with these laws, contractual damages, reputational harm and the curtailment or restructuring of our operations, any of which could have a negative impact on our business, financial condition, results of operations and prospects. Any future acquisitions or strategic collaborations may increase our capital requirements, dilute our stockholders, cause us to incur debt or assume contingent liabilities and/or subject us to other risks. From time to time, we may evaluate various acquisitions and strategic collaborations, including licensing or acquiring complementary drugs, intellectual property rights, technologies or businesses, as deemed appropriate to carry out our business plan. Any potential acquisition or strategic partnership may entail numerous risks, including: ● increased operating expenses and cash requirements; ● the assumption of additional indebtedness or contingent or unknown liabilities; ● assimilation of operations, intellectual property and drugs of an acquired company, including difficulties associated with integrating new personnel; ● the diversion of our management’s attention from our existing drug programs and initiatives in pursuing such a strategic partnership, merger or acquisition; ● retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key business relationships; ● risks and uncertainties associated with the other party to such a transaction, including the prospects of that party and their existing drugs or product candidates and regulatory approvals; and ● our inability to generate revenue from acquired technology and/or drugs sufficient to meet our objectives in undertaking the acquisition or even to offset the associated acquisition and maintenance costs. In addition, if we engage in future acquisitions or strategic partnerships, we may issue dilutive securities, assume or incur debt obligations, incur large one-time expenses, and acquire intangible assets that could result in significant future amortization expense. Moreover, we may not be able to locate suitable acquisition opportunities, and this inability could impair our ability to grow or obtain access to technology or drugs that may be important to the development of our business. Our business may be adversely affected by the coronavirus outbreak. The Covid-19 pandemic, (“Covid-19”) has had and may continue to have a material impact on our operations. Infections and deaths related to Covid-19 continue to disrupt the United States’ healthcare and healthcare regulatory systems. Such disruptions could divert healthcare resources away from, or materially delay FDA approval with respect to, our clinical trials. In addition, other known and unknown factors caused by Covid-19 could materially delay our clinical trials, including our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to Covid-19. For example, with respect to our trials related to AT-001 for the treatment of Diabetic Cardiomyopathy, we have experienced, and may continue to experience, delays in patient enrollment. Furthermore, we may experience additional delays in patient enrollment that we may not be able to mitigate. In addition, we have partnered with clinical research organizations, or CROs, to conduct clinical studies in jurisdictions, such as the EU, that have been affected by the spread of Covid-19. There is a possibility that such CROs may become unavailable or that the clinical trials they manage may be delayed due to Covid-19 or containment efforts associated with it. Such events may lead to termination of our relationship with affected CROs, affecting the development and study of our product candidates. Any elongation or de-prioritization of our clinical trials or delay in regulatory review resulting from such disruptions could materially affect the development and study of our product 73 Table of Contents candidates, and increase the costs related to such development. While Covid-19 vaccines have become available both domestically and internationally, the effects of Covid-19, including the impacts described above may last longer than expected, extending such impacts, and materially impacting our business, financial condition, and results of operations. Risks Related to Ownership of Our Common Stock The market price of our common stock is volatile and has fluctuated substantially, which could result in substantial losses for purchasers of our common stock. The stock market in general and the market for biopharmaceutical and pharmaceutical companies in particular, has experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, you may not be able to sell your common stock at or above the price at which you purchased it. In addition to the factors discussed in this “Risk Factors” section and elsewhere in this Annual Report, the market price for our common stock has been, and is likely to continue to be influenced by the following: ● the commencement, enrollment, results of , or any delays in our planned or future clinical trials of our product candidates or those of our competitors; ● the success of competitive drugs or therapies; ● regulatory or legal developments in the United States and other countries; ● the success of competitive products or technologies; ● developments or disputes concerning patent applications, issued patents or other proprietary rights; ● the recruitment or departure of key personnel; ● the level of expenses related to our product candidates or clinical development programs; ● the results of our efforts to discover, develop, acquire or in-license additional product candidates; ● actual or anticipated changes in estimates as to financial results, development timelines or recommendations by securities analysts; ● our inability to obtain or delays in obtaining adequate drug supply for any approved drug or inability to do so at acceptable prices; ● disputes or other developments relating to proprietary rights, including patents, litigation matters and our ability to obtain patent protection for our technologies; ● the potential impact of the Covid-19 pandemic on the timing and progress of our ongoing clinical trials, our business, results of operations, liquidity, and operations and our ability to mitigate those potential impacts; ● significant lawsuits, including patent or stockholder litigation; ● variations in our financial results or those of companies that are perceived to be similar to us; ● changes in the structure of healthcare payment systems, including coverage and adequate reimbursement for any approved drug; ● market conditions in the pharmaceutical and biotechnology sectors; ● general economic, political, and market conditions and overall fluctuations in the financial markets in the United States and abroad; and ● investors’ general perception of us and our business. These and other market and industry factors have caused the market price and demand for our common stock to fluctuate substantially, regardless of our actual operating performance, which may limit or prevent investors from selling their shares at or above the price paid for the shares and may otherwise negatively affect the liquidity of our common stock. Furthermore, we believe our stock has been, and may in the future be, adversely affected as a result of actions by third- parties. Short sellers and others, some of whom post anonymously on social media, may be positioned to profit if our stock declines and their activities can negatively affect our stock price. Some companies that have experienced volatility in the trading price of their shares have been the subject of securities class action litigation. Any lawsuit to which we are a party, with or without merit, may result in an unfavorable judgment. We also may decide to settle lawsuits on unfavorable terms. Any such negative outcome could result in payments of substantial damages or fines, damage to our reputation or adverse changes to our business practices. Defending against litigation is costly and time-consuming, and could divert our management’s attention and our 74 Table of Contents resources. Furthermore, during the course of litigation, there could be negative public announcements of the results of hearings, motions or other interim proceedings or developments, which could have a negative effect on the market price of our common stock. Concentration of ownership of our common stock among our existing executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions. Based upon shares of our common stock outstanding as of December 31, 2022, our executive officers, directors and stockholders who owned more than 10% of our outstanding common stock, in the aggregate, beneficially own shares representing approximately 40.1% of our outstanding common stock. If our executive officers, directors and stockholders who owned more than 10% of our outstanding common stock acted together, they may be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and approval of any merger, consolidation or sale of all or substantially all of our assets. The concentration of voting power and transfer restrictions could delay or prevent an acquisition of our company on terms that other stockholders may desire or result in the management of our company in ways with which other stockholders disagree. Because we do not anticipate paying any cash dividends on our capital stock in the foreseeable future, capital appreciation, if any, will be your sole source of gain. You should not rely on an investment in our common stock to provide dividend income. We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future. Investors seeking cash dividends should not purchase our common stock. Future sales of common stock by holders of our common stock, or the perception that such sales may occur, could depress the market price of our common stock. Sales of a substantial number of shares of our common stock in the public market could occur at any time, subject to certain restrictions described below. These sales, or the perception in the market that holders of a large number of shares intend to sell shares, could reduce the market price of our common stock. As of December 31, 2022, we had outstanding 48,063,358 shares of common stock. A substantial number of such shares are currently restricted as a result of securities laws or lock-up agreements but will be able to be sold in the future. We further have registered all shares of common stock that we may issue in the future or have issued to date under our equity compensation plans. These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and certain lock-up agreements. Sales of a large number of the shares issued under these plans in the public market could have an adverse effect on the market price of our common stock. If we fail to regain compliance with the continued listing requirements of Nasdaq, our common stock may be delisted and the price of our common stock and our ability to access the capital markets could be negatively impacted. On November 15, 2022, we received a deficiency letter from the staff of the Listing Qualifications Department of the Nasdaq Stock Market, or Nasdaq, notifying us that we were not in compliance with Listing Rule 5450(b)(1)(A), which requires a minimum of $10 million in stockholders’ equity, for companies listed under the NASDAQ Global Market, referred to as the equity rule. On February 24, 2023, the Nasdaq staff granted us an extension to regain compliance with the equity rule, or to transition to the NASDAQ Capital Market, which has a lower stockholders’ equity requirement, by May 15, 2023. We intend to enter into one or more financing transactions in an effort to comply with the equity rule and may, if appropriate, consider other available options. There are many factors that may adversely affect our stockholders’ equity, including those described throughout this section titled “Risk Factors.” Many of these factors are outside of our control. As a result, we may not be able to regain, or once regained, sustain compliance with the equity rule or other Nasdaq rule market cap requirements in the 75 Table of Contents long term. Any potential delisting of our common stock from the Nasdaq Global Market would likely result in decreased liquidity and increased volatility for our common stock and would adversely affect our ability to raise additional capital or to enter into strategic transactions. Any potential delisting of our common stock from the Nasdaq Global Market would also make it more difficult for our stockholders to sell our common stock in the public market. General Risk Factors If research analysts do not publish research or reports, or publish unfavorable research or reports, about us, our business or our market, our stock price and trading volume could decline. The trading market for our common stock will be influenced by the research and reports that industry or financial analysts publish about us or our business. Equity research analysts may discontinue research coverage of our common stock, and such lack of research coverage may adversely affect the market price of our common stock. We do not have any control over the analysts or the content and opinions included in their reports. The price of our shares could decline if one or more equity research analysts downgrade our shares or issue other unfavorable commentary or research about us. If one or more equity research analysts cease coverage of us or fail to publish reports on us regularly, demand for our shares could decrease, which in turn could cause the trading price or trading volume of our common stock to decline. We have broad discretion in the use of our cash and cash equivalents and may use them ineffectively, in ways with which you do not agree or in ways that do not increase the value of your investment. Our management has broad discretion in the application of our cash and cash equivalents, and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our common stock. The failure by our management to apply these funds effectively could result in additional operating losses that could have a negative impact on our business, cause the price of our common stock to decline and delay the development of our product candidates. Pending their use, we may invest our cash and cash equivalents in a manner that does not produce income or that loses value. We are an “emerging growth company,” and the reduced disclosure requirements applicable to emerging growth companies may make our common stock less attractive to investors. We are an “emerging growth company,” or EGC, as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we intend to take advantage of some of the exemptions from reporting requirements that are applicable to other public companies that are not EGCs, including: ● being permitted to provide only two years of audited financial statements, in addition to any required unaudited interim financial statements, with correspondingly reduced “Management’s Discussion and Analysis of Financial Condition and Results of Operations” disclosure; ● not being required to comply with the auditor attestation requirements in the assessment of our internal control over financial reporting; ● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements; ● reduced disclosure obligations regarding executive compensation; and ● not being required to hold a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. We cannot predict whether investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our share price may be more volatile. We currently take advantage of some or all of these reporting exemptions until we are no longer an EGC. We will remain an EGC until the earlier of (i) December 31, 2024, (ii) the last day of the fiscal year in which we have total annual gross revenue of at least $1.235 billion, (iii) the last day of the first fiscal year in which we are deemed to be a large accelerated filer, which means the market value of our 76 Table of Contents common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (iv) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. In addition, under Section 107(b) of the JOBS Act, EGCs can delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as other public companies that are not EGCs. We have incurred increased costs as a result of operating as a public company, and our management will be required to devote substantial time to new compliance initiatives. As a public company, and particularly after we are no longer an EGC, we incur and will continue to incur significant legal, accounting and other expenses. In addition, the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, and rules subsequently implemented by the SEC and The Nasdaq Stock Market LLC have imposed various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to devote a substantial amount of time to comply with these requirements. Moreover, these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, we expect that these rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance. Pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, we will be required to furnish a report by our management on our internal control over financial reporting, including an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. However, while we remain an EGC, we will not be required to include an attestation report on internal control over financial reporting issued by our independent registered public accounting firm. To achieve compliance with Section 404 within the prescribed period, we will be engaged in a process to document and evaluate our internal control over financial reporting, which is both costly and challenging. In this regard, we will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Despite our efforts, there is a risk that neither we nor our independent registered public accounting firm will be able to conclude within the prescribed timeframe that our internal control over financial reporting is effective as required by Section 404. This could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements. Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management. Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions also could limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Among other things, these provisions: ● establish a classified board of directors such that not all members of the board are elected at one time; ● allow the authorized number of our directors to be changed only by resolution of our board of directors; ● limit the manner in which stockholders can remove directors from the board; ● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of directors; 77 Table of Contents ● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by our stockholders by written consent; ● limit who may call stockholder meetings; ● authorize our board of directors to issue preferred stock without stockholder approval, which could be used to institute a stockholder rights plan, or so-called “poison pill,” that would work to dilute the stock ownership of a potential hostile acquirer, effectively preventing acquisitions that have not been approved by our board of directors; and ● require the approval of the holders of at least 662/3% of the votes that all our stockholders would be entitled to cast to amend or repeal certain provisions of our charter or bylaws. Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, or DGCL, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner. These provisions could discourage potential acquisition proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others from making tender offers for our common stock, including transactions that may be in your best interests. These provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock. Our governing documents designate certain courts as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees. Our amended and restated certificate of incorporation provides that, with respect to any state actions or proceedings under Delaware statutory or common law, the Court of Chancery of the State of Delaware is the exclusive forum for: ● any derivative action or proceeding brought on our behalf; ● any action asserting a breach of fiduciary duty; ● any action asserting a claim against us or any of our directors, officers, employees or agents arising under the DGCL, our amended and restated certificate of incorporation or our amended and restated bylaws; ● any action or proceeding to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or our amended and restated bylaws; and ● any action asserting a claim against us or any of our directors, officers, employees or agents that is governed by the internal-affairs doctrine. In addition, our amended and restated bylaws provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States are, to the fullest extent permitted by law, the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act. These exclusive-forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers or other employees, which may discourage lawsuits against us and our directors, officers and other employees. If a court were to find an exclusive-forum provision in our amended and restated certificate of incorporation or our amended and restated bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving the dispute in other jurisdictions, which could harm our business. ITEM 1B. UNRESOLVED STAFF COMMENTS. None. 78 Table of Contents ITEM 2. PROPERTIES. Our corporate headquarters are located at 545 Fifth Ave, Suite 1400, New York, NY 10017 where we lease office space pursuant to a lease agreement that commenced on October 31, 2019 and expires on October 31, 2024. We also occupy space for offices in Englewood Cliffs, New Jersey pursuant to a lease which commenced on November 1, 2020 for a three year period. We believe that our existing facilities are suitable and adequate to meet our current needs. We intend to add new facilities or expand existing facilities as we add employees, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. ITEM 3. LEGAL PROCEEDINGS. We are not a party to any material legal proceedings, and we are not aware of any material claims or actions pending or threatened against us. In the future, we might from time to time become involved in litigation relating to claims arising from our ordinary course of business, the resolution of which we do not anticipate would have a material adverse impact on our financial position, results of operations or cash flows. ITEM 4. MINE SAFETY DISCLOSURES. Not applicable. PART II ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information On May 16, 2019, our common stock began trading on the Nasdaq Global Market under the symbol “APLT.” Prior to that time, there was no public market for our common stock. Stockholders As of December 31, 2022, there were approximately 20 stockholders of record of our common stock. The actual number of holders of our common stock is greater than this number of record holders, and includes stockholders who are beneficial owners, but whose shares are held in street names by brokers or held by other nominees. This number of holders of record also does not include stockholders whose shares may be held in trust by other entities. Dividend Policy We have never paid or declared any cash dividends on our common stock, and we do not anticipate paying any cash dividends on our common stock in the foreseeable future. We intend to retain all available funds and any future earnings to fund the development and expansion of our business. Any future determination to pay dividends will be at the discretion of our board of directors and will depend upon a number of factors, including our results of operations, financial condition, future prospects, contractual restrictions, restrictions imposed by applicable law and other factors that our board of directors deems relevant. Recent Sales of Unregistered Securities None. Issuer Purchases of Equity Securities We did not purchase any of our registered equity securities during the period covered by this Annual Report. 79 Table of Contents ITEM 6. RESERVED. ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. You should read the following discussion and analysis of our financial condition and results of operations together with our financial statements and the related notes included elsewhere in this Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual Report, including information with respect to our plans and strategy for our business and related financing, includes forward-looking statements that involve risks and uncertainties. As a result of many factors, including those factors set forth in the “Risk Factors” section of this Annual Report, our actual results could differ materially from the results described in or implied by these forward-looking statements. Overview We are a clinical-stage biopharmaceutical company developing a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical need. We focus on molecules and pathways whose role in the disease process is well known based on prior research, but have previously failed to yield successful products due to poor efficacy and tolerability. Our unique approach to drug development leverages recent technological advances to design improved drugs, employs early use of biomarkers to confirm biological activity and focuses on abbreviated regulatory pathways. Our first molecular target is aldose reductase, or AR, an enzyme that converts glucose to sorbitol under oxidative stress conditions, and is implicated in multiple diseases. Prior attempts to inhibit this enzyme were hindered by nonselective, nonspecific inhibition, which resulted in limited efficacy and significant off-target safety effects. The detrimental consequences of AR activation have been well established by decades of prior research. Our AR program currently includes three small molecules, which are all potent and selective inhibitors of AR, but are engineered to have unique tissue permeability profiles to target different disease states, including diabetic complications, heart disease and rare metabolic diseases. The result of this unique multifaceted approach to drug development is a portfolio of highly specific and selective product candidates that we believe are significantly de-risked and can move quickly through the development process. AT-007 is a novel central nervous system, or CNS, penetrant ARI that we are developing for the treatment of rare metabolic diseases, including Galactosemia and SORD Deficiency. Galactosemia is a devastating rare pediatric metabolic disease that affects how the body processes a simple sugar called galactose, and for which there is no known cure or approved treatment available. The U.S. Food and Drug Administration, or FDA, has granted both orphan drug designation and rare pediatric disease designation to AT-007 for the treatment of Galactosemia and in June 2021, the FDA granted Fast Track Designation to AT-007 for the treatment of Galactosemia. We have completed an adult study in healthy volunteers and Galactosemia patients, demonstrating that AT-007 is safe and well tolerated, and significantly reduces plasma galactitol levels vs. placebo. Galactitol is a toxic metabolite of galactose, which is formed in Galactosemia patients by aberrant activity of aldose reductase when galactose is present at high levels. A pediatric study is underway in children with Galactosemia, assessing the impact of AT-007 vs. placebo on safety, biomarker reduction of galactitol, and long-term functional outcomes. On April 13, 2021, we presented data featuring a cross-sectional analysis of nineteen pediatric patients with Classic Galactosemia, providing meaningful insight on the progressive worsening of the central nervous system phenotype with age. On October 18, 2021, we reported biomarker data from the pediatric ACTION-Galactosemia Kids study. The results demonstrate a substantial reduction in plasma galactitol of approximately 40%, which was statistically significant (p<0.001) vs. placebo. We previously reported a baseline analysis of the 47 children enrolled in the study which demonstrated a clear correlation between baseline galactitol levels and baseline clinical functional outcomes. The long-term functional outcomes portion of the pediatric study is ongoing, and the outcomes are assessed every 6 months by a fire-walled data monitoring committee (DMC). When the study reaches statistical significance in the active treated arm vs. the placebo arm, the DMC will alert the Company and the trial will be unblinded. In April 2022, the Company met with the FDA to discuss the design of the ongoing pediatric study prior to the first 6-month outcomes assessment by the DMC. The FDA confirmed that the pediatric study as it is currently designed would support an NDA submission if statistical significance is reached, and there is alignment between the FDA and the Company on the potential path forward to approval. The 12-month clinical outcomes were assessed by the 80 Table of Contents fire-walled DMC, and as expected the data did not yet reach statistical significance, but demonstrated a trend in clinical outcomes favoring AT-007 vs. placebo. A safety analysis showed that AT-007 continued to be safe and well tolerated. The Company is exploring a potential submission for conditional approval based on existing data with the European Medicines Agency (EMA). AT-007 is also being studied in a rare disease caused by deficiency in the enzyme Sorbitol Dehydrogenase. Aldose Reductase is the first enzyme in the polyol pathway, converting glucose to sorbitol. AR is then followed by Sorbitol Dehydrogenase, which converts sorbitol to fructose. Patients with SORD Deficiency accumulate very high levels of sorbitol in their cells and tissues as a result of the enzyme deficiency, which results in tissue toxicities such as peripheral neuropathy and motor neuron disease. Recent research in drosophila and cell models of SORD Deficiency demonstrated that treatment with an ARI that blocks sorbitol production may provide benefit in this disease. Preclinical studies on AT- 007 have demonstrated significant reduction in sorbitol levels in fibroblasts from SORD deficient patients. Treatment with AT-007 in the drosophila model of SORD prevented the disease phenotype and protected from neuronal degeneration. On October 25, 2021, we reported data from a pilot open-label study in 8 SORD Deficiency patients. AT-007 reduced blood sorbitol levels by approximately 66% from baseline through 30 days of treatment. AT-007 was safe and well tolerated in all treated patients. In December 2021, we initiated a Phase 2/3 registrational study in patients with SORD Deficiency, which is ongoing at multiple clinical sites in the US and Europe. On February 16, 2023, we announced that in a pre-specified interim analysis of the ongoing Phase 3 INSPIRE trial, AT-007 reduced sorbitol levels by a mean of approximately 52% (or approximately 16,000ng/ml) over 90 days of treatment (p<0.001 vs. placebo) in patients with SORD Deficiency. At baseline, the mean blood sorbitol level of SORD patients included in this interim analysis was approximately 29,000ng/ml, with a range of approximately 22,000ng/ml-38,000ng/ml. In the INSPIRE trial, a baseline cross-sectional analysis of the relationship between sorbitol level, age (or duration of disease) and clinical outcome measures demonstrated a statistically significant correlation between sorbitol level and key clinical outcome measures, including 10-meter-walk/run speed, 4- stair climb speed, and sit-to-stand test (p<0.05). The Company is working with the FDA to determine the appropriate regulatory path forward, as well as data required for an NDA submission, to advance AT-007 towards registration for this indication. The INSPIRE study will continue in blinded format to the 12-month interim clinical outcomes assessment. If the primary clinical outcome measure (10-meter-walk/run) reaches statistical significance at 12 months, the study will be completed and unblinded. If not, the study will continue in blinded format to 24 months, where clinical outcomes will be assessed again in a final statistical analysis. AT-007 continues to be safe and well tolerated to date. We also plan to initiate a clinical development program on AT-007 in another pediatric rare disease, called PMM2- CDG. PMM2-CDG is a glycosylation disorder caused by deficiencies in the enzyme phosphomannomutase 2, which leads to CNS symptoms similar to Galactosemia, including low IQ, tremor, and speech and motor problems. Aldose Reductase is over-activated in this disease as a compensatory consequence of PMM2 deficiency, and a CNS penetrant ARI may be a compelling clinical option. Initial data in fibroblast cell lines derived from PMM2-CDG patients demonstrates that AT-007 treatment increases phosphomannomutase 2 activity. The FDA has granted pediatric rare disease designation and orphan designation for AT-007 in PMM2-CDG. AT-001 is a novel ARI with broad systemic exposure and peripheral nerve permeability that we are developing for the treatment of diabetic cardiomyopathy, or DbCM, a fatal fibrosis of the heart, for which no treatments are available. We completed a Phase 1/2 clinical trial evaluating AT-001 in approximately 120 patients with type 2 diabetes, in which no drug-related adverse effects or tolerability issues were observed. In September 2019, we announced the initiation of a Phase 3 registrational trial of AT-001 in DbCM. The study, called ARISE-HF, is designed to evaluate AT-001’s ability to improve or prevent the decline of functional capacity in patients with DbCM at high risk of progression to overt heart failure. Although we did experience enrollment delays in 2020 associated with the Covid-19 pandemic, modifications were made to the trial to include additional sites and geographies to address Covid-19-related issues. The trial is now fully enrolled with 675 patients. AT-003 is a novel ARI designed to cross through the back of the eye when dosed orally, and has demonstrated strong retinal penetrance, for the treatment of diabetic retinopathy, or DR. DR is an ophthalmic disease that occurs in diabetic patients and for which treatments are currently limited to high-cost biologics requiring intravitreal administration. DR has been linked to AR activity, including elevations in sorbitol and subsequent changes in retinal blood vessels, which distorts vision and leads to permanent blindness. 81 Table of Contents AT-104 is a preclinical dual selective PI3K inhibitor. Due to recent regulatory changes impacting development of the PI3K inhibitor class of compounds, the Company has discontinued its early stage preclinical PI3K program and further development of AT-104. The compound and all rights associated with the technology were returned to Columbia University. Since inception in 2016, our operations have focused on developing our product candidates, organizing and staffing our company, business planning, raising capital, establishing our intellectual property portfolio and conducting clinical trials. We do not have any product candidates approved for sale and have not generated any revenue. We have incurred significant operating losses since inception in 2016. Our ability to generate product revenue sufficient to achieve profitability will depend on the successful development and commercialization of one or more of our product candidates. Our net loss was $82.5 million for the year ended December 31, 2022. As of December 31, 2022, we had an accumulated deficit of $348.8 million. We expect to continue to incur significant expenses and increasing operating losses for the foreseeable future in connection with our ongoing activities. Furthermore, we expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. As of December 31, 2022, we had cash and cash equivalents and short-term investments of $30.6 million. February 2021 Secondary Public Offering In February 2021, we issued and sold 3,000,000 shares of common stock at a public offering price of $23.00 per share, with an additional 450,000 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares in the February Offering. We received aggregate proceeds, net of underwriting discounts and commissions and offering costs of $74.4 million. June 2022 Offering On June 27, 2022, the Company completed the June Offering, an underwritten public offering of 20,000,000 shares of common stock, par value $0.0001 per share, 10,000,000 Pre-Funded Warrants, and accompanying Common Warrants to purchase up to 30,000,000 shares of common stock. The shares and accompanying Common Warrants were offered at a price to the public of $1.00 per share and warrant, and the Pre-Funded Warrants and accompanying Common Warrants were offered at a price to the public of $0.9999, resulting in aggregate net proceeds of approximately $27.8 million, after deducting underwriting discounts and commissions and offering expenses. The Pre-Funded Warrants and the Common Warrants are immediately exercisable and will expire five years from the date of issuance. Holders may not exercise any Pre-Funded Warrants or Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise. Holders of the Pre-Funded Warrants and/or Common Warrants (together with affiliates) who immediately prior to June 27, 2022 beneficially owned more than 9.99% of the Company’s outstanding common stock may not exercise any portion of their Pre-Funded Warrants or Common Warrants if the holder (together with affiliates) would beneficially own more than 19.99% of the Company’s outstanding common stock after exercise. The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders. In the event of certain corporate transactions, the holders of the Pre- Funded Warrants and/or Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants and/or Common Warrants immediately prior to such transaction. The Pre-Funded Warrants and Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. The Company intends to use the net proceeds from the June Offering for general corporate purposes, which may include research and development costs, including the conduct of clinical trials and process development and manufacturing of the Company’s product candidates, expansion of the Company’s research and development capabilities, working capital and capital expenditures. 82 Table of Contents Components of Our Results of Operations Revenue Since inception, we have not generated any revenue and do not expect to generate any revenue from the sale of products in the near future. If our development efforts for our product candidates are successful and result in regulatory approval, or if we enter into collaboration or license agreements with third parties, we may generate revenue in the future from a combination of product sales or payments from collaboration or license agreements. Operating Expenses Research and Development Expenses Research and development expenses consist primarily of costs incurred for our research activities, including our discovery efforts and the development of our product candidates, and include: ● employee-related expenses, including salaries, related benefits and stock-based compensation expense for employees engaged in research and development functions; ● fees paid to consultants for services directly related to our product development and regulatory efforts; ● expenses incurred under agreements with contract research organizations, or CROs, as well as contract manufacturing organizations, or CMOs, and consultants that conduct and provide supplies for our preclinical studies and clinical trials; ● costs associated with preclinical activities and development activities; ● costs associated with our technology and our intellectual property portfolio; and ● costs related to compliance with regulatory requirements. We expense research and development costs as incurred. Costs for external development activities are recognized based on an evaluation of the progress to completion of specific tasks using information provided to us by our vendors. Payments for these activities are based on the terms of the individual agreements, which may differ from the pattern of costs incurred, and are reflected in our financial statements as prepaid or accrued research and development expenses. Research and development costs also include costs incurred in connection with certain licensing arrangements. Before a compound receives regulatory approval, we record upfront and milestone payments made by us to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a compound receives regulatory approval, we will record any milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the asset is determined to have an indefinite life, we will amortize the payments on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. Research and development activities are central to our business model. We expect that our research and development expenses will continue to increase for the foreseeable future as we continue clinical development for our product candidates and continue to discover and develop additional product candidates. If any of our product candidates enter into later stages of clinical development, they will generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. Historically, we have incurred research and development expenses that primarily relate to the development of AT-007, AT-001 and our ARI program. As we advance our product candidates, we expect to allocate our direct external research and development costs across each of the indications or product candidates. 83 Table of Contents The following table summarizes our research and development expenses for the years ended December 31, 2022 and 2021: (in thousands) Product pipeline research and development expenses AT-001 AT-007 Personnel-related expenses Stock-based compensation Other expenses Total research and development expenses General and Administrative Expenses Year Ended December 31, 2022 2021 $ $ 20,809 23,902 6,648 3,618 657 55,634 $ $ 22,861 30,669 5,529 2,759 752 62,570 General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in our executive, finance, and commercial functions. General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other operating costs. Commercial expenses consist of payroll expense for commercial personnel, as well as marketing, market research, market access, and other focused investments to support launch of drug candidates, generate evidence of commercial potential and value proposition, and maximize potential business development deal leverage. Commercial expenses are included in general and administrative expenses. We expect that our general and administrative expenses will increase in the future as we increase our general and administrative headcount to support our continued research and development and potential commercialization of our product candidates. We also expect to incur increased expenses associated with being a public company, including costs of accounting, audit, legal, regulatory and tax compliance services; director and officer insurance costs; and investor and public relations costs. Other Income (Expense), Net Other income (expense), net consists of interest income (expense), net, and other income (expense), net. Interest income (expense), net consists primarily of our interest income on our cash and cash equivalents and marketable securities. Other income (expense), net consists primarily of realized gains and losses on sales of marketable securities. 84 Table of Contents Results of Operations The following table summarizes our results of operations: (in thousands) Operating expenses: Research and development General and administrative Total operating expenses Loss from operations Other income (expense), net: Interest income (expense), net Change in fair value of warrant liabilities Other income (expense) Other income (expense), net Net loss Research and Development Expenses Years Ended December 31, 2022 2021 $ 55,634 27,316 82,950 (82,950) $ 62,570 43,048 105,618 (105,618) 685 (66) (177) 442 555 — (521) 34 $ (82,508) $ (105,584) The following table summarizes our research and development expenses: (in thousands) Clinical and pre-clinical Drug manufacturing and formulation Personnel expenses Stock-based compensation Regulatory and other Total research and development expenses Year Ended December 31, 2022 $ 42,928 957 6,648 3,619 1,482 $ 55,634 2021 $ 40,323 11,910 5,529 2,759 2,049 $ 62,570 $ Increase / (Decrease) 2,605 (10,953) 1,119 860 (567) (6,936) $ Research and development expenses for the year ended December 31, 2022 were $55.6 million, compared to $62.6 million for the year ended December 31, 2021. The decrease of approximately $6.9 million was primarily related to: ● an increase in clinical and pre-clinical expense of $2.6 million, primarily related to the progression of the SORD Phase 2/3 registrational study, progression of the AT-007 ACTION-Galactosemia long-term extension adult study, and progression of the AT-007 ACTION-Galactosemia Kids pediatric registrational study; ● a decrease in drug manufacturing and formulation expenses of $11.0 million primarily related to the completion and release of AT-001 and AT-007 drug product batches in the year ended December 31, 2021; ● an increase in personnel expenses of $1.1 million due to the increase in headcount in support of our clinical program pipeline; ● an increase in stock-based compensation of $0.9 million due to new stock option and restricted stock unit grants, offset by forfeitures of stock option and restricted stock unit grants; 85 Table of Contents ● a decrease of regulatory and other expenses of $0.6 million primarily related to the UM license fees recognized during the year ended December 31, 2021. General and Administrative Expenses The following table summarizes our general and administrative expenses: (in thousands) Legal and professional fees Commercial expenses Personnel expenses Stock-based compensation Insurance expenses Other expenses Total general and administrative expenses Year Ended December 31, 2022 $ 6,854 2,193 5,537 5,543 3,682 3,507 $ 27,316 2021 $ 6,340 11,341 6,617 8,418 4,399 5,933 $ 43,048 $ Increase / (Decrease) 514 (9,148) (1,080) (2,875) (717) (2,426) (15,732) $ General and administrative expenses were $27.3 million for the year ended December 31, 2022, compared to $43.0 million for the year ended December 31, 2021. The decrease of approximately $15.7 million was primarily related to: ● an increase in professional and legal fees of $0.5 million due to higher external legal fees; ● a decrease of $9.1 million related to decreased spend for commercial operations; ● a decrease in personnel expenses of $1.1 million and a decrease in stock-based compensation of $2.9 million due to a decrease in headcount; ● a decrease of insurance expenses of $0.7 million related to decreased directors and officers liability insurance costs; and ● a decrease in other expenses of $2.4 million, primarily relating to decreased costs of other office expenses. Other Income (Expense), Net Interest income was $0.7 million for the year ended December 31, 2022 as compared to $0.6 million for the year ended December 31, 2021. Interest income is derived from our marketable securities and the increase of $0.1 million in interest income year over year is due to rising interest rates during 2022. Change in fair value of warrant liabilities - The change in the fair value of our warrant liabilities for the year ended December 31, 2022 resulted in a $0.1 million expense recognized in the period. There were no warrant liabilities for the year ended December 31, 2021. Other expense, net was expense of approximately $0.2 million for the year ended December 31, 2022, compared to expense of $0.5 million for the year ended December 31, 2021. The decrease was primarily related to lower realized losses incurred by our available-for-sale securities portfolio during the year ended December 31, 2022. Liquidity and Capital Resources Since our inception through December 31, 2022, we have not generated any revenue and have incurred significant operating losses and negative cash flows from our operations. The accompanying financial statements have 86 Table of Contents been prepared assuming the continuation of the Company as a going concern. The exclusive licensing agreement with Advanz Pharma for commercialization rights to AT-007 in Europe is expected to provide a source of capital to the Company based on clinical and regulatory milestones. If actualization of these milestones aligns with the projected timelines, and product approvals are received in the timeframes expected, this source of capital may be sufficient to cover operating expenses through expected product approvals and potential revenues. However, there are no guarantees that this will materialize, and delays or unexpected data could disrupt this potential source of liquidity. Broadly, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. As of December 31, 2022, our cash, cash equivalents and marketable securities was $30.6 million. We also received a $10.7 million upfront payment from Advanz Pharma in January 2023 in conjunction with signing the exclusive licensing agreement for European commercialization rights. We believe that our cash and cash equivalents as of December 31, 2022, along with the upfront payment received in January 2023 and the projected clinical and regulatory milestone payments expected in fiscal year 2023 from Advanz Pharma will be sufficient to fund our operations through year end 2023, and potentially beyond if clinical trial completion and marketing authorization in Europe as well as commercial sales milestones materialize in the expected timelines. The report of our independent registered public accounting firm on our financial statements for the year ended December 31, 2022 includes an explanatory paragraph regarding the existence of substantial doubt about our ability to continue as a going concern. Given our planned expenditures for the next several years, we have concluded and our independent registered public accounting firm has agreed with our conclusion that there is still a substantial doubt regarding our ability to continue as a going concern for a period of 12 months beyond the filing of this Form 10-K. Cash Flows The following table summarizes our cash flows for each of the periods presented: (in thousands) Net cash used in operating activities Net cash provided by/(used in) investing activities Net cash provided by financing activities Net increase (decrease) in cash and cash equivalents Operating Activities Year Ended December 31, 2022 2021 $ (78,093) $ (90,728) 12,433 74,717 $ (37,231) $ (3,578) 13,170 27,692 During the year ended December 31, 2022, operating activities used cash of $78.1 million, due to our net losses of $82.6 million, a decrease in operating lease liability of $0.4 million, a decrease in financed insurance premium of $3.1 million, a decrease of $1.6 million in accrued expense, and a decrease in accounts payable of $4.9 million. This is partially offset by increases of $0.4 million in prepaid expense, $0.4 million of issuance of options in-lieu of bonus, $9.2 million in non-cash stock-based compensation expense, and $3.6 million of amortization of insurance premium, an increase of $0.1 million in change in fair value of warrant liability, and $0.4 million in amortization of operating lease right-of-use assets. During the year ended December 31, 2021, operating activities used cash of $90.7 million, due to our net losses of $105.6 million, a decrease in operating lease liability of $0.4 million, a decrease in financed insurance premium of $4.4 million, a decrease of $3.3 million in accrued expense, and a decrease in prepaid expenses of $1.7 million. This is partially offset by increases of $8.8 million in accounts payable, $11.2 million in non-cash stock-based compensation expense, and $4.3 million of amortization of insurance premium, and $0.4 million in amortization of operating lease right-of-use assets. Investing Activities Net cash provided by investing activities for the year ended December 31, 2022 was $13.2 million relating to our purchases of available-for-sale marketable securities for $64.2 million and proceeds from the maturities of available-for- sale marketable securities for $77.4 million. 87 Table of Contents Net cash provided by investing activities for the year ended December 31, 2021 was $12.4 million relating to our purchases of available-for-sale marketable securities for $121.6 million and proceeds from the sale and maturities of available-for-sale marketable securities for $134.0 million. Financing Activities During the year ended December 31, 2022, net cash provided by financing activities was $27.7 million, primarily from the cash proceeds from the June 2022 offering of $27.8 million, $49,000 from the exercise of stock options for common stock under the 2019 Plan, and $3.1 million from the proceeds from financed insurance premium. This was partially offset by the repayment of short-term borrowings of $3.3 million. In June 2020, we entered into the Goldman Equity Distribution Agreement to sell shares of our common stock, from time to time, having an aggregate offering price of up to $100 million. The Goldman Equity Distribution Agreement was terminated as of January 24, 2022. On January 26, 2022, the Company entered into the Cowen Equity Distribution Agreement to sell shares of the Company’s common stock, from time to time, having an aggregate offering price of up to $100.0 million. Pursuant to the Cowen Equity Distribution Agreement shares of our common stock may be offered and sold through the sales agent in sales deemed “at-the-market” offerings under the Securities Act of 1933, as amended, or the Securities Act. Under the Cowen Equity Distribution Agreement, the sales agent will be entitled to compensation of up to 3% of the gross offering proceeds of all shares of our common stock sold through it pursuant to the Cowen Equity Distribution Agreement. In connection with the sale of shares of our common stock on our behalf, the sales agent may be deemed to be “underwriters” within the meaning of the Securities Act, and the compensation paid to the sales agent may be deemed to be underwriting commissions or discounts. As of December 31, 2022, the Company has not sold any shares of common stock pursuant to the Cowen Equity Distribution Agreement. On June 27, 2022, the Company completed the June Offering, an underwritten public offering of 20,000,000 shares of common stock, par value $0.0001 per share, 10,000,000 Pre-Funded Warrants, and accompanying Common Warrants to purchase up to 30,000,000 shares of common stock. The shares and accompanying Common Warrants were offered at a price to the public of $1.00 per share and warrant, and the Pre-Funded Warrants and accompanying Common Warrants were offered at a price to the public of $0.9999, resulting in aggregate net proceeds of approximately $27.8 million, after deducting underwriting discounts and commissions and offering expenses. The Pre-Funded Warrants and the Common Warrants are immediately exercisable and will expire five years from the date of issuance. Holders may not exercise any Pre-Funded Warrants or Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise. Holders of the Pre-Funded Warrants and/or Common Warrants (together with affiliates) who immediately prior to June 27, 2022 beneficially owned more than 9.99% of the Company’s outstanding common stock may not exercise any portion of their Pre-Funded Warrants or Common Warrants if the holder (together with affiliates) would beneficially own more than 19.99% of the Company’s outstanding common stock after exercise. The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders. In the event of certain corporate transactions, the holders of the Pre- Funded Warrants and/or Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants and/or Common Warrants immediately prior to such transaction. The Pre-Funded Warrants and Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. The Company intends to use the net proceeds from the June Offering for general corporate purposes, which may include research and development costs, including the conduct of clinical trials and process development and manufacturing of the Company’s product candidates, expansion of the Company’s research and development capabilities, working capital and capital expenditures. During the year ended December 31, 2021, net cash provided by financing activities was $74.7 million, primarily from the cash proceeds from the secondary offering of $74.4 million, $0.5 million from the exercise of stock options for common stock under the 2019 Plan, and $69,000 from the exercise of warrants for common stock, and $4.4 88 Table of Contents million from the proceeds from financed insurance premium. This was partially offset by the repayment of short-term borrowings of $4.7 million. Funding Requirements We expect our expenses to increase substantially in connection with our ongoing activities, particularly as we advance the preclinical activities and clinical trials of our product candidates. We believe that our expenses may increase significantly if and as we: ● continue the ongoing and planned development of our product candidates; ● initiate, conduct and complete any ongoing, anticipated or future preclinical studies and clinical trials for our current and future product candidates; ● seek marketing approvals for any product candidates that successfully complete clinical trials; ● establish a sales, marketing, manufacturing and distribution infrastructure to commercialize any current or future product candidate for which we may obtain marketing approval; ● seek to discover and develop additional product candidates; ● continue to build a portfolio of product candidates through the acquisition or in-license of drugs, product candidates or technologies; ● maintain, protect and expand our intellectual property portfolio; ● hire additional clinical, regulatory and scientific personnel; and ● add operational, financial and management information systems and personnel, including personnel to support our product development and planned future commercialization efforts. Furthermore, we have and expect to incur additional costs associated with operating as a public company, including significant legal, accounting, investor relations and other expenses. Due to the numerous risks and uncertainties associated with the development of our product candidates and programs, and because the extent to which we may enter into collaborations with third parties for development of our product candidates is unknown, we are unable to estimate the timing and amounts of increased capital outlays and operating expenses associated with completing the research and development of our product candidates. Our future funding requirements, both near and long-term, will depend on many factors, including: ● the initiation, scope, progress, timing, costs and results of our ongoing and planned clinical trials for our product candidates; ● the outcome, timing and cost of meeting regulatory requirements established by the FDA and other comparable foreign regulatory authorities; ● the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual property rights; ● the cost of defending potential intellectual property disputes, including patent infringement actions; ● the achievement of milestones or occurrence of other developments that trigger payments under the Columbia Agreements or other agreements we may enter into; ● the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if any; ● the effect of competing technological and market developments; ● the cost and timing of completion of clinical or commercial-scale manufacturing activities; ● the costs of operating as a public company; ● the extent to which we in-license or acquire other products and technologies; ● our ability to establish and maintain collaborations on favorable terms, if at all; ● the cost of establishing sales, marketing and distribution capabilities for our product candidates in regions where we choose to commercialize our product candidates, if approved; and ● the initiation, progress, timing and results of the commercialization our product candidates, if approved, for commercial sale. 89 Table of Contents A change in the outcome of any of these variables with respect to the development of a product candidate could mean a significant change in the costs and timing associated with the development of that product candidate. Until such time, if ever, that we can generate product revenue sufficient to achieve profitability, we expect to finance our cash needs through offerings of securities, PIPE, debt financings, collaborations or other strategic transactions. The terms of financing may adversely affect the holdings or the rights of our stockholders. Funding may not be available to us on acceptable terms, or at all. If we are unable to obtain funding, we may be required to delay, limit, reduce or terminate some or all of our research and product development, product portfolio expansion or future commercialization efforts. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. Contractual Obligations and Commitments The following table summarizes our contractual obligations as of December 31, 2022: (in thousands) Total 1 Year 1 to 3 Years 4 to 5 Years Payments Due By Period Less Than More Than 5 Years Operating lease commitments(1) $ 940 $ 515 Total $ 940 $ 515 $ $ 425 425 $ $ — $ — $ — — (1) Represents future minimum lease payments under our operating leases for office space. Except as disclosed in the table above, we have no long-term debt or capital leases and no material non-cancelable purchase commitments with service providers, as we have generally contracted on a cancelable, purchase-order basis. We enter into contracts in the normal course of business with CROs, CMOs and other third parties for clinical trials, preclinical research studies and testing and manufacturing services. These contracts are cancelable by us upon prior notice. Payments due upon cancellation consist only of payments for services provided or expenses incurred, including noncancelable obligations of our service providers, up to the date of cancellation. These payments are not included in the preceding table as the amount and timing of such payments are not known. We may incur potential contingent payments upon our achievement of clinical, regulatory and commercial milestones, as applicable, or royalty payments that we may be required to make under the 2016 and 2019 Columbia Agreements, the 2020 Miami License Agreement, the 2020 Miami Option Agreement, and the 2020 Miami Research Agreement, pursuant to which we have in-licensed certain intellectual property. Due to the uncertainty of the achievement and timing of the events requiring payment under these agreements, the amounts to be paid by us are not fixed or determinable at this time and are excluded from the table above. See the section titled “Business—Exclusive License Agreement with Columbia University” and “Business—License Agreement with University of Miami.” Critical Accounting Policies and Significant Judgments and Estimates Our management’s discussion and analysis of financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of our financial statements and related disclosures requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities, costs and expenses and the disclosure of contingent assets and liabilities in our financial statements. We base our estimates on historical experience, known trends and events and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. We evaluate our estimates and assumptions on an ongoing basis. Our actual results may differ from these estimates under different assumptions or conditions. 90 Table of Contents While our significant accounting policies are described in greater detail in Note 1 to our financial statements appearing elsewhere in this Annual Report, we believe that the following accounting policies are those most critical to the judgments and estimates used in the preparation of our financial statements. Accrued Research and Development Expenses We expense all costs incurred in performing research and development activities. Research and development expenses include materials and supplies, preclinical expenses, manufacturing expenses, contract services and other outside expenses. As part of the process of preparing our financial statements, we are required to estimate our accrued research and development expenses. We make estimates of our accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known to us at that time. There may be instances in which payments made to our vendors will exceed the level of services provided and result in a prepayment of the expense. In accruing service fees, we estimate the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, we adjust the accrual or the amount of prepaid expenses accordingly. Although we do not expect our estimates to be materially different from amounts actually incurred, our understanding of the status and timing of services performed relative to the actual status and timing of services performed may vary and may result in reporting amounts that are too high or too low in any particular period. To date, there have not been any material adjustments to our prior estimates of accrued research and development expenses. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Research and development costs also include costs incurred in connection with certain licensing arrangements. Before a compound receives regulatory approval, we record upfront and milestone payments made by us to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a compound receives regulatory approval, we will record any milestone payments in Identifiable intangible assets, less accumulated amortization and, unless the asset is determined to have an indefinite life, we will amortize the payments on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. Stock-Based Compensation We account for our stock-based compensation as expense in the statements of operations based on the awards’ grant date fair values. We account for forfeitures as they occur by reversing any expense recognized for unvested awards. We estimate the fair value of options granted using the Black-Scholes option pricing model. The Black-Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to a historical lack of a public market for our common stock and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to us, including stage of product development and life science industry focus. We use the simplified method as allowed by the SEC Staff Accounting Bulletin No. 107, Share-Based Payment, to calculate the expected term for options granted as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. The fair value of stock-based payments is recognized as expense over the requisite service period which is generally the vesting period. 91 Table of Contents Warrant Liabilities We account for our Warrant liabilities by measuring the fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value recognized in other income (expense) within the Company’s statement of operations. We utilized a Black-Scholes option pricing model to estimate the fair value of the Common and Pre-Funded Warrants, which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement. Certain inputs used in this Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of the Company’s control, including a potential change in control outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations. We utilized a probability-weighted approach that considered the probability of a change in control at the Company in the Black-Scholes option pricing model, whereby a 10% probability of change in control was used for each of the five years in the term of the agreements. The inputs we utilized to value the warrant liability for Common and Pre-Funded Warrants are highly subjective. The assumptions used in calculating the fair value of the warrant liability for Common and Pre-Funded Warrants represent our best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and we use different assumptions, the fair value of the warrant liability for Common Warrants may be materially different in the future. Off-Balance Sheet Arrangements We have not entered into any off-balance sheet arrangements and do not have any holdings in variable interest entities. Recently Issued Accounting Pronouncements A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 1 to our financial statements appearing elsewhere in this Annual Report. Emerging Growth Company Status The Jumpstart Our Business Startups Act of 2012 permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies until those standards would otherwise apply to private companies. We have irrevocably elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards when they are required to be adopted by public companies that are not emerging growth companies. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK. We are exposed to market risks in the ordinary course of our business. These risks primarily include interest rate sensitivities and foreign currency sensitivities. Interest Rate Sensitivity Our exposure to market risk relates to our cash, cash equivalents and investments of $30.6 million. The primary objective of our investment activities is to preserve principal while at the same time maximizing the income we receive without significantly increasing risk. Some of the financial instruments in which we invest could be subject to market risk where the interest rates may cause the value of the instruments to fluctuate. To minimize this risk, we intend to 92 Table of Contents maintain a portfolio which may include cash, cash equivalents and short-term investment securities available-for-sale in a variety of securities. The securities in our investment portfolio are not leveraged and are classified as available-for-sale. These available-for-sale securities are short-term in nature and subject to minimal interest rate risk. All investments have a fixed interest rate and are carried at market value, which approximates cost. We do not use derivative financial instruments in our investment portfolio. A change of 50 to 100 basis points in interest rate would result in a change of $45,000 to $0.1 million, respectively, on the value of our investment portfolio. We do not believe that our cash has significant risk of default or illiquidity. While we believe our cash and cash equivalents does not contain excessive risk, we cannot provide absolute assurance that in the future our investments will not be subject to adverse changes in market value. In addition, we maintain significant amounts of cash at one or more financial institutions that are in excess of federally insured limits. Inflation generally affects us by increasing our cost of labor and clinical trial costs. We do not believe that inflation has had a material effect on our results of operations during the periods presented. As of December 31, 2022, we had $0.6 million of outstanding short-term debt relating to our financed directors’ and officers’ insurance premium. The interest rate on this short-term loan is fixed at 2.64% per annum, and when considering the remaining outstanding balance and the remaining term of the agreement ending in the second quarter of 2022, the loan is not subject to material interest rate risk. Foreign Currency Sensitivity Our primary operations are transacted in U.S. Dollars, however, certain service agreements with third parties are denominated in currencies other than the U.S. Dollar, primarily the Euro. As such, we are subject to foreign exchange risk and therefore, fluctuations in the value of the U.S. Dollar against the Euro may impact the amounts reported for expenses and obligations incurred under such agreements. We do not participate in any foreign currency hedging activities and we do not have any other derivative financial instruments. We did not recognize any significant exchange rate loss during the year ended December 31, 2022. A hypothetical 10% change in foreign exchange rates during any of the periods presented would not have a material impact on our financial condition or results of operations. ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA. The information required by this item is set forth in the financial statements filed with this report and are herein and incorporated by reference. 93 Table of Contents Report of Independent Registered Public Accounting Firm The Shareholders and the Board of Directors of Applied Therapeutics, Inc. Opinion on the Financial Statements We have audited the accompanying balance sheets of Applied Therapeutics, Inc. (the Company) as of December 31, 2022 and 2021, the related statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the two years in the period ended December 31, 2022, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles. The Company's Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 to the financial statements, the Company has suffered recurring losses from operations, will require additional capital to fund operations, and has stated that substantial doubt exists about the Company’s ability to continue as a going concern. Management's evaluation of the events and conditions and management’s plans regarding these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Ernst & Young LLP We have served as the Company’s auditor since 2017. New York, New York March 23, 2023 F-1 Table of Contents Applied Therapeutics, Inc. Balance Sheets (in thousands except share and per share data) ASSETS CURRENT ASSETS: Cash and cash equivalents Investments Prepaid expenses and other current assets Total current assets Operating lease right-of-use asset Security deposits and leasehold improvements TOTAL ASSETS LIABILITIES AND STOCKHOLDERS’ EQUITY CURRENT LIABILITIES: Current portion of operating lease liabilities Accounts payable Accrued expenses and other current liabilities Warrant liability Total current liabilities NONCURRENT LIABILITIES: Noncurrent portion of operating lease liabilities Clinical holdback - long-term portion Total noncurrent liabilities Total liabilities STOCKHOLDERS’ EQUITY: As of December 31, 2022 As of December 31, 2021 $ $ $ $ $ $ 16,657 13,923 6,728 37,308 857 198 38,363 477 4,534 14,756 13,657 33,424 414 464 878 34,302 53,888 26,935 7,571 88,394 1,298 200 89,892 442 9,461 16,559 — 26,462 891 — 891 27,353 Common stock, $0.0001 par value; 200,000,000 shares authorized as of December 31, 2022 and 100,000,000 shares authorized as of December 31, 2021; 48,063,358 shares issued and outstanding as of December 31, 2022 and 26,215,514 shares issued and outstanding as of December 31, 2021 Preferred stock, par value $0.0001; 10,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 Additional paid-in capital Accumulated other comprehensive gain/(loss) Accumulated deficit Total stockholders' equity TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY 5 3 - 352,828 51 (348,823) 4,061 38,363 $ - 328,958 (107) (266,315) 62,539 89,892 $ The Notes to Financial Statements are an integral part of these statements. F-2 Table of Contents Applied Therapeutics, Inc. Statements of Operations (in thousands except share and per share data) OPERATING EXPENSES: Research and development General and administrative Total operating expenses LOSS FROM OPERATIONS OTHER INCOME (EXPENSE), NET: Interest income Change in fair value of warrant liabilities Other expense Total other income, net Net loss Net loss attributable to common stockholders—basic and diluted Net loss per share attributable to common stockholders—basic and diluted Weighted-average common stock outstanding—basic and diluted Year Ended December 31, 2022 2021 $ $ 55,634 27,316 82,950 (82,950) 62,570 43,048 105,618 (105,618) 685 (66) (177) 442 (82,508) $ (82,508) $ (2.18) $ 555 — (521) 34 (105,584) (105,584) (4.12) 25,598,181 $ $ $ 37,825,431 The Notes to Financial Statements are an integral part of these statements. F-3 Table of Contents Applied Therapeutics, Inc. Statements of Comprehensive Income (Loss) (in thousands) Net Loss Other comprehensive income (loss) Unrealized gain (loss) on marketable securities Other comprehensive gain (loss), net of tax Comprehensive income (loss), net of tax Year Ended December 31, 2022 $ (82,508) 2021 $ (105,584) 158 158 $ (82,350) 5 5 $ (105,579) The Notes to Financial Statements are an integral part of these statements. F-4 Table of Contents Applied Therapeutics, Inc. Statements of Stockholders’ Equity (in thousands, except share and per share data) Common Stock $0.0001 Par Value Additional Accumulated Other Paid-in Amount Capital $ 2 $ 242,780 Accumulated Deficit (160,731) $ $ Comprehensive Income (Loss) BALANCE, January 1, 2021 Issuance of common stock upon secondary public offering, net of issuance costs of $167 Exercise of options for common stock issued under Equity Incentive Plan Restricted Stock Unit released for common stock issued under Equity Incentive Plan Exercise of warrants for common stock Stock-based compensation expense Net loss Other comprehensive income (loss) BALANCE, December 31, 2021 Shares 22,493,661 3,450,000 191,436 52,562 27,855 — — — 26,215,514 1 — — — — — — 3 74,421 511 — 69 11,177 — — 328,958 — — — — — (105,584) — (266,315) Total Stockholders’ Equity (112) $ 81,939 — — — — — — 5 (107) 74,422 511 — 69 11,177 (105,584) 5 62,539 BALANCE, January 1, 2022 Issuance of common stock, pre-funded warrants, and common warrants sold for cash, net of issuance costs of $96 Exercise of pre-funded warrants for common stock Exercise of options for common stock issued under Equity Incentive Plan Restricted Stock Units released for common issued under Equity Incentive Plan Stock-based compensation expense Issuance of options in-lieu of bonus Net loss Other comprehensive income (loss) BALANCE, December 31, 2022 Common Stock $0.0001 Par Value Shares 26,215,514 $ Amount 20,000,000 1,750,000 47,602 50,242 — — — — 48,063,358 $ 3 2 — — — — — — — 5 Additional Paid-in Capital Accumulated Deficit Accumulated Other Comprehensive Income (Loss) Total Stockholders’ Equity $ 328,958 $ (266,315) $ (107) $ 62,539 12,801 1,417 49 — 9,162 441 — — 352,828 $ — — — — — — (82,508) — (348,823) $ $ — — — — — — — 158 51 $ 12,803 1,417 49 — 9,162 441 (82,508) 158 4,061 The Notes to Financial Statements are an integral part of these statements. F-5 Table of Contents Applied Therapeutics, Inc. Statements of Cash Flows (in thousands) OPERATING ACTIVITIES: Net loss Adjustments to reconcile net loss to net cash used in operating activities: Stock-based compensation expense Issuance of options in-lieu of bonus Amortization of insurance premium Amortization of operating lease right-of-use assets Amortization of leasehold improvements Change in operating lease liability Change in fair value of warrant liability Changes in operating assets and liabilities: Financed insurance premium Prepaid expenses Accounts payable Accrued expenses and other current liabilities Other liabilities Net cash used in operating activities INVESTING ACTIVITIES: Purchase of available-for-sale securities Proceeds from sale of available-for-sale securities Proceeds from maturities of available-for-sale securities Net cash provided by investing activities FINANCING ACTIVITIES: Proceeds from June Offering issuance of shares and prefunded warrants Proceeds from February Offering, net of cash issuance costs of $169 Proceeds from financed insurance premium Repayments of short-term borrowings Exercise of stock options for common stock under Equity Incentive Plan Exercise of Warrants Net cash provided by financing activities NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS Cash and cash equivalents at beginning of period Cash and cash equivalents at end of period SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: Initial measurement of warrant liability Conversion of warrant liability to equity for warrant exercises Reclassification of prefunded warrant liability to equity Unrealized gain (loss) on marketable securities Year Ended December 31, 2022 2021 $ (82,508) $ (105,584) 9,162 441 3,589 441 2 (442) 66 (3,105) 359 (4,927) (1,635) 464 (78,093) (64,218) — 77,388 13,170 27,811 — 3,105 (3,273) 49 — 27,692 (37,231) 53,888 16,657 21,835 1,417 6,827 158 11,177 — 4,282 415 — (404) — (4,435) (1,654) 8,821 (3,346) — (90,728) (121,589) 5,538 128,484 12,433 — 74,421 4,434 (4,718) 511 69 74,717 (3,578) 57,466 53,888 — — — 5 $ $ $ $ $ $ $ $ $ $ The Notes to Financial Statements are an integral part of these statements. F-6 Table of Contents NOTES TO AUDITED FINANCIAL STATEMENTS 1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Operations and Business Applied Therapeutics, Inc. (the “Company”) is a clinical-stage biopharmaceutical company developing a pipeline of novel product candidates against validated molecular targets in indications of high unmet medical need. In particular, the Company is currently targeting treatments for CNS rare diseases and diabetic complications. The Company was incorporated in Delaware on January 20, 2016 and is headquartered in New York, New York. On January 28, 2020, the Company completed its secondary public offering (the “Secondary Public Offering”), pursuant to which it issued and sold 2,741,489 shares of common stock at a public offering price of $45.50 per share, with an additional 411,223 shares sold pursuant to the underwriters’ full exercise of their option to purchase additional shares. The aggregate net proceeds received by the Company from the offering, after deducting underwriting discounts and commissions and offering costs, were $134.1 million. On June 4, 2020, the Company filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) under which the Company may, from time to time, sell securities in one or more offerings having an aggregate offering price of up to $300.0 million. The Shelf Registration Statement was declared effective as of June 15, 2020. As of the filing date of this Annual Report, the Company has sold 3,450,000 shares of common stock under the Shelf Registration. On June 12, 2020, the Company entered into an equity distribution agreement (the “Goldman Equity Distribution Agreement”) with Goldman Sachs & Co. LLC (“Goldman”), as a sales agent to sell shares of the Company’s common stock, from time to time, having an aggregate offering price of up to $100 million. Goldman may act as an agent on the Company’s behalf or purchase shares of the Company’s common stock as a principal. As of December 31, 2021, the Company had not sold any shares of common stock pursuant to the Goldman Equity Distribution Agreement. This agreement has since been terminated as of January 24, 2022. On February 17, 2021, the Company completed an underwritten public offering (the “February Offering”) of 3,450,000 shares of common stock, including the exercise in full of the underwriters’ option to purchase 450,000 additional shares of common stock, which option closed on February 19, 2021. The shares were offered at a price to the public of $23.00 per share, resulting in aggregate net proceeds of approximately $74.4 million, after deducting underwriting discounts and commissions and offering expenses. On January 26, 2022, the Company entered into an equity distribution agreement (the “Cowen Equity Distribution Agreement) with Cowen and Company, LLC (“Cowen”), as a sales agent, to sell shares of the Company’s common stock, from time to time, having an aggregate offering price of up to $100.0 million. Pursuant to the Cowen Equity Distribution Agreement shares of our common stock may be offered and sold through the sales agent in sales deemed “at-the-market” offerings under the Securities Act of 1933, as amended, or the Securities Act. Under the Cowen Equity Distribution Agreement, the sales agent will be entitled to compensation of up to 3% of the gross offering proceeds of all shares of our common stock sold through it pursuant to the Cowen Equity Distribution Agreement. In connection with the sale of shares of our common stock on our behalf, the sales agent may be deemed to be “underwriters” within the meaning of the Securities Act, and the compensation paid to the sales agent may be deemed to be underwriting commissions or discounts. As of December 31, 2022, the Company has not sold any shares of common stock pursuant to the Cowen Equity Distribution Agreement. On June 27, 2022, the Company completed an underwritten public offering (the “June Offering”) of 20,000,000 shares of common stock, par value $0.0001 per share, 10,000,000 pre-funded warrants to purchase shares of common stock (the “Pre-Funded Warrants”), and accompanying warrants to purchase up to 30,000,000 shares of common stock (the “Common Warrants”). The shares and accompanying Common Warrants were offered at a price to the public of $1.00 per share and warrant, and the Pre-Funded Warrants and accompanying Common Warrants were offered at a price to the public of $0.9999, resulting in aggregate net proceeds of approximately $27.8 million, after deducting F-7 Table of Contents underwriting discounts and commissions and offering expenses. The Pre-Funded Warrants and the Common Warrants are immediately exercisable and will expire five years from the date of issuance. Holders may not exercise any Pre-Funded Warrants or Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise. Holders of the Pre- Funded Warrants and/or Common Warrants (together with affiliates) who immediately prior to June 27, 2022 beneficially owned more than 9.99% of the Company’s outstanding common stock may not exercise any portion of their Pre-Funded Warrants or Common Warrants if the holder (together with affiliates) would beneficially own more than 19.99% of the Company’s outstanding common stock after exercise. The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders. In the event of certain corporate transactions, the holders of the Pre-Funded Warrants and/or Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants and/or Common Warrants immediately prior to such transaction. The Pre-Funded Warrants and Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. The Company intends to use the net proceeds from the June Offering for general corporate purposes, which may include research and development costs, including the conduct of clinical trials and process development and manufacturing of the Company’s product candidates, expansion of the Company’s research and development capabilities, working capital and capital expenditures. Liquidity and Going Concern The Company has incurred, and expects to continue to incur, significant operating losses for the foreseeable future as it continues to develop its drug candidates. To date, the Company has not generated any revenue, and it does not expect to generate revenue unless and until it successfully completes development and obtains regulatory approval for one of its product candidates. Under ASC Topic 205-40, Presentation of Financial Statements - Going Concern, management is required at each reporting period to evaluate whether there are conditions and events, considered in the aggregate, that raise substantial doubt about an entity's ability to continue as a going concern within one year after the date that the financial statements are issued. We are actively pursuing several potential financing options. While we continue to explore opportunities to raise additional equity capital in the public markets, this has proven to be challenging in the biotech sector recently. Other options for structured finance which we continue to explore include a PIPE (private investment in public equity), debt, convertible debt, and synthetic royalty financing. Synthetic royalty financing, in particular, has become a favorable option for many companies for funding ongoing clinical development in late-stage and pre-approval programs. We have engaged an investment bank and we are specifically exploring this option in the near term. Additionally, we are in active dialogue with several potential partners regarding business development opportunities related to one or more of our programs. There can be no assurances that our discussions with any of the current counterparties will be successful, and the Company expects to continue to pursue additional opportunities. As reflected in the accompanying financial statements, the Company incurred a net loss of $82.5 million for the year ended December 31, 2022 and has an accumulated deficit of $348.8 million as of December 31, 2022. The exclusive licensing agreement with Advanz Pharma for commercialization rights to AT-007 in Europe provides a source of capital to the Company based on clinical and regulatory milestones. We received a $10.7 million upfront payment from Advanz Pharma in January 2023 in conjunction with signing the agreement. If actualization of these milestones aligns with the projected timelines, and product approvals are received in the timeframes expected, this source of capital may be sufficient to cover operating expenses through expected product approvals and potential revenues. However, there are no guarantees that this will materialize timely or at all, and delays or unexpected data could disrupt this potential liquidity. Broadly, the Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and is dependent on debt and equity financing to fund its operations. As of December 31, 2022, our cash, cash equivalents and marketable securities totaled $30.6 million. Given our planned expenditures for the next twelve months, we have concluded there is substantial doubt regarding our ability to continue as a going concern for a year beyond the date of these financial statements. The accompanying financial statements have been prepared assuming the continuation of the Company as a going concern. F-8 Table of Contents Risks and Uncertainties The Company is subject to risks common to companies in the biotechnology industry, including but not limited to, risks of failure of preclinical studies and clinical trials, the need to obtain marketing approval for any product candidate that it may identify and develop, the need to successfully commercialize and gain market acceptance of its product candidates, dependence on key personnel, protection of proprietary technology, compliance with government regulations, development by competitors of technological innovations and reliance on third party manufacturers. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the Company's ability to continue as a going concern as of the date of the financial statements and the reported amounts of expenses during the reporting period. In preparing the financial statements, management used estimates in the following areas, among others: prepaid and accrued expenses; warrant liability valuation; stock-based compensation expense; and the evaluation of the existence of conditions and events that raise substantial doubt regarding the Company’s ability to continue as a going concern. Actual results could differ from those estimates. Significant Accounting Policies Fair Value Measurements Certain assets and liabilities are reported on a recurring basis at fair value. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. Financial assets and liabilities carried at fair value are to be classified and disclosed in one of the following three levels of the fair value hierarchy, of which the first two are considered observable and the last is considered unobservable: Level 1—Quoted prices in active markets for identical assets or liabilities. Level 2—Observable inputs (other than Level 1 quoted prices), such as quoted prices in active markets for similar assets or liabilities, quoted prices in markets that are not active for identical or similar assets or liabilities, or other inputs that are observable or can be corroborated by observable market data. Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to determining the fair value of the assets or liabilities, including pricing models, discounted cash flow methodologies and similar techniques. Cash and Cash Equivalents The Company considers all short-term, highly liquid investments, with an original maturity of three months or less, to be cash equivalents. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in these accounts and does not believe it is exposed to any significant credit risk on cash and cash equivalents. Investments The Company has investments in marketable debt securities. The Company determines the appropriate classification of its investments at the date of purchase and reevaluates the classifications at the balance sheet date. Marketable debt securities with maturities of 12 months or less are classified as short-term. Marketable debt securities with maturities greater than 12 months are classified as long-term. The Company’s marketable securities are accounted for as available for sale (“AFS”). AFS securities are reported at fair value. Unrealized gains and losses, after applicable F-9 Table of Contents income taxes, are reported in accumulated other comprehensive income/(loss). Realized gains or losses on the sale of marketable securities are determined using the specific identification method and are recorded as a component of other income (expense), net. The Company conducts an other-than-temporary impairment (“OTTI”) analysis on a quarterly basis or more often if a potential loss-triggering event occurs. The Company considers factors such as the duration, severity and the reason for the decline in value, the potential recovery period and whether the Company intends to sell. For AFS securities, the Company also considers whether (i) it is more likely than not that the Company will be required to sell the debt securities before recovery of their amortized cost basis and (ii) the amortized cost basis cannot be recovered as a result of credit losses. Leases At the inception of an arrangement, the Company determines if an arrangement is, or contains, a lease based on the unique facts and circumstances present in that arrangement. Lease classification, recognition, and measurement are then determined at the lease commencement date. For arrangements that contain a lease the Company (i) identifies lease and non-lease components, (ii) determines the consideration in the contract, (iii) determines whether the lease is an operating or financing lease; and (iv) recognizes lease right-of-use (“ROU”) assets and liabilities. Lease liabilities and their corresponding ROU assets are recorded based on the present value of lease payments over the expected lease term. The interest rate implicit in lease contracts is typically not readily determinable and as such, the Company uses its incremental borrowing rate based on the information available at the lease commencement date, which represents an internally developed rate that would be incurred to borrow, on a collateralized basis, over a similar term, an amount equal to the lease payments in a similar economic environment. Most leases include options to renew and, or, terminate the lease, which can impact the lease term. The exercise of these options is at the Company’s discretion and the Company does not include any of these options within the expected lease term as the Company is not reasonably certain it will exercise these options. The Company has elected to combine lease components (for example fixed payments including rent) with non-lease components (for example, non-dedicated parking and common-area maintenance costs) on our real estate asset classes. Fixed, or in substance fixed, lease payments on operating leases are recognized over the expected term of the lease on a straight-line basis. Fixed lease expense on operating leases is recognized within operating expenses within the statements of operations. The Company has operating leases for our corporate offices. The Company has elected the short- term lease exemption and, therefore, do not recognize a ROU asset or corresponding liability for lease arrangements with an original term of 12 months or less. Leasehold improvements and assets under financing lease arrangements are amortized over the lesser of the asset’s estimated useful life or the term of the respective lease. Maintenance costs are expensed as incurred. Operating leases are included in operating lease right-of-use asset, current portion of operating lease liabilities, and noncurrent portion of operating lease liabilities in the balance sheet as of December 31, 2022 and 2021. Clinical hold-back, long-term As part of the regulatory approval process for taking its products to market, the Company enters into certain Clinical Trial Agreements (CTAs) which include, among other things, the compensation and payment schedule the participating medical institutions and physicians will receive for all costs in connection with the clinical trial (or study) under the terms of the CTA. As individual patients are enrolled in the study by the participating medical institution or physician, the Company pays certain per study fees according to the CTA for the duration of the trial. As invoices are received by the Company from the medical institution or physician, the Company retains an agreed upon percentage of total invoiced costs, generally ranging between 5% - 10%, that is withheld from payment until the end of the study. F-10 Table of Contents These retained amounts are recorded as clinical holdback, a liability, on the accompanying balance sheets, and all expenses incurred in connection with these CTA activities are expensed as services are provided, which are included as research and development expenses on the accompanying statements of operations. The following table shows the activity within the clinical holdback liability accounts for the year ended December 31, 2022: (in thousands) Balance as of December 31,2021 Clinical holdback retained Clinical holdback paid Balance as of December 31,2022 Less: clinical holdback current portion Clinical holdback - long-term portion $ $ $ — 464 — 464 — 464 There was no clinical holdback during the year ended December 31, 2021. Deferred Offering Costs The Company capitalizes certain legal, professional accounting and other third party fees that are directly associated with in-process equity financings as deferred offering costs until such financings are consummated. After consummation of the equity financing, these costs are recorded in the statement of stockholders’ (deficit) equity as a reduction of proceeds generated as a result of the offering. Should a planned equity financing be abandoned, the deferred offering costs would be expensed immediately as a charge to operating expenses in the statement of operations. As of December 31, 2022 and 2021, the Company did not have any deferred offering costs recorded in prepaid and other current assets. Research and Development The Company expenses all costs incurred in performing research and development activities. Research and development expenses include salaries and other related costs, materials and supplies, preclinical expenses, manufacturing expenses, contract services and other outside expenses. As part of the process of preparing the financial statements, the Company is required to estimate their accrued research and development expenses. The Company makes estimates of the accrued expenses as of each balance sheet date in the financial statements based on facts and circumstances known at that time. In addition, there may be instances in which payments made to the Company’s vendors will exceed the level of services provided and result in a prepayment of the expense in which case such amounts are reflected as prepaid expenses and other current assets. In accruing service fees, the Company estimates the time period over which services will be performed and the level of effort to be expended in each period. If the actual timing of the performance of services or the level of effort varies from the estimate, the Company adjusts the accrual or the amount of prepaid expenses accordingly. Nonrefundable advance payments for goods or services to be received in the future for use in research and development activities are deferred and capitalized in prepaid expenses and other current assets. The capitalized amounts are expensed as the related goods are delivered or the services are performed. Research and development costs also include costs incurred in connection with certain licensing arrangements. Before a compound receives regulatory approval, the Company records upfront and milestone payments made to third parties under licensing arrangements as expense. Upfront payments are recorded when incurred, and milestone payments are recorded when the specific milestone has been achieved. Once a compound receives regulatory approval, the Company will record any milestone payments in identifiable intangible assets, less accumulated amortization and, unless the asset is determined to have an indefinite life, the Company will amortize the payments on a straight-line basis over the remaining agreement term or the expected product life cycle, whichever is shorter. F-11 Table of Contents General and Administrative General and administrative expenses consist primarily of salaries and other related costs, including stock-based compensation, for personnel in the Company’s executive and finance functions. General and administrative expenses also include professional fees for legal, accounting, auditing, tax and consulting services; travel expenses; and facility-related expenses, which include allocated expenses for rent and maintenance of facilities and other operating costs. Commercial expenses consist of payroll expense for commercial personnel, as well as marketing, market research, market access, and other focused investments to support launch of drug candidates, generate evidence of commercial potential and value proposition, and maximize potential business development deal leverage. Commercial expenses are included in general and administrative expenses. Stock-Based Compensation The Company accounts for its stock-based compensation as expense in the statements of operations based on the awards’ grant date fair values. The Company accounts for forfeitures as they occur by reversing any expense recognized for unvested awards. The Company estimates the fair value of options granted using the Black-Scholes option pricing model. The Black- Scholes option pricing model requires inputs based on certain subjective assumptions, including (a) the expected stock price volatility, (b) the calculation of expected term of the award, (c) the risk-free interest rate and (d) expected dividends. Due to the lack of a public market for the Company’s common stock and a lack of company-specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The computation of expected volatility is based on the historical volatility of a representative group of companies with similar characteristics to the Company, including stage of product development and life science industry focus. The Company uses the simplified method as allowed by the Securities and Exchange Commission (“SEC”) Staff Accounting Bulletin (“SAB”) No. 107, Share-Based Payment, to calculate the expected term for options granted to employees as it does not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a treasury instrument whose term is consistent with the expected term of the stock options. The expected dividend yield is assumed to be zero as the Company has never paid dividends and has no current plans to pay any dividends on its common stock. The fair value of stock-based payments is recognized as expense over the requisite service period which is generally the vesting period. Stock-Based Compensation–Restricted Stock Units The Company accounts for restricted stock units in accordance with the authoritative guidance for stock-based compensation. The fair value of restricted stock units is measured at the grant date based on the closing market price of the Company’s common stock on the date of grant, and is recognized as expense on a straight-line basis over the period of vesting. Forfeitures are recognized as a reduction of stock-based compensation expense as they occur. Income Taxes The Company uses the asset and liability method of accounting for deferred income taxes. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities at currently enacted tax rates. These temporary differences primarily relate to net operating loss carryforwards available to offset future taxable income. Valuation allowances are established, if necessary, to reduce a deferred tax asset to the amount that will more likely than not be realized. F-12 Table of Contents The Company recognizes tax liabilities from an uncertain tax position only if it is more likely than not that the tax position will not be sustained upon examination by the taxing authorities, based on the technical merits of the tax position. There are no uncertain tax positions that have been recognized in the accompanying financial statements. The Company is required to file tax returns in the U.S. federal jurisdiction and in the states of New York, California, Massachusetts, New Jersey, and New York City. The Company’s policy is to recognize interest and penalties related to uncertain tax benefits, if any, as part of income tax expense. No such interest and penalties have been accrued as of December 31, 2022 and 2021. In December 2019, the FASB issued ASU 2019-12, Income Taxes: Simplifying the Accounting for Income Taxes. The new standard intended to simplify the accounting for income taxes by eliminating certain exceptions related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplifies aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. The standard is effective for annual periods beginning after December 15, 2020 and interim periods within, with early adoption permitted. Adoption of the standard requires certain changes to primarily be made prospectively, with some changes to be made retrospectively. The Company adopted the amendment on January 1, 2021, with no impact to the financial statements. Net Loss per Share Basic net loss per share is calculated by dividing net loss available to common stockholders by the weighted-average common stock outstanding. Diluted net loss per share is calculated similarly, except that it includes the dilutive effect of the assumed exercise of securities, including outstanding warrants and the effect of shares issuable under the Company’s stock- based compensation plan, if such effect is dilutive. Segment Information Operating segments are defined as components of an enterprise for which separate discrete information is available for evaluation by the chief operating decision-maker in deciding how to allocate resources and assess performance. The Company and the Company’s chief operating decision-maker, the Company’s chief executive officer, views the Company’s operations and manages its business as a single operating segment, which is the business of discovering and developing its product candidates. Recent Accounting Pronouncements Any recent pronouncements issued by the FASB or other authoritative standards groups with future effective dates are either not applicable or are not expected to be significant to the financial statements of the Company. 2. LICENSE AGREEMENT Columbia University In October 2016, the Company entered into a license agreement (the “2016 Columbia Agreement”) with the Trustees of Columbia University (“Columbia University”) to obtain an exclusive royalty-bearing sublicensable license in respect to certain patents. As part of the consideration for entering into the 2016 Columbia Agreement, the Company issued to Columbia University shares equal to 5% of its outstanding common stock on a fully diluted basis at the time of issue. The common stock had a fair value of $0.5 million at the time of issuance. The Company will be required to make further payments to Columbia University of up to an aggregate of $1.3 million for the achievement of specified development and regulatory milestones, and up to an aggregate of $1.0 million for the achievement of a specified level of aggregate annual net sales, in each case in connection with products covered by the 2016 Columbia Agreement. The Company will also be required to pay tiered royalties to Columbia University in the low- to mid-single digit percentages on the Company’s, its affiliates’ and its sublicensees’ net sales of licensed products, subject to specified offsets and reductions. In addition, the Company is required to make specified annual minimum royalty payments to Columbia F-13 Table of Contents University, which is contingent upon the approval of the licensed products, in the mid-six figures beginning on the 10th anniversary of the effective date of the 2016 Columbia Agreement. When we grant sublicenses under the 2016 Columbia Agreement we are required to pay Columbia University a portion of the net sublicensing revenue received from such third parties, at percentages between 10% and 20%, depending on the stage of development at the time such revenue is received from such third parties. The Advanz Agreement includes a sublicense under the 2016 Columbia Agreement. The 2016 Columbia Agreement will terminate upon the expiration of all the Company’s royalty payment obligations in all countries. The Company may terminate the 2016 Columbia Agreement for convenience upon 90 days’ written notice to Columbia University. At its election, Columbia University may terminate the 2016 Columbia Agreement, or convert the licenses granted to the Company into non-exclusive, non-sublicensable licenses, in the case of (a) the Company’s uncured material breach upon 30 days’ written notice (which shall be extended to 90 days if the Company is diligently attempting to cure such material breach), (b) the Company’s failure to achieve the specified development and funding milestone events, or (c) the Company’s insolvency. In January 2019, the Company entered into a second license agreement with Columbia University (the “2019 Columbia Agreement”). Pursuant to the 2019 Columbia Agreement, Columbia University granted the Company a royalty- bearing, sublicensable license that is exclusive with respect to certain patents, and non-exclusive with respect to certain know-how, in each case to develop, manufacture and commercialize PI3k inhibitor products. The license grant is worldwide. Under the 2019 Columbia Agreement, the Company is obligated to use commercially reasonable efforts to research, discover, develop and market licensed products for commercial sale in the licensed territory, and to comply with certain obligations to meet specified development and funding milestones within defined time periods. Columbia University retains the right to conduct, and grant third parties the right to conduct, non-clinical academic research using the licensed technology; provided that such research is not funded by a commercial entity or for-profit entity or results in rights granted to a commercial or for-profit entity. As consideration for entering into the 2019 Columbia Agreement, the Company made a nominal upfront payment to Columbia University. The Company will be required to make further payments to Columbia University of up to an aggregate of $1.3 million for the achievement of specified development and regulatory milestones, and up to an aggregate of $1.0 million for the achievement of a specified level of aggregate annual net sales, in each case in connection with products covered by the 2019 Columbia Agreement. The Company will also be required to pay tiered royalties to Columbia University in the low- to mid-single digit percentages on the Company’s, its affiliates’ and its sublicensees’ net sales of licensed products, subject to specified offsets and reductions. In addition, the Company is required to make specified annual minimum royalty payments to Columbia University, which is contingent upon the approval of the licensed products, in the mid-six figures beginning on the tenth anniversary of the effective date of the 2019 Columbia Agreement. In July 2022, following regulatory changes impacting development of the class of PI3k inhibitors and the Company’s decision to discontinue its early stage preclinical PI3k program, the Company and Columbia entered into an agreement terminating the 2019 Columbia Agreement (the “2022 Columbia Termination Agreement”) as of July 25, 2022. Under the terms of the 2022 Columbia Termination Agreement, the Company assigned certain regulatory documents regarding the preclinical PI3k inhibitor AT-104 to Columbia and granted Columbia a non-exclusive royalty free license (with rights to sublicense any future Columbia licensee) under certain know-how, technical information and data relating to AT-104 that was developed by the Company during the term of the 2019 Columbia Agreement. In March 2019, and in connection with the 2016 Columbia Agreement, the Company entered into a research services agreement (the “2019 Columbia Research Agreement”) with Columbia University with the purpose of analyzing structural and functional changes in brain tissue in an animal model of Galactosemia, and the effects of certain compounds whose intellectual property rights were licensed to the Company as part of the 2016 Columbia Agreement on any such structural and functional changes. The 2019 Columbia Research Agreement had a term of 12 months from its effective date and expired in accordance with its terms. On October 3, 2019, and in connection with the 2019 Columbia Agreement, the Company entered into a research services agreement (the “PI3k Columbia Research Agreement” and collectively with the 2016 Columbia Agreement, 2019 Columbia Agreement and 2019 Columbia Research Agreement, the “Columbia Agreements”) with Columbia F-14 Table of Contents University with the purpose of analyzing PI3k inhibitors for the treatment of lymphoid malignancies. The PI3k Columbia Research Agreement had a term of 18 months from its effective date and expired in accordance with its terms. During the years ended December 31, 2022 and 2021, the Company recorded $0 and $0 in research and development expense, respectively, and $0.2 million and $0.2 million, respectively, in general and administrative expense related to the Columbia Agreements. In aggregate, the Company has incurred $2.7 million in expense from the execution of the Columbia Agreements through December 31, 2022. As of December 31, 2022, the Company had $0.1 million due to Columbia University included in accrued expenses and $0 included in accounts payable. As of December 31, 2021, the Company had $12,000 due to Columbia University included in accrued expenses and $0.1 million included in accounts payable. University of Miami 2020 Miami License Agreement On October 28, 2020, the Company entered into a license agreement with the University of Miami (the “2020 Miami License Agreement”) relating to certain technology that is co-owned by the University of Miami (UM), the University of Rochester (UR) and University College London (UCL). UM was granted an exclusive agency from UR and UCL to license each of their rights in the technology. Pursuant to the 2020 Miami License Agreement, UM, on behalf of itself and UR and UCL, granted the Company a royalty-bearing, sublicensable license that is exclusive with respect to certain patent applications and patents that may grant from the applications, and non-exclusive with respect to certain know-how, in each case to research, develop, make, have made, use, sell and import products for use in treating and/or detecting certain inherited neuropathies, in particular those caused by mutation in the sorbitol dehydrogenase (SORD) gene. The license grant is worldwide. Under the 2020 Miami License Agreement, the Company is obligated to use commercially reasonable efforts to develop, manufacture, market and sell licensed products in the licensed territory, and to comply with certain obligations to meet specified development milestones within defined time periods. UM retains for itself, UR, and UCL the right to use the licensed patent rights and licensed technology for their internal non-commercial educational, research and clinical patient care purposes, including in sponsored research and collaboration with commercial entities. Under the terms of the 2020 Miami License Agreement, the Company was obligated to pay UM an up-front non- refundable license fee of $1.1 million, and a second non-refundable license fee of $0.5 million due on the first anniversary of the date of the license. The Company will be required to make further payments to UM of up to an aggregate $2.2 million for the achievement of specified patenting and development milestones, and up to an aggregate of $4.1 million for achievement of late stage regulatory milestones. The Company will also be required to pay royalties ranging from 0.88% - 5% on the Company’s, the Company’s affiliates’ and the Company’s sublicensees’ net sales of licensed products. When the Company sublicenses the rights granted under the 2020 Miami License Agreement to one or more third parties, the Company will be required to pay to UM a portion of the non-royalty sublicensing revenue received from such third parties ranging from 15% – 25%. The Advanz Agreement includes a sublicense under the 2020 Miami License Agreement. The 2020 Miami License Agreement terminates upon the expiration of all issued patents and filed patent applications or 10 years after the first commercial sale of the last product or process for which a royalty is due, unless earlier terminated. In addition, the 2020 Miami License Agreement may be terminated by the Company at any time upon 60 days prior written notice to UM, and may be terminated by either the Company or UM upon material breach of an obligation if action to cure the breach is not initiated within 60 days of receipt of written notice. The Company recorded $0.1 million and $0 in research and development expense and general and administrative expense, respectively, during the year-ended December 31, 2022. As of December 31, 2022, the Company had $0.3 million in accrued expenses. The Company recorded $0.03 million and $0 in research and development expense and general and administrative expense, respectively, during the year-ended December 31, 2021. As of December 31, 2021, the Company had $0.3 million in accrued expenses. F-15 Table of Contents 2020 Miami Option Agreement On October 28, 2020, the Company entered into an option agreement with the University of Miami (the “2020 Miami Option Agreement”) concerning certain research activities and technology relating to SORD neuropathy that may be pursued and developed by UM. Under the 2020 Miami Option Agreement, if UM conducts such research activities, then UM is obligated to grant us certain option rights to access and use the research results and to obtain licenses to any associated patent rights upon us making specified payments to UM within specified time limits. If the Company elects to obtain option rights the Company will be required to make payments to UM in the low-six figures to the low-seven figures, depending upon the rights the Company elects to obtain, and the Company will be obligated to make certain milestone payments in the high-six figures to mid-seven figures if UM conducts and completes certain research activities within specified time periods and the Company elects to receive rights to use the results of that research. 2020 Miami Sponsored Research Agreement On December 14, 2020, the Company entered into a research agreement with the University of Miami (the “2020 Miami Research Agreement”), under which the University of Miami will conduct a research study relating to SORD neuropathy and deliver a final report on the study to the Company. The term of the research agreement was from December 14, 2020 through December 30, 2021, and was extended through August 31, 2022. The total consideration for the 2020 Miami Research Agreement was $0.3 million. During the years ended December 31, 2022 and 2021, the Company recorded $48,000 and $0.2 million in research and development expenses, respectively, in relation to the 2020 Miami Research Agreement. As of December 31, 2022 and 2021, the Company had $1.0 million and $0.2 million, respectively, in accrued expenses. Bayh-Dole Act Some of the intellectual property rights the Company has licensed, including certain rights licensed in the agreements described above, may have been generated through the use of U.S. government funding. As a result, the U.S. government may have certain rights to intellectual property embodied in the Company’s current or future product candidates under the Bayh-Dole Act of 1980, or Bayh-Dole Act, including the grant to the government of a non-exclusive, worldwide, freedom to operate license under any patents, and the requirement, absent a waiver, to manufacture products substantially in the United States. To the extent any of the Company’s current or future intellectual property is generated through the use of U.S. government funding, the provisions of the Bayh-Dole Act may similarly apply. F-16 Table of Contents 3. FAIR VALUE MEASUREMENTS The following tables summarize, as of December 31, 2022 and 2021, the Company's financial assets and liabilities that are measured at fair value on a recurring basis, according to the fair value hierarchy described in the significant accounting policies section. (in thousands) Cash Money market funds Total cash and cash equivalents U.S. government agency debt securities Total marketable securities Total financial assets measured at fair value on a recurring basis Warrant liabilities - Common Warrants Level 1 As of December 31, 2022 Level 2 Level 3 Total $ $ 1,337 15,320 $ 16,657 — $ — — $ $ — 13,923 — $ 13,923 $ 1,337 — $ — 15,320 — $ 16,657 — 13,923 — $ 13,923 $ 16,657 — $ 13,923 — 13,657 — $ 30,580 13,657 $ $ Total financial liabilities measured at fair value on a recurring basis $ — $ — $ 13,657 $ 13,657 As of December 31, 2021 (in thousands) Cash Money market funds Total cash and cash equivalents U.S. government agency debt securities Total marketable securities Total financial assets measured at fair value on a recurring basis Level 1 $ 12,671 41,217 $ 53,888 Level 2 $ Level 3 — $ — $ — — $ — $ — $ — 26,935 — $ 26,935 — $ — $ $ Total 12,671 41,217 53,888 26,935 26,935 $ 53,888 $ 26,935 $ — $ 80,823 Investments in certificate of deposits, corporate bonds, and U.S. government agency debt securities have been classified as Level 2 as they are valued using quoted prices in less active markets or other directly or indirectly observable inputs. Fair values of corporate bonds and U.S. government agency debt securities were derived from a consensus or weighted average price based on input of market prices from multiple sources at each reporting period. With regard to commercial paper, all of the securities had high credit ratings and one year or less to maturity; therefore, fair value was derived from accretion of purchase price to face value over the term of maturity or quoted market prices for similar instruments if available. During the period ended December 31, 2022 and 2021, there were no transfers of financial assets between Level 1 and Level 2. On June 27, 2022 the Company issued Common Warrants exercisable for 30,000,000 shares of common stock and Pre-Funded Warrants exercisable for 10,000,000 shares of common stock in connection with the June Offering (see note 1 and note 8 for more information on the June Offering). The Common Warrants were accounted for as liabilities under ASC 815-40, Derivatives and Hedging, Contracts in Entity’s Own Equity (“ASC 815-40”), as these warrants provide for a settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40. The Pre-Funded Warrants were initially recorded at fair value as a liability as the Company could be required to settle the Pre-Funded Warrants in cash under certain circumstances. In December 2022, the Company amended the Pre-Funded Warrants to remove the potential requirement that they could be settled in cash under certain circumstances. Upon the amendment to the Pre-Funded Warrants, the Pre-funded Warrants liability was reclassified to equity, using their fair value as of the amendment date. F-17 Table of Contents These Common Warrant liabilities were measured at fair value at inception and are then subsequently measured on a recurring basis, with changes in fair value recognized in other income (expense) within the Company’s statement of operations. The Company uses a Black-Scholes option pricing model to estimate the fair value of the Common and Pre- Funded Warrants, which utilizes certain unobservable inputs and is therefore considered a Level 3 fair value measurement. Certain inputs used in this Black-Scholes pricing model may fluctuate in future periods based upon factors that are outside of the Company’s control, including a potential change in control outside of the Company’s control. A significant change in one or more of these inputs used in the calculation of the fair value may cause a significant change to the fair value of the Company’s warrant liabilities, which could also result in material non-cash gains or losses being reported in the Company’s consolidated statement of operations. The Common and Pre-Funded Warrants were initially valued and remeasured using a Black-Scholes option pricing model with a range of assumptions as follows: Expected term (in years) Volatility Risk-free interest rate Dividend yield 3.7 91.53 % 4.11 % 0.00 % The Company utilized a probability-weighted approach that considered the probability of a change in control at the Company in the Black-Scholes option pricing model, whereby a 10% probability of change in control was used for each of the five years in the term of the agreements. The following table provides a roll forward of the aggregate fair values of the Company’s warrant liability, for which fair value is determined using Level 3 inputs (in thousands): Balance as of January 1, 2022 Initial fair value of Warrant Liability Warrants exercised Change in fair value Reclassification of pre-funded warrant liability to equity Balance as of December 31, 2022 Warrant Liability Common Warrant Pre-Funded Warrant $ — $ 13,734 — (77) $ 13,657 $ — 8,101 (1,417) 143 (6,827) — The inputs utilized by management to value the warrant liability for Common and Pre-Funded Warrants are highly subjective. The assumptions used in calculating the fair value of the warrant liability for Common and Pre-Funded Warrants represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the fair value of the warrant liability for Common Warrants may be materially different in the future. 4. INVESTMENTS Marketable Securities Marketable securities, which the Company classifies as available-for-sale securities, primarily consist of high quality commercial paper, corporate bonds, and U.S. government debt obligations. Marketable securities with remaining effective maturities of twelve months or less from the balance sheet date are classified as short-term; otherwise, they are classified as long-term on the balance sheets. F-18 Table of Contents The following tables provide the Company’s marketable securities by security type (in thousands): As of December 31, 2022 Gross Gross Unrealized Unrealized Estimated Losses Fair Value Gains Cost As of December 31, 2021 Gross Gross Cost Unrealized Unrealized Estimated Fair Value Losses Gains $13,873 $13,873 $ $ 50 50 $ — $13,923 $ — $13,923 $27,042 $27,042 $ $ 1 1 $ $ (108) $26,935 (108) $26,935 (in thousands) US government agency debt security Total As of December 31, 2022, the Company’s investment portfolio reported no unrealized loss. Based on its evaluations, the Company determined that a credit loss allowance is not required since the decline was not related to underlying credit issues of the counterparties. The counterparties to these investments have high credit quality with investment grade ratings of at least AA+ or above, along with a history of no defaults. No single investment in the portfolio had an individually material unrealized loss and in the aggregate. In addition, the Company does not intend to sell these investments and it is not more likely than not that the Company will be required to sell these investments before recovery of their amortized cost bases. Accordingly, based on the foregoing evaluation, the Company did not record any credit losses during the year ended December 31, 2022 and 2021. Unrealized gains are also reflected, net of tax, as other comprehensive income (loss) in the Statements of Comprehensive Loss. Contractual maturities of the Company’s marketable securities are summarized as follows (in thousands): Cost (in thousands) Due in one year or less $ 13,873 Due in one through two years — Total $ 13,873 As of December 31, 2022 Gross Gross Unrealized Unrealized Estimated Gains Losses Fair Value Cost As of December 31, 2021 Gross Gross Unrealized Unrealized Estimated Fair Value Losses Gains $ 50 $ — $ 13,923 $ 27,042 $ 1 $ (108) $ 26,935 — — — 50 $ — $ 13,923 — $ 27,042 $ — 1 $ — — (108) $ 26,935 $ At December 31, 2022, the Company had $50,000 of gross unrealized gains and $0 of gross unrealized losses primarily due to fluctuations in the fair value of certain U.S. government agency debt securities. During the year ended December 31, 2022, the Company recorded gross realized losses of $0.2 million and gross realized gains of $16,000 from the redemption of marketable securities. The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2022 are as follows: F-19 Table of Contents (in thousands) US government agency debt security Total Securities in an unrealized loss position less than 12 months As of December 31, 2022 Securities in an unrealized loss position greater than 12 months Unrealized Estimated Unrealized Estimated Unrealized Estimated Fair Value Fair Value Fair Value Losses Losses Losses Total $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — $ — The unrealized losses and fair values of available-for-sale securities that have been in an unrealized loss position for a period of less than and greater than 12 months as of December 31, 2021 are as follows: Securities in an unrealized loss position less than 12 months As of December 31, 2021 Securities in an unrealized loss position greater than 12 months Unrealized Estimated Unrealized Estimated Unrealized Estimated Fair Value Fair Value Fair Value Losses Losses Losses Total $ $ (108) $ 17,696 (108) $ 17,696 $ — $ — $ $ — $ — $ (108) $ 17,696 (108) $ 17,696 (in thousands) US government agency debt security Total 5. PREPAID EXPENSE AND OTHER CURRENT ASSETS Prepaid expenses and other current assets consisted of the following (in thousands): (in thousands) Prepaid research and development expenses Insurance premium asset Prepaid rent expenses Prepaid insurance expenses Prepaid commercial and patient advocacy Research and development tax credit receivable Interest receivable Other prepaid expenses and current assets Total prepaid expenses & other current assets F-20 December 31, December 31, 2022 2021 $ $ 4,272 1,131 99 71 206 252 23 674 6,728 $ $ 4,483 1,616 117 105 254 502 23 471 7,571 Table of Contents 6. ACCRUED EXPENSE AND OTHER CURRENT LIABILITIES Accrued expenses and other current liabilities consisted of the following (in thousands): (in thousands) Accrued pre-clinical and clinical expenses Short-term insurance financing note Accrued professional fees Accrued compensation and benefits Accrued commercial expenses Accrued patent expenses Other Total accrued expenses & other current liabilities December 31, December 31, 2022 8,877 622 1,218 2,301 896 361 481 14,756 $ $ 2021 9,912 789 419 2,779 1,394 279 987 16,559 $ $ 7. STOCK-BASED COMPENSATION Equity Incentive Plans In May 2019, the Company's board of directors (the "Board") adopted its 2019 Equity Incentive Plan ("2019 Plan"), which was subsequently approved by its stockholders and became effective on May 13, 2019. As a result, no additional awards under the Company's 2016 Equity Incentive Plan, as amended (the "2016 Plan") will be granted and all outstanding stock awards granted under the 2016 Plan that are repurchased, forfeited, expired or are cancelled will become available for grant under the 2019 Plan in accordance with its terms. The 2016 Plan will continue to govern outstanding equity awards granted thereunder. The 2019 Plan provides for the issuance of incentive stock options ("ISOs") to employees, and for the grant of nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards, performance cash awards and other forms of stock awards to the Company's employees, officers and directors, as well as non- employees, consultants and affiliates to the Company. Under the terms of the 2019 Plan, stock options may not be granted at an exercise price less than fair market value of the Company's common stock on the date of the grant. The 2019 Plan is administered by the Compensation Committee of the Company's Board. Initially, subject to adjustments as provided in the 2019 Plan, the maximum number of the Company's common stock that may be issued under the 2019 Plan is 4,530,000 shares, which is the sum of (i) 1,618,841 new shares, plus (ii) the number of shares (not to exceed 2,911,159 shares) that remained available for the issuance of awards under the 2016 Plan, at the time the 2019 Plan became effective, and (iii) any shares subject to outstanding stock options or other stock awards granted under the 2016 Plan that are forfeited, expired, or reacquired. The 2019 Plan provides that the number of shares reserved and available for issuance under the 2019 Plan will automatically increase each January 1, beginning on January 1, 2020, by 5% of the outstanding number of shares of common stock on the immediately preceding December 31 or such lesser number of shares as determined by the Board. Subject to certain changes in capitalization of the Company, the aggregate maximum number of shares of common stock that may be issued pursuant to the exercise of ISOs shall be equal to 13,000,000 shares of common stock. Stock options awarded under the 2019 Plan expire 10 years after grant and typically vest over four years. On August 2, 2022, the Board took action in accordance with its authority under the terms of the 2019 Plan to reset the per-share exercise price of all stock options previously granted under the 2019 Plan to $1.05 per share (the "Options Repricing"), which is equal to the closing price of a share of the Company’s common stock on August 1, 2022. The Options Repricing was deemed to be a Type I modification event under ASC 718, Compensation-Stock Compensation. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the F-21 Table of Contents Options Repricing, 1,797,517 vested and 1,380,917 unvested stock options outstanding as of August 2, 2022, with original exercise prices ranging from $1.22 to $49.60, were repriced. The Options Repricing resulted in incremental stock-based compensation expense of $1.4 million, of which $0.9 million related to vested stock option awards and was expensed on the repricing date, and $0.5 million of which related to unvested stock option awards and is being amortized on a ratable basis over the remaining weighted-average vesting period of those awards being approximately 2.4 years. As of December 31, 2022, there were 1,096,493 shares of common stock available for issuance under the 2019 Plan. On January 1, 2023, there were 2,403,167 shares that became issuable for future grants subject to the adjustments provided in the 2019 Plan. Stock-Based Compensation Expense Total stock-based compensation expense recorded for employees, directors and non-employees (in thousands): (in thousands) Research and development General and administrative Total stock-based compensation expense Stock Option Activity Year Ended December 31, 2022 3,619 5,543 9,162 $ $ $ 2021 2,759 8,418 $ 11,177 During the year ended December 31, 2022, and 2021 the Company granted options to purchase 767,913 and 406,752 shares of common stock, respectively. For the years ended December 31, 2022, and 2021, amortization of stock compensation of options amounted to $7.8 million and $9.3 million, respectively. As of December 31, 2022, the total unrecognized stock-based compensation balance for unvested options was $8.1 million, which is expected to be recognized over 2.2 years. The weighted-average fair value of options granted during the years ended December 31, 2022, and December 31, 2021, were $1.79 per share and $8.43 per share, respectively. The following table summarizes the information about options outstanding at December 31, 2022: Options Weighted- Average Outstanding Exercise Price $ Weighted-Average Remaining Contractual Term (in years) 7.7 Aggregate Intrinsic Value $ 10,305 (in thousands, except for share data) Outstanding at December 31, 2021 Options granted Options exercised Forfeited Expired Outstanding at December 31, 2022 4,704,888 767,913 (47,602) (377,378) (173,774) 4,874,047 Exercisable at December 31, 2022 Nonvested at December 31, 2022 3,859,880 1,014,167 F-22 13.29 1.39 1.04 19.90 26.82 1.97 2.21 1.05 $ $ $ 21 — — — 6.9 6.6 8.3 $ $ $ Table of Contents Valuation of Stock Options Granted to Employees that Contain Service Conditions Only The fair value of each option award granted with service-based vesting is estimated on the date of the grant using the Black-Scholes option valuation model based on the weighted average assumptions noted in the table below for those options granted in the years ended December 31, 2022 and 2021. Expected term (in years) Volatility Risk-free interest rate Dividend yield Restricted Stock Unit Activity Year Ended December 31, 2022 2021 5.7 75.83 % 2.13 % — % 5.8 71.92 % 1.08 % — % During the year ended December 31, 2022, the Company granted 605,600 restricted stock units (“RSUs”). For the years ended December 31, 2022 and December 31, 20201 amortization of stock compensation of RSUs amounted to $1.3 million and $1.9 million, respectively. As of December 31, 2022, the unamortized compensation costs associated with non- vested restricted stock awards was $3.5 million with a weighted-average remaining amortization period of 3.2 years. The following table summarizes the information about restricted stock units outstanding at December 31, 2022: (in thousands, except for share data) Outstanding at December 31, 2021 Awarded Released Forfeited Outstanding at December 31, 2022 Nonvested at December 31, 2022 Weighted-Average Grant Date Fair Value Aggregate Intrinsic Value 4,202 18.05 $ 2.33 24.57 18.10 5.96 $ 5.73 $ 620 582 Shares 469,485 $ 605,600 (50,242) (209,334) 815,509 $ 815,509 $ Weighted Average Remaining Recognition Period (in years) 3.2 2019 Employee Stock Purchase Plan In May 2019, the Company’s Board and its stockholders approved the 2019 Employee Stock Purchase Plan (the “ESPP”), which became effective as of May 13, 2019. The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the U.S. Internal Revenue Code of 1986, as amended. The number of shares of common stock initially reserved for issuance under the ESPP was 180,000 shares. The ESPP provides for an annual increase on the first day of each year beginning in 2020 and ending in 2029, in each case subject to the approval of the Board, equal to the lesser of (i) 1% of the shares of common stock outstanding on the last day of the calendar month before the date of the automatic increase and (ii) 360,000 shares; provided that prior to the date of any such increase, the Board may determine that such increase will be less than the amount set forth in clauses (i) and (ii). As of December 31, 2022, no shares of common stock had been issued under the ESPP. The first offering period has not yet been decided by the Board. 8. STOCKHOLDERS’ EQUITY As of December 31, 2022, the authorized capital stock of the Company consists of 200,000,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. As of F-23 Table of Contents December 31, 2021, the authorized capital stock of the Company consists of 100,000,000 shares of common stock, par value $0.0001 per share and 10,000,000 shares of preferred stock, par value $0.0001 per share. Common Stock Voting The holders of the common stock are entitled to one vote for each share of common stock held at all meetings of the stockholders. There is no cumulative voting. Goldman Equity Distribution Agreement In June 2020, the Company entered into the Goldman Equity Distribution Agreement to sell shares of the Company’s common stock, from time to time, having an aggregate offering price of up to $100.0 million. The issuance and sale of shares of common stock by the Company pursuant to the Goldman Equity Distribution Agreement is deemed an “at-the-market” offering under the Securities Act of 1933, as amended, or the Securities Act. Goldman is entitled to compensation for its services equal to up to 3.0% of the gross offering proceeds of all shares of the Company’s common stock sold through it as a sales agent pursuant to the Goldman Equity Distribution Agreement. The Goldman Equity Distribution Agreement was terminated as of January 24, 2022. Cowen Equity Distribution Agreement On January 26, 2022, the Company entered into the Cowen Equity Distribution Agreement to sell shares of the Company’s common stock, from time to time, having an aggregate offering price of up to $100.0 million. Pursuant to the Cowen Equity Distribution Agreement shares of our common stock may be offered and sold through the sales agent in sales deemed “at-the-market” offerings under the Securities Act of 1933, as amended, or the Securities Act. Under the Cowen Equity Distribution Agreement, the sales agent will be entitled to compensation of up to 3% of the gross offering proceeds of all shares of our common stock sold through it pursuant to the Cowen Equity Distribution Agreement. In connection with the sale of shares of our common stock on our behalf, the sales agent may be deemed to be “underwriters” within the meaning of the Securities Act, and the compensation paid to the sales agent may be deemed to be underwriting commissions or discounts. As of December 31, 2022, the Company has not sold any shares of common stock pursuant to the Cowen Equity Distribution Agreement. June 2022 Offering On June 27, 2022, the Company completed the June Offering, an underwritten public offering of 20,000,000 shares of common stock, par value $0.0001 per share, 10,000,000 Pre-Funded Warrants, and accompanying Common Warrants to purchase up to 30,000,000 shares of common stock. The shares and accompanying Common Warrants were offered at a price to the public of $1.00 per share and warrant, and the Pre-Funded Warrants and accompanying Common Warrants were offered at a price to the public of $0.9999, resulting in aggregate net proceeds of approximately $27.8 million, after deducting underwriting discounts and commissions and offering expenses. The Pre-Funded Warrants and the Common Warrants are immediately exercisable and will expire five years from the date of issuance. Holders may not exercise any Pre-Funded Warrants or Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise. Holders of the Pre-Funded Warrants and/or Common Warrants (together with affiliates) who immediately prior to June 27, 2022 beneficially owned more than 9.99% of the Company’s outstanding common stock may not exercise any portion of their Pre-Funded Warrants or Common Warrants if the holder (together with affiliates) would beneficially own more than 19.99% of the Company’s outstanding common stock after exercise. The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders. In the event of certain corporate transactions, the holders of the Pre- Funded Warrants and/or Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre-Funded Warrants and/or Common Warrants immediately prior to such transaction. The Pre-Funded Warrants and Common Warrants do F-24 Table of Contents not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. The Company intends to use the net proceeds from the June Offering for general corporate purposes, which may include research and development costs, including the conduct of clinical trials and process development and manufacturing of the Company’s product candidates, expansion of the Company’s research and development capabilities, working capital and capital expenditures. 9. WARRANTS Warrants Issued with Series A Preferred Stock On January 26, 2017, in connection with the sale and issuance of the Series A Preferred Stock, the Company issued equity-classified warrants to purchase 309,389 shares of common stock (the “2017 Warrants”), valued at $0.2 million, and included in the issuance costs of the Series A Preferred Stock. The warrants vested immediately and have an exercise price of $2.49 per share and expire on March 13, 2027. The fair value of warrants issued is estimated using the Black-Scholes option pricing model with the following assumptions for the 2017 Warrants. Contractual term (in years) Volatility Risk-free interest rate Dividend yield 10.0 74.48 % 3.20 % 0.00 % On December 5, 2019, an optionholder exercised 20,000 options in a cashless exercise at net, and the Company issued 17,026 shares of common stock. On February 21, 2020, two warrantholders exercised 185,634 options in a cashless exercise at net, and the Company issued 176,092 shares of common stock. On February 24, 2020, a warrantholder exercised 72,818 options in a cashless exercise at net, and the Company issued 69,094 shares of common stock. On February 5, 2021, a warrantholder exercised 27,855 warrants on a cash basis and received 27,855 shares of common stock. The Company received $69,000 in cash proceeds for the exercise of these warrants. Warrants Issued with the 2018 Notes On January 18, 2018, the Company entered into a placement agent agreement through which it became obligated to issue common stock warrants in connection with the issuance of the Company’s convertible promissory notes issued on February 5, 2018 (the “2018 Notes”). The obligation to issue the 2018 Notes Warrants was recorded as a liability at its fair value (see Note 3), which was initially $0.1 million, and was included in the issuance costs of the 2018 Notes. On November 5, 2018, in connection with the extinguishment of the 2018 Notes into shares of Series B Preferred Stock, the Company issued the 2018 Notes Warrants, which were equity-classified warrants upon issuance, to purchase 76,847 shares of common stock, valued at $0.3 million. The 2018 Notes Warrants vested immediately upon issuance and have an exercise price of $6.59 per share and expire on November 4, 2028. On February 24, 2020, a warrantholder exercised 386 options in a cashless exercise at net, and the Company issued 333 shares of common stock. On June 24, 2020, a warrantholder exercised 20,331 options in a cashless exercise at net, and the Company issued 17,369 shares of common stock. Warrants Issued with Series B Preferred Stock In November and December 2018, in connection with the sale and issuance of the Series B Preferred Stock, the Company was obligated to issue equity-classified warrants to purchase 72,261 shares of common stock (collectively the “2018 Warrants”), valued in the aggregate at $0.2 million, which was included in the issuance costs for the Series B F-25 Table of Contents Preferred Stock. The warrants vest immediately upon issuance, have an exercise price of $8.24 per share and expire 10 years from the date of issuance. The fair value of the 2018 Warrants is estimated using the Black-Scholes option pricing model with the following assumptions: Contractual term (in years) Volatility Risk-free interest rate Dividend yield 10.0 73.22 % 2.70 % 0.00 % In February 2019, in connection with the sale and issuance of the Series B Preferred Stock, the Company was obligated to issue warrants to purchase 23,867 shares of common stock (collectively the “2019 Warrants”), valued in the aggregate at $0.1 million, which was included in the issuance costs for the Series B Preferred Stock. The warrants vest immediately upon issuance, have an exercise price of $8.24 per share and expire 10 years from the date of issuance. The fair value of the 2019 Warrants was estimated using the Black-Scholes option pricing model with the following assumptions: Contractual term (in years) Volatility Risk-free interest rate Dividend yield 10.0 73.22 % 2.70 % 0.00 % The inputs utilized by management to value the warrants are highly subjective. The assumptions used in calculating the fair value of the warrants represent the Company’s best estimates, but these estimates involve inherent uncertainties and the application of management judgment. As a result, if factors change and the Company uses different assumptions, the fair value of the warrants may be materially different in the future. Warrants Issued with June 2022 Offering On June 27, 2022, in connection with the sale and issuance common stock as part of the June Offering, the Company issued 10,000,000 Pre-Funded Warrants at an exercise price of $0.0001 per share, and 30,000,000 accompanying Common Warrants at an exercise price of $1.00 per share. Each share of common stock and accompanying Common Warrant was sold at a public offering price of $1.00, less underwriting discounts and commissions, and each Pre-Funded Warrant and accompanying Common Warrant was sold at a public offering price of $0.9999, less underwriting discounts and commissions, as described in the prospectus supplement, dated June 22, 2022, filed with the Securities and Exchange Commission on June 24, 2022. The Pre-Funded Warrants and the Common Warrants are immediately exercisable and will expire five years from the date of issuance. Holders may not exercise any Pre-Funded Warrants or Common Warrants that would cause the aggregate number of shares of common stock beneficially owned by the holder to exceed 9.99% of the Company’s outstanding common stock immediately after exercise. Holders of the Pre-Funded Warrants and/or Common Warrants (together with affiliates) who immediately prior to June 27, 2022 beneficially owned more than 9.99% of the Company’s outstanding common stock may not exercise any portion of their Pre-Funded Warrants or Common Warrants if the holder (together with affiliates) would beneficially own more than 19.99% of the Company’s outstanding common stock after exercise. The Pre-Funded Warrants and Common Warrants are subject to adjustment in the event of certain stock dividends and distributions, stock splits, stock combinations, reclassifications or similar events affecting the common stock and also upon any distributions for no consideration of assets to the Company’s stockholders. In the event of certain corporate transactions, the holders of the Pre-Funded Warrants and/or Common Warrants will be entitled to receive, upon exercise, the kind and amount of securities, cash or other property that the holders would have received had they exercised the Pre- Funded Warrants and/or Common Warrants immediately prior to such transaction. The Pre- F-26 Table of Contents Funded Warrants and Common Warrants do not entitle the holders thereof to any voting rights or any of the other rights or privileges to which the Company’s stockholders are entitled. On June 28, 2022, a warrantholder exercised 1,750,000 Pre-Funded Warrants on a cash basis and received 1,750,000 shares of common stock. The Company received $175 in cash proceeds for the exercise of these Pre-Funded Warrants. As of December 31, 2022, the Company had 8,250,000 Pre-Funded Warrants outstanding with a weighted average exercise price of $0.0001 per share and an average contractual life of 5 years. As of December 31, 2022, the Company had 30,000,000 Common Warrants outstanding with a weighted average exercise price of $1.00 per share and an average contractual life of 5 years. The Common Warrants were accounted for as liabilities under ASC 815-40, as these warrants provide for a settlement provision that does not meet the requirements of the indexation guidance under ASC 815-40. These warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within the statement of operations. The Pre-Funded Warrants were initially recorded at fair value as a liability as the Company could be required to settle the Pre-Funded Warrants in cash in the event of an acquisition of the Company under certain circumstances. In December 2022, the Company amended the Pre-Funded Warrants to remove the potential requirement that they could be settled in cash under certain circumstances. At December 31, 2022, the Pre-funded Warrants are recorded as equity, using their fair value as of the amendment date. The fair value of the Common and Pre-Funded Warrants were estimated using the Black-Scholes option pricing model with the following assumptions: Expected term (in years) Volatility Risk-free interest rate Dividend yield 3.7 91.53 % 4.11 % 0.00 % A summary of the Company’s outstanding common stock warrants as of December 31, 2022 is as follows: Outstanding as of December 31, 2021 Warrants granted and issued Warrants exercised Warrants exchanged Outstanding as of December 31, 2022 10. LEASES Warrants 125,618 40,000,000 (1,750,000) — 38,375,618 The following table summarizes our lease assets and liabilities as of December 31, 2022 and 2021: ROU Assets and Liabilities ROU - Asset Lease liabilities (current) Lease liabilities (non-current) Operating lease liabilities, non-current Right-of-use assets Operating lease liabilities, current Balance Sheet Location Operating (in thousands) December 31, December 31, 2022 2021 $ 857 $ 477 414 1,298 442 891 F-27 Table of Contents The following table summarizes our lease related costs for the twelve months ended December 31, 2022 and 2021: Lease Cost Operating Lease Cost Statement of Operations Location General and administrative Total Lease Cost Operating (in thousands) 2022 2021 489 $ 489 $ 505 505 $ $ Average lease terms and discount rates for the Company’s operating leases were as follows: Other Information Weighted-average remaining lease term Operating leases Weighted-average discount rate Operating leases Year Ended December 31, December 31, 2022 2021 1.8 years 2.8 years 5.69% 5.69% The following table summarizes the maturities of lease liabilities as of December 31, 2022: Year 2023 2024 Thereafter Total lease payments Less: interest Total lease liabilities 11. INCOME TAXES Operating (in thousands) 515 $ 425 — 940 49 891 $ The Company’s current tax provision for the years ended December 31, 2022 and 2021 is $0 and $0, respectively. The Company’s deferred tax provision for the years ended December 31, 2022 and 2021 is $0 and $0, respectively. F-28 Table of Contents A reconciliation of the Company's deferred taxes is as follows (in thousands): Year ended December 31, 2022 2021 Deferred Tax Assets Operating Lease Liability Stock-based compensation License fee Net operating loss carryforwards Research and development tax credits Capitalized R&D expense Other Total Deferred Tax Assets Valuation Allowance Net Deferred Tax Assets Deferred Tax Liabilities Right of Use Asset Net Deferred Tax Liabilities Net deferred tax asset (liability) $ $ 420 282 6,606 8,131 594 554 79,429 88,090 14,940 21,397 — 14,910 1,352 1,085 $ 103,341 $ 134,449 $ (134,177) $ (102,932) 409 $ 272 $ (272) (272) $ — $ (409) (409) — $ $ Deferred tax assets result primarily from unutilized net operating losses, research tax credits, stock-based compensation, operating lease liability, and timing differences as a result of the Company reporting its income tax returns. As of December 31, 2022, the Company had approximately $280.6 million of federal operating losses (“NOLs”) carried forward. Of this amount, approximately $3.3 million will begin to expire in 2037 and approximately $277.3 million are carried forward indefinitely. The Company had approximately $572.8 million in state and city net operating loss carryforwards available to offset future taxable income. As of December 31, 2022, the Company had federal research tax credits (R&D) of approximately $4.9 million which may be used to offset future tax liabilities. Additionally, the Company had a federal orphan drug credit (“ODC”) related to qualifying research of $16.5 million. These tax credit carryforwards will begin to expire at various times beginning in 2037 for federal purposes. The NOL, R&D and ODC credits carry forwards are subject to review and possible adjustment by the U.S. and state tax authorities. NOL carry forwards and credit carry forwards may become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of significant shareholders, as defined under Sections 382 and 383 Internal Revenue Code. This could limit the amount of NOLs and credits that the Company can utilize annually to offset future taxable income or tax liabilities. As of December 31, 2022, the Company has not performed such an analysis. Subsequent ownership changes and proposed future changes to tax rules in respect of the utilization of losses carried forward may further affect the limitation in future years. In assessing the realizability of the Company’s deferred tax assets, management considers whether or not it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income. The Company’s assessment is based on the weight of available evidence, including cumulative losses since inception and expected future losses and, as such, the Company does not believe it is more likely than not that the deferred tax assets will be realized. Accordingly, a full valuation allowance has been established and no deferred tax assets and related tax benefit have been recognized in the accompanying financial statements. At December 31, 2022 and 2021, the Company recorded valuation allowances of $134.2 million and $102.9 million, respectively. The increase in valuation allowance is primarily driven by additional net operating loss. The Company files its income tax returns in the United States, New York State, New York City, California, Massachusetts, and New Jersey. All years remain subject to examination for federal and state purpose. F-29 Table of Contents The U.S. federal statutory corporate tax rate reconciles to the Company’s effective tax rate for the years ended December 31, 2022 and 2021: Federal statutory rate State and local taxes net of federal tax benefit Credits Permanent Differences Change in valuation allowance Stock Compensation Other Total Year Ended December 31, 2022 21.0 % 10.2 7.8 (0.1) (37.9) (1.1) 0.1 0.0% 2021 21.0 % 10.7 5.6 0.5 (37.7) — (0.1) 0.0 % 12. BENEFIT PLANS The Company established a defined contribution savings plan under Section 401(k) of the Internal Revenue Code in 2018. This plan covers substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of their annual compensation on a pre-tax basis. Matching contributions to the plan may be made at the discretion of the Company’s Board. The Company made approximately $0.4 million and $0.2 million in matching contributions to the plan during the year ended December 31, 2022 and 2021, respectively. 13. NET LOSS PER COMMON SHARE Basic net loss per common share is computed by dividing the net loss available to common stockholders by the weighted-average number of shares of common stock outstanding during the period. Diluted net loss per common share is computed by giving the effect of all potential shares of common stock, including stock options, preferred shares, warrants and instruments convertible into common stock, to the extent dilutive. Basic and diluted net loss per common share was the same for the years ended December 2022 and 2021, as the inclusion of all potential common shares outstanding would have been anti-dilutive. The following table sets forth the computation of basic and diluted net loss per common share (in thousands, except share and per share data): (in thousands, except for share data) Numerator: Net loss Denominator: Years Ended December 31, 2022 2021 $ (82,508) $ (105,584) Weighted-average common stock outstanding 37,825,431 25,598,181 Net loss per share attributable to common stockholders - basic and diluted $ (2.18) $ (4.12) The Company’s potentially dilutive securities, which include restricted stock units, stock options and common warrants, have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share. Therefore, the weighted-average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at December 31, 2022 and 2021, from the F-30 Table of Contents computation of diluted net loss per share attributable to common stockholders because including them would have had an anti-dilutive effect: Options to purchase common stock Restricted stock units Warrants to purchase common stock 14. RELATED PARTIES As of December 31, 2022 4,874,047 815,509 30,125,618 2021 4,704,888 469,485 125,618 In December 2018, the Company entered into an agreement (the “LaunchLabs Agreement”) with ARE- LaunchLabs NYC LLC (“Alexandria LaunchLabs”), a subsidiary of Alexandria Real Estate Equities, Inc. for use of specified premises within the Alexandria LaunchLabs space on a month-to-month basis. A member of the Company’s board of directors is the founder and executive chairman of Alexandria Real Estate Equities, Inc. During the years ended December 31, 2022 and 2021, the Company made payments to Alexandria LaunchLabs of approximately $0.1 million and $0.1 million, respectively under the LaunchLabs Agreement, which was recognized in research and development expenses. As of December 31, 2022, there were no amounts due to Alexandria LaunchLabs under the LaunchLabs Agreement. 15. SUBSEQUENT EVENTS On January 3, 2023, the “Company entered into an Exclusive License and Supply Agreement (the “Agreement”) with Mercury Pharma Group Limited (trading as Advanz Pharma Holdings), a company organized and existing under the laws of England and Wales (“ADVANZ PHARMA”), a UK headquartered global pharmaceutical company with a strategic focus on specialty, hospital, and rare disease medicines in Europe. Pursuant to the Agreement, the Company granted ADVANZ PHARMA the exclusive right and license to commercialize drug products containing AT-007 (also known as govorestat), the Company’s proprietary Aldose Reductase Inhibitor (ARI) (the “Licensed Product”), for use in treatment of sorbitol dehydrogenase deficiency (“SORD”) and Galactosemia in humans (each, a “Licensed Indication”) in the European Economic Area, Switzerland and the United Kingdom (the “Territory”). The Company also grants ADVANZ PHARMA a right of negotiation and “most-favored nation” rights with respect to acquiring the European commercialization rights for any additional indications for which the Licensed Product may be developed in the future (or any other products the Company may develop solely to the extent used for the Licensed Indications). ADVANZ PHARMA is required to use commercially reasonable efforts to launch and commercialize the Licensed Products in the major markets in the Territory in each Licensed Indication following, and subject to, receipt of marketing authorization therein. Under the Agreement, ADVANZ PHARMA agrees to pay the Company (i) an upfront payment of EUR 10 million (approx. USD $10.7 million), and certain development milestone payments upon clinical trial completions and receipt of marketing authorization in the Territory, as well as certain commercial milestone payments, totaling EUR 134 million (approx. USD $142.2 million) in the aggregate, and (ii) royalties of 20% of net sales of the Licensed Product. Such royalty rate will be payable on a country-by-country basis until the later of (i) the expiration of the licensed patents covering the composition of matter of AT-007, or (ii) 10 years after the European Medicines Agency’s grant of marketing authorization for the Licensed Product. The royalties are subject to certain deductions, including certain secondary finishing costs, certain step-in establishment costs and a portion of fees for any potential third party patent licenses if applicable in the future. Following the initial term of the license, as described above, the royalty rate shall be reduced to 10% and shall continue in perpetuity unless the Agreement is terminated in various circumstances in accordance with its terms. Certain of the patents licensed to ADVANZ PHARMA under the Agreement are sub-licensed from the University of Miami and Columbia University, and thus remain subject to certain obligations of the Company (including royalty obligations) to such institutions. F-31 Table of Contents Under the Agreement, the Company remains responsible for development of the Licensed Product, and must conduct such development through grant of marketing authorizations in the Licensed Indications in the Territory and as otherwise required under such marketing authorization, in accordance with any timeframe required by regulatory authorities. The Company retains sole responsibility for the conduct of all clinical trials (subject in some circumstances to cost-sharing with ADVANZ PHARMA), unless the Company provides ADVANZ PHARMA prior consent to conduct certain studies following marketing authorization, or ADVANZ PHARMA exercises certain step-in rights (as described below). The Company also agrees to manufacture and supply the Licensed Product in bulk form to ADVANZ PHARMA. ADVANZ PHARMA is responsible for secondary packaging and release for the Territory. The Agreement includes indemnification obligations on the part of both parties for third-party claims arising out of, among other things, a breach of the Agreement; an election by the other party not to initiate a recall; gross negligence or willful misconduct; and violation of applicable laws. In addition, both parties have agreed to indemnification obligations for third party liability product liability claims and certain exclusions from liability disclaimers, such as for breaches of confidentiality, death or personal injury caused by negligence or willful default. In certain circumstances, including in the event of specified supply shortages, bankruptcy and certain other financial events, a force majeure event lasting more than three months, or termination as a result of the Company’s gross negligence or willful misconduct, ADVANZ PHARMA may exercise certain step-in rights. Such step-in rights include the ability for ADVANZ PHARMA to perform its own supply arrangements, and in some cases, specified development rights in the Licensed Indications in the Territory and assignment of certain contract rights. In all such circumstances, ADVANZ PHARMA must continue to pay royalties and milestone payments. ADVANZ PHARMA may recoup certain of its manufacturing and development establishment costs, and deduct such costs from royalties. The Company may terminate the Agreement upon certain specified events, including ADVANZ PHARMA’s failure to launch or achieve certain sales threshold for the Licensed Product in major markets within a certain timeframe, or if ADVANZ PHARMA challenges a licensed patent, and either party may terminate the Agreement upon the other party’s material breach or insolvency, certain material safety issues or a force majeure event of the other party lasting longer than six months. ADVANZ PHARMA may also terminate the agreement if the Licensed Product does not receive marketing authorization for use in a Licensed Indication in any country in the Territory by a specified date, or in the event of the Company’s gross negligence or willful misconduct (subject to a cure period). F-32 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE. None. ITEM 9A. CONTROLS AND PROCEDURES. Evaluation of Controls and Procedures As of December 31, 2022, our management, with the participation of our Chief Executive Officer and our Interim Principal Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as defined in Rules 13a- 15(e) and 15d-15(e) of the Exchange Act. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to management, including our principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our Chief Executive Officer and Interim Principal Financial Officer concluded that, as of December 31, 2022, the design and operation of our disclosure controls and procedures were effective at the reasonable assurance level. Management’s Annual Report on Internal Control over Financial Reporting Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Management conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2022 based on the framework in Internal Control-Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, management has concluded that the Company’s internal control over financial reporting was effective as of December 31, 2022. Changes in Internal Control over Financial Reporting There was no change in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the fourth quarter of 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. ITEM 9B. OTHER INFORMATION. None. ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS. Not Applicable. 94 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE. The information required by Item 10 is incorporated by reference to the information that will be contained in our 2023 Proxy Statement under the captions “Proposal 1 - Election of Directors,” “Principal Stockholders,” “Proposal 2 – Ratification of Independent Registered Public Accounting Firm” and “Audit Committee Report.” ITEM 11. EXECUTIVE AND DIRECTOR COMPENSATION. The information required by Item 11 is incorporated by reference to the information that will be contained in our 2023 Proxy Statement under the captions “Executive and Director Compensation,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Compensation of Named Executives,” “Summary Compensation Table,” “Equity Incentive Plans,” “Non-Employee Director Compensation,” “Stock Option Grants,” “Outstanding Equity Awards at Fiscal Year-End,” “Health and Welfare Retirement Benefits,” and “Potential Payments and Benefits Upon Termination or Change-in-Control.” ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS. The information required by Item 12 is incorporated by reference to the information that will be contained in our 2023 Proxy Statement under the caption “Principal Stockholders.” ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE. The information required by Item 13 is incorporated by reference to the information that will be contained in our 2023 Proxy Statement under the caption “Certain Relationships and Transactions.” ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES. The information required by Item 14 is incorporated by reference to the information that will be contained in our 2023 Proxy Statement under the caption “Independent Registered Public Accounting Firm”. 95 Table of Contents ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES. (a) The following documents are filed as part of this Annual Report PART IV 1. Financial Statements: The following financial statements and schedules of the Registrant are contained in Part II, Item 8, “Financial Statements and Supplementary Data” of this Annual Report: Item Report of Independent Registered Public Accounting Firm PCAOB Firm ID: 00042 Balance Sheets as of December 31, 2022 and 2021 Statements of Operations for the years ended December 31, 2022 and 2021 Statements of Comprehensive Income (Loss) for the years ended December 31, 2022 and 2021 Statement of Changes in Shareholders’ Equity for the years ended December 31, 2021 and 2022 Statements of Cash Flows for the years ended December 31, 2022 and 2021 Notes to Financial Statements Page F-1 F-2 F-3 F-4 F-5 F-6 F-7 2. Financial Statement Schedules: There are no Financial Statement Schedules included with this filing for the reason that they are not applicable or are not required or the information is included in the financial statements or notes thereto. (b) Exhibits required by Item 601 of Regulation S-K The information required by this Item is set forth on the exhibit index that follows the signature page of this Annual Report. 96 Table of Contents Exhibit Number 3.1 3.2 3.3+ 4.1+ 4.2+ 4.3+ 4.4+ 4.5+ 4.6+ 4.7+ 4.8+ EXHIBIT INDEX Description Amended and Restated Certificate of Incorporation of the Registrant, as amended. Certificate of Amendment to Amended and Restated Certificate of Incorporation of the Registrant. Amended and Restated Bylaws of the Registrant. Registration Rights Agreement, dated November 7, 2019, by and among the Registrant and the Purchasers. Form of Common Stock Certificate of the Registrant. Amended and Restated Investors’ Rights Agreement, by and among the Registrant and certain of its stockholders, dated November 5, 2018. Form of Warrant, issued to affiliates of Brookline Capital Markets, a division of CIM Securities, LLC on March 13, 2017. Form of Warrant, issued to affiliates of Brookline Capital Markets, a division of CIM Securities, LLC on November 5, 2018. Form of Warrant, issued to affiliates of Brookline Capital Markets, a division of CIM Securities, LLC on April 9, 2019. Form of Pre-Funded Warrant to Purchase Common Stock Form of Common Warrant to Purchase Common Stock 97 Form File No. Exhibit Filing Date 8-K 001- 38898 3.1 October 28, 2022 8-K 10- Q S- 1/A S- 1/A S- 1/A S- 1/A 8-K 8-K 001- 38898 10.2 November 12, 2019 001- 38898 333- 230838 333- 230838 333- 230838 333- 230838 001- 38898 001- 38898 4.1 4.2 4.3 4.4 4.5 4.1 4.2 August 12, 2019 April 29, 2019 April 29, 2019 April 29, 2019 April 29, 2019 June 27, 2022 June 27, 2022 Table of Contents 4.9+ 10.1*+ 10.2*+ 10.3*+ 10.4*+ 10.5*+ 10.6*+ 10.7*+ 10.8†+ 10.9† 10.10*+ 10.11* Description of securities registered under Section 12 of the Exchange Act. Forms of Indemnity Agreement by and between the Registrant and its directors and executive officers. 2019 Equity Incentive Plan. Forms of Option Grant Notice and Option Agreement under 2019 Equity Incentive Plan. Form of Restricted Stock Unit Grant Notice and Unit Award Agreement under 2019 Equity Incentive Plan. 2016 Equity Incentive Plan, as amended. Forms of Stock Option Agreement under the 2016 Equity Incentive Plan, as amended. 2019 Employee Stock Purchase Plan Exclusive License Agreement by and between the Registrant and The Trustees of Columbia University in the City of New York, dated October 26, 2016. Exclusive License Agreement by and between the Registrant and Mercury Pharma Group Limited, dated January 3, 2023. Employment Agreement, by and between the Registrant and Riccardo Perfetti, dated August 28, 2019. Employment Agreement, by and between the Registrant and Shoshana Shendelman, dated March 9, 2020. 98 10- K S- 1/A S- 1/A S- 1/A S- 1/A S- 1/A S- 1/A S- 1/A S-1 001- 38898 333- 230838 333- 230838 333- 230838 333- 230838 333- 230838 333- 230838 333- 230838 333- 230838 4.7 10.1 10.2 10.3 10.4 10.5 10.6 10.7 10.11 March 13, 2020 April 29, 2019 April 29, 2019 April 29, 2019 April 29, 2019 April 29, 2019 April 29, 2019 April 29, 2019 April 12, 2019 10- Q 10- K 001- 38898 001- 38898 10.1 November 13, 2019 10.13 March 13, 2020 10- K 10- K 001- 38898 10.14 March 13, 2020 001- 38898 10.15 March 10, 2022 Table of Contents 10.12* 10.13* 23.1 31.1 31.2 32.1 32.2 Amendment to Employment Agreement, by and between the Registrant and Riccardo Perfetti, dated March 9, 2020. Offer Letter, by and between Steven Ortega and the Registrant, dated February 1, 2021. Consent of Ernst & Young LLP, an Independent Registered Public Accounting Firm. Rule 13a-14(a)/15d-14(a) Certification under the Exchange Act by Shoshana Shendelman, President and Chief Executive Officer (Principal Executive Officer). Rule 13a-14(a)/15d-14(a) Certification under the Exchange Act by Steven Ortega, Chief Accounting Officer (Interim Principal Financial Officer). Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Section 1350 Certifications. Certification of Interim Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 Section 1350 Certifications. 101.INS Inline XBRL Instance Document. 101.SCH 101.CAL 101.DEF XBRL Taxonomy Extension Schema Document. XBRL Taxonomy Extension Calculation Linkbase Document. XBRL Taxonomy Extensions Definition Linkbase Document. 99 Table of Contents 101.LAB 101.PRE 104 XBRL Taxonomy Extension Label Linkbase Document. XBRL Taxonomy Extension Presentation Linkbase Document. Cover Page Interactive Data File (formatted as Inline XBRL with applicable taxonomy extension information contained in Exhibits 101). * Indicates a management contract or compensatory plan. † Portions of this exhibit have been omitted. + Previously filed. ITEM 16. 10-K SUMMARY None. 100 Table of Contents Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. SIGNATURES Dated: March 23, 2023 Applied Therapeutics, Inc. /s/ Shoshana Shendelman Name: Shoshana Shendelman, Ph.D. Title: President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Company and in the capacities indicated on the 23rd of March 2023. Name Title /s/ Shoshana Shendelman Shoshana Shendelman, Ph.D. Chair of the Board President and Chief Executive Officer (Principal Executive Officer) /s/ Steven Ortega Steven Ortega /s/ Les Funtleyder Les Funtleyder /s/ Teena Lerner Teena Lerner, Ph.D. /s/ Stacy Kanter Stacy Kanter /s/ Joel S. Marcus Joel S. Marcus /s/ Jay S. Skyler Jay S. Skyler, M.D., MACP Chief Accounting Officer (Principal Accounting Officer and Interim Principal Financial Officer) Director Director Director Director Director Date March 23, 2023 March 23, 2023 March 23, 2023 March 23, 2023 March 23, 2023 March 23, 2023 March 23, 2023 101 Exhibit 3.1 AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF APPLIED THERAPEUTICS, INC. Applied Therapeutics, Inc., a corporation organized and existing under and by virtue of the General Corporation Law of the State of the Delaware, hereby certifies that: 1: The original name of this corporation was Applied Therapeutics, Inc. and the date of filing the original Certificate of Incorporation of this corporation with the Secretary of State of the State of Delaware (the “Secretary”) was January 20, 2016. 2: The Amended and Restated Certificate of Incorporation, attached hereto as Exhibit A, is incorporated herein by reference, and restates, integrates and further amends the provisions of the Amended and Restated Certificate of Incorporation as previously amended or supplemented. 3: This Amended and Restated Certificate of Incorporation has been duly approved by the Board of Directors of the Corporation. 4: This Amended and Restated Certificate of Incorporation was approved by the holders of the requisite number of shares of said Corporation in accordance with Section 228 of the Delaware General Corporation Law. This Amended and Restated Certificate of Incorporation has been duly adopted in accordance with the provisions of Sections 242 and 245 of the Delaware General Corporation Law by the stockholders of the Corporation. IN WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be signed by its duly authorized officer this 22nd day of October, 2022. APPLIED THERAPEUTICS, INC. By: /s/ Shoshana Shendelman Shoshana Shendelman, Ph.D. President and Chief Executive Officer EXHIBIT A AMENDED AND RESTATED CERTIFICATE OF INCORPORATION OF APPLIED THERAPEUTICS, INC. I. The name of the corporation is APPLIED THERAPEUTICS, INC. (the “Corporation”). II. The address of the registered office of the Corporation in the State of Delaware is 251 Little Falls Drive, in the City of Wilmington, County of New Castle, 19808. The name of the registered agent of the Corporation in the State of Delaware at such address is the Corporation Service Company. The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the Delaware General Corporation Law (the “DGCL”). III. IV. A. The Corporation is authorized to issue two classes of stock to be designated, respectively, “Common Stock” and “Preferred Stock.” The total number of shares which the Corporation is authorized to issue is two hundred ten million (210,000,000) shares. Two hundred million (200,000,000) shares shall be Common Stock, each having a par value of one-hundredth of one cent ($0.0001) and ten million (10,000,000) shares shall be Preferred Stock, each having a par value of one-hundredth of one cent ($0.0001). B. The Preferred Stock may be issued from time to time in one or more series. The Board of Directors of the Corporation (the “Board of Directors”) is hereby expressly authorized to provide for the issue of all or any of the shares of the Preferred Stock in one or more series, and to fix the number of shares and to determine or alter for each such series, such voting powers, full or limited, or no voting powers, and such designation, preferences, and relative, participating, optional, or other rights and such qualifications, limitations, or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the Board of Directors providing for the issuance of such shares and as may be permitted by the DGCL. The Board of Directors is also expressly authorized to increase or decrease the number of shares of any series subsequent to the issuance of shares of that series, but not below the number of shares of such series then outstanding. In case the number of shares of any series shall be decreased in accordance with the foregoing sentence, the shares constituting such decrease shall resume the status that they had prior to the adoption of the resolution originally fixing the number of shares of such series. The number of authorized shares of Preferred Stock may be increased or decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority of the voting power of the outstanding shares of stock of the Corporation entitled to vote, without a separate vote of the holders of the Preferred Stock, or of any series thereof irrespective of Section 242(b)(2) 6 of the DGCL, unless a vote of any such holders is required pursuant to the terms of any certificate of designation filed with respect to any series of Preferred Stock. C. Each outstanding share of Common Stock shall entitle the holder thereof to one vote on each matter properly submitted to the stockholders of the Corporation for their vote; provided, however, that, except as otherwise required by law, holders of Common Stock shall not be entitled to vote on any amendment to this Amended and Restated Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock) that relates solely to the terms of one or more outstanding series of Preferred Stock if the holders of such affected series are entitled, either separately or together as a class with the holders of one or more other such series, to vote thereon by law or pursuant to this Amended and Restated Certificate of Incorporation (including any certificate of designation filed with respect to any series of Preferred Stock). V. For the management of the business and for the conduct of the affairs of the Corporation, and in further definition, limitation and regulation of the powers of the Corporation, of its directors and of its stockholders or any class thereof, as the case may be, it is further provided that: A. MANAGEMENT OF BUSINESS. The management of the business and the conduct of the affairs of the Corporation shall be vested in its Board of Directors. The number of directors which shall constitute the Board of Directors shall be fixed exclusively by resolutions adopted by a majority of the authorized number of directors constituting the Board of Directors. B. BOARD OF DIRECTORS. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended (the “1933 Act”), covering the offer and sale of Common Stock to the public (the “Initial Public Offering”), the directors shall be divided into three classes designated as Class I, Class H and Class III, respectively. The Board of Directors is authorized to assign members of the Board of Directors already in office to such classes at the time the classification becomes effective. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this section, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. 6 No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. C. REMOVAL OF DIRECTORS. Subject to the rights of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the Initial Public Offering, neither the Board of Directors nor any individual director may be removed without cause. Subject to any limitation imposed by applicable law, any individual director or directors may be removed with cause by the affirmative vote of the holders of at least sixty-six and two- thirds percent (66 2/3%) of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally at an election of directors. D. VACANCIES. Subject to any limitations imposed by applicable law and subject to the rights of the holders of any series of Preferred Stock, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors, shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by the stockholders and except as otherwise provided by applicable law, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. E. BYLAW AMENDMENTS. The Board of Directors is expressly empowered to adopt, amend or repeal the Bylaws of the Corporation. Any adoption, amendment or repeal of the Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders shall also have power to adopt, amend or repeal the Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by this Amended and Restated Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of at least sixty-six and two- thirds percent (66 2/3%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. F. STOCKHOLDER ACTIONS. 1. The directors of the Corporation need not be elected by written ballot unless the Bylaws so provide. 2. No action shall be taken by the stockholders of the Corporation except at an annual or special meeting of stockholders called in accordance with the Bylaws, and no action shall be taken by the stockholders by written consent or electronic transmission. 6 3. Advance notice of stockholder nominations for the election of directors and of business to be brought by stockholders before any meeting of the stockholders of the Corporation shall be given in the manner provided in the Bylaws of the Corporation. VI. A. The liability of the directors for monetary damages shall be eliminated to the fullest extent under applicable law. B. To the fullest extent permitted by applicable law, the Corporation is authorized to provide indemnification of (and advancement of expenses to) directors, officers and agents of the Corporation (and any other persons to which applicable law permits the Corporation to provide indemnification) through Bylaw provisions, agreements with such agents or other persons, vote of stockholders or disinterested directors or otherwise in excess of the indemnification and advancement otherwise permitted by such applicable law. If applicable law is amended after approval by the stockholders of this Article VI to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director to the Corporation shall be eliminated or limited to the fullest extent permitted by applicable law as so amended. C. Any repeal or modification of this Article VI shall only be prospective and shall not affect the rights or protections or increase the liability of any director under this Article VI in effect at the time of the alleged occurrence of any act or omission to act giving rise to liability or indemnification. VII. A. Unless the Corporation consents in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware (or, if and only if the Court of Chancery of the State of Delaware lacks subject matter jurisdiction, any state court located within the State of Delaware or, if and only if all such state courts lack subject matter jurisdiction, the federal district court for the District of Delaware) shall be the sole and exclusive forum for the following types of actions or proceedings under Delaware statutory or common law: (A) any derivative action or proceeding brought on behalf of the Corporation; (B) any action or proceeding (including any class action) asserting a claim of breach of a fiduciary duty owed by any current or former director, officer or other employee of the Corporation, to the Corporation or the Corporation’s stockholders; (C) any action or proceeding (including any class action) asserting a claim against the Corporation or any current or former director, officer, employee or agent of the Corporation, arising out of or pursuant to any provision of the DGCL, this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation (as each may be amended from time to time); (D) any action or proceeding to interpret, apply, enforce or determine the validity of this Amended and Restated Certificate of Incorporation or the Bylaws of the Corporation (including any right, obligation, or remedy thereunder); (E) any action or proceeding as to which the DGCL confers jurisdiction to the Court of Chancery of the State of Delaware; (F) any action asserting a claim against the Corporation or any director, officer or other employee of the Corporation, governed by the internal affairs doctrine, in all cases to the fullest extent permitted by law and subject to the court’s having personal jurisdiction over the indispensable parties named as defendants. This Section A of Article VII shall not apply to suits brought to enforce a duty or liability created by the Securities Exchange 6 Act of 1934, as amended, the Securities Act of 1933, as amended, or any other claim for which the federal courts have exclusive jurisdiction. B. Any person or entity purchasing, holding, owning or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to the provisions of this Amended and Restated Certificate of Incorporation. VIII. A. The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Amended and Restated Certificate of Incorporation, in the manner now or hereafter prescribed by statute, except as provided in paragraph B. of this Article VIII, and all rights conferred upon the stockholders herein are granted subject to this reservation. B. Notwithstanding any other provisions of this Amended and Restated Certificate of Incorporation or any provision of law which might otherwise permit a lesser vote or no vote, but in addition to any affirmative vote of the holders of any particular class or series of the Corporation required by law or by this Amended and Restated Certificate of Incorporation or any certificate of designation filed with respect to a series of Preferred Stock, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all of the then outstanding shares of capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class, shall be required to alter, amend or repeal Articles V, VI and VII. * * * * 6 Exhibit 3.3 AMENDED AND RESTATED BYLAWS OF APPLIED THERAPEUTICS, INC. (A DELAWARE CORPORATION) March 16, 2021 Table of Contents ARTICLE I OFFICES Section 1. Registered Office Section 2. Other Offices ARTICLE II CORPORATE SEAL Section 3. Corporate Seal ARTICLE III STOCKHOLDERS’ MEETINGS Section 4. Place of Meetings Section 5. Annual Meetings. Section 6. Special Meetings. Section 7. Notice of Meetings Section 8. Quorum Section 9. Adjournment and Notice of Adjourned Meetings Section 10. Voting Rights Section 11. Joint Owners of Stock Section 12. List of Stockholders Section 13. Action Without Meeting Section 14. Organization. ARTICLE IV DIRECTORS Section 15. Number and Term of Office Section 16. Powers Section 17. Classes of Directors. Section 18. Vacancies. Section 19. Resignation Section 20. Removal Section 21. Meetings. Section 22. Quorum and Voting. Section 23. Action Without Meeting Section 24. Fees and Compensation Section 25. Committees. Section 26. Duties of Chairperson of the Board of Directors and Lead Independent Director. Section 27. Organization ARTICLE V OFFICERS Section 28. Officers Designated Section 29. Tenure and Duties of Officers. Section 30. Delegation of Authority Section 31. Resignations Section 32. Removal ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION i Page 1 1 1 1 1 1 1 1 5 6 7 7 7 8 8 8 8 9 9 9 9 10 10 11 11 12 12 12 12 14 14 14 14 14 16 16 16 17 Table of Contents (continued) Section 33. Execution of Corporate Instruments Section 34. Voting of Securities Owned By the Corporation ARTICLE VII SHARES OF STOCK Section 35. Form and Execution of Certificates Section 36. Lost Certificates Section 37. Transfers. Section 38. Fixing Record Dates. Section 39. Registered Stockholders ARTICLE VIII OTHER SECURITIES OF THE CORPORATION Section 40. Execution of Other Securities ARTICLE IX DIVIDENDS Section 41. Declaration of Dividends Section 42. Dividend Reserve ARTICLE X FISCAL YEAR Section 43. Fiscal Year ARTICLE XI INDEMNIFICATION Page 17 17 17 17 17 18 18 18 19 19 19 19 19 20 20 20 Section 44. Indemnification of Directors, Executive Officers, Other Officers, Employees 20 and Other Agents. ARTICLE XII NOTICES Section 45. Notices. ARTICLE XIII AMENDMENTS Section 46. [ ] ARTICLE XIV LOANS TO OFFICERS Section 47. Loans to Officers ii 23 23 24 24 25 25 AMENDED AND RESTATED BYLAWS OF APPLIED THERAPEUTICS, INC. (A DELAWARE CORPORATION) March 16, 2021 ARTICLE I OFFICES Section 1. Registered Office. The registered office of Applied Therapeutics, Inc. (the “Corporation”) in the State of Delaware shall be 2711 Centerville Road, Suite 400, City of Wilmington, County of New Castle 19808. Section 2. Other Offices. The Corporation shall also have and maintain an office or principal place of business at such place as may be fixed by the Board of Directors of the Corporation (the “Board of Directors”), and may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or the business of the Corporation may require. ARTICLE II CORPORATE SEAL Section 3. Corporate Seal. The Board of Directors may adopt a corporate seal. If adopted, the corporate seal shall consist of a die bearing the name of the Corporation and the inscription, “Corporate Seal-Delaware.” Said seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE III STOCKHOLDERS’ MEETINGS Section 4. Place of Meetings. Meetings of the stockholders of the Corporation may be held at such place, either within or without the State of Delaware, as may be determined from time to time by the Board of Directors. The Board of Directors may, in its sole discretion, determine that the meeting shall not be held at any place, but may instead be held solely by means of remote communication as provided under the Delaware General Corporation Law (“DGCL”). Section 5. Annual Meetings. (a) The annual meeting of the stockholders of the Corporation, for the purpose of election of directors and for such other business as may properly come before it, shall be held on such date and at such time as may be designated from time to time by the Board of Directors. Nominations of persons for election to the Board of Directors of the Corporation and the proposal of business to be considered by the stockholders may be made at an annual meeting of 26 stockholders: (i) pursuant to the Corporation’s notice of meeting of stockholders (with respect to business other than nominations); (ii) brought specifically by or at the direction of the Board of Directors; or (iii) by any stockholder of the Corporation who was a stockholder of record at the time of giving the stockholder’s notice provided for in Section 5(b) below, who is entitled to vote at the meeting and who complied with the notice procedures set forth in Section 5. For the avoidance of doubt, clause (iii) above shall be the exclusive means for a stockholder to make nominations and submit other business (other than matters properly included in the Corporation’s notice of meeting of stockholders and proxy statement under Rule 14a-8 under the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the “1934 Act”)) before an annual meeting of stockholders. (b) At an annual meeting of the stockholders, only such business shall be conducted as is a proper matter for stockholder action under Delaware law and as shall have been properly brought before the meeting. (i) For nominations for the election to the Board of Directors to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 5(a) of these Amended and Restated Bylaws (these “Bylaws”), the stockholder must deliver written notice to the Secretary of the Corporation at the principal executive offices of the Corporation on a timely basis as set forth in Section 5(b)(iii) and must update and supplement such written notice on a timely basis as set forth in Section 5(c). Such stockholder’s notice shall set forth: (A) as to each nominee such stockholder proposes to nominate at the meeting: (1) the name, age, business address and residence address of such nominee; (2) the principal occupation or employment of such nominee; (3) the class and number of shares of each class of capital stock of the Corporation which are owned of record and beneficially by such nominee; (4) the date or dates on which such shares were acquired and the investment intent of such acquisition; (5) a statement whether such nominee, if elected, intends to tender, promptly following such person’s failure to receive the required vote for election or re-election at the next meeting at which such person would face election or re-election, an irrevocable resignation effective upon acceptance of such resignation by the Board of Directors; and (6) such other information concerning such nominee as would be required to be disclosed in a proxy statement soliciting proxies for the election of such nominee as a director in an election contest (even if an election contest is not involved), or that is otherwise required to be disclosed pursuant to Section 14 of the 1934 Act and the rules and regulations promulgated thereunder (including such person’s written consent to being named as a nominee and to serving as a director if elected); and (B) the information required by Section 5(b)(iv). The Corporation may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as an independent director of the Corporation or that could be material to a reasonable stockholder’s understanding of the independence, or lack thereof, of such proposed nominee. (ii) Other than proposals sought to be included in the Corporation’s proxy materials pursuant to Rule 14a-8 under the 1934 Act, for business other than nominations for the election to the Board of Directors to be properly brought before an annual meeting by a stockholder pursuant to clause (iii) of Section 5(a) of these Bylaws, the stockholder must deliver written notice to the Secretary of the Corporation at the principal executive offices of the Corporation on a timely basis as set forth in Section 5(b) (iii), and must update and supplement such written notice on a timely basis as set forth in Section 5(c). Such stockholder’s notice shall 26 set forth: (A) as to each matter such stockholder proposes to bring before the meeting, a brief description of the business desired to be brought before the meeting, the reasons for conducting such business at the meeting, and any material interest (including any anticipated benefit of such business to any Proponent (as defined below) other than solely as a result of its ownership of the Corporation’s capital stock, that is material to any Proponent individually, or to the Proponents in the aggregate) in such business of any Proponent; and (B) the information required by Section 5(b) (iv). (iii) To be timely, the written notice required by Section 5(b)(i) or 5(b)(ii) must be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the ninetieth (90th) day nor earlier than the close of business on the one hundred twentieth (120th) day prior to the first anniversary of the preceding year’s annual meeting; provided, however, that, subject to the last sentence of this Section 5(b)(iii), in the event that no annual meeting was held during the preceding year or the date of the annual meeting is advanced more than thirty (30) days prior to or delayed by more than thirty (30) days after the anniversary of the preceding year’s annual meeting, notice by the stockholder to be timely must be so received not earlier than the close of business on the one hundred twentieth (120th) day prior to such annual meeting and not later than the close of business on the later of the ninetieth (90th) day prior to such annual meeting or the closing of business on the tenth (10th) day following the day on which public announcement of the date of such meeting is first made. In no event shall an adjournment or a postponement of an annual meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period (or extend any time period) for the giving of a stockholder’s notice as described above. (iv) The written notice required by Section 5(b)(i) or 5(b)(ii) shall also set forth, as of the date of the notice and as to the stockholder giving the notice and the beneficial owner, if any, on whose behalf the nomination or proposal is made (each, a “Proponent” and collectively, the “Proponents”): (A) the name and address of each Proponent, as they appear on the Corporation’s books; (B) the class, series and number of shares of the Corporation that are owned beneficially and of record by each Proponent; (C) a description of any agreement, arrangement or understanding (whether oral or in writing) with respect to such nomination or proposal between or among any Proponent and any of its affiliates or associates, and any others (including their names) acting in concert, or otherwise under the agreement, arrangement or understanding, with any of the foregoing; (D) a representation that the Proponents are holders of record or beneficial owners, as the case may be, of shares of the Corporation entitled to vote at the meeting and intend to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice (with respect to a notice under Section 5(b)(i)) or to propose the business that is specified in the notice (with respect to a notice under Section 5(b)(ii)); (E) a representation as to whether the Proponents intend to deliver a proxy statement and form of proxy to holders of a sufficient number of holders of the Corporation’s voting shares to elect such nominee or nominees (with respect to a notice under Section 5(b)(i)) or to carry such proposal (with respect to a notice under Section 5(b)(ii)); (F) to the extent known by any Proponent, the name and address of any other stockholder supporting the proposal on the date of such stockholder’s notice; and (G) a description of all Derivative Transactions (as defined below) by each Proponent during the previous twelve (12) month period, including the date of the transactions and the class, series and number of securities involved in, and the material economic terms of, such Derivative Transactions. 26 (c) A stockholder providing written notice required by Section 5(b)(i) or (ii) shall update and supplement such notice in writing, if necessary, so that the information provided or required to be provided in such notice is true and correct in all material respects as of (i) the record date for the meeting and (ii) the date that is five (5) business days prior to the meeting and, in the event of any adjournment or postponement thereof, five (5) business days prior to such adjourned or postponed meeting. In the case of an update and supplement pursuant to clause (i) of this Section 5(c), such update and supplement shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than five (5) business days after the record date for the meeting. In the case of an update and supplement pursuant to clause (ii) of this Section 5(c), such update and supplement shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than two (2) business days prior to the date for the meeting, and, in the event of any adjournment or postponement thereof, two (2) business days prior to such adjourned or postponed meeting. (d) Notwithstanding anything in Section 5(b)(iii) to the contrary, in the event that the number of directors in an Expiring Class (as defined below) is increased and there is no public announcement of the appointment of a director to such class, or, if no appointment was made, of the vacancy in such class, made by the Corporation at least ten (10) days before the last day a stockholder may deliver a notice of nomination in accordance with Section 5(b)(iii), a stockholder’s notice required by this Section 5 and which complies with the requirements in Section 5(b)(i), other than the timing requirements in Section 5(b)(iii), shall also be considered timely, but only with respect to nominees for any new positions in such Expiring Class created by such increase, if it shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the tenth (10th) day following the day on which such public announcement is first made by the Corporation. For purposes of this section, an “Expiring Class” shall mean a class of directors whose term shall expire at the next annual meeting of stockholders. (e) A person shall not be eligible for election or re-election as a director unless the person is nominated either in accordance with clause (ii) of Section 5(a), or in accordance with clause (iii) of Section 5(a). Except as otherwise required by law, the chairperson of the meeting shall have the power and duty to determine whether a nomination or any business proposed to be brought before the meeting was made, or proposed, as the case may be, in accordance with the procedures set forth in these Bylaws and, if any proposed nomination or business is not in compliance with these Bylaws, or the Proponent does not act in accordance with the representations in Sections 5(b)(iv)(D) and 5(b)(iv)(E), to declare that such proposal or nomination shall not be presented for stockholder action at the meeting and shall be disregarded, notwithstanding that proxies in respect of such nominations or such business may have been solicited or received. (f) Notwithstanding the foregoing provisions of this Section 5, in order to include information with respect to a stockholder proposal in the proxy statement and form of proxy for a stockholders’ meeting, a stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act; provided, however, that any references in these Bylaws to the 1934 Act or the rules and regulations thereunder are not 26 intended to and shall not limit the requirements applicable to proposals and/or nominations to be considered pursuant to Section 5(a)(iii) of these Bylaws. (g) For purposes of Sections 5 and 6, Rule 405 under the Securities Act of 1933, as amended (the “1933 Act”). (i) “affiliates” and “associates” shall have the meanings set forth in “Derivative Transaction” means any agreement, arrangement, interest or understanding entered into by, or on behalf or for the benefit of, any Proponent or any of its affiliates or associates, whether record or beneficial: (ii) the value of which is derived in whole or in part from the value of any class or (w) series of shares or other securities of the Corporation, which otherwise provides any direct or indirect opportunity to gain or share in any (x) gain derived from a change in the value of securities of the Corporation, the effect or intent of which is to mitigate loss, manage risk or benefit of security (y) value or price changes, or (z) which provides the right to vote or increase or decrease the voting power of, such Proponent, or any of its affiliates or associates, with respect to any securities of the Corporation, which agreement, arrangement, interest or understanding may include, without limitation, any option, warrant, debt position, note, bond, convertible security, swap, stock appreciation right, short position, profit interest, hedge, right to dividends, voting agreement, performance-related fee or arrangement to borrow or lend shares (whether or not subject to payment, settlement, exercise or conversion in any such class or series), and any proportionate interest of such Proponent in the securities of the Corporation held by any general or limited partnership, or any limited liability company, of which such Proponent is, directly or indirectly, a general partner or managing member. (iii) “public announcement” shall mean disclosure in a press release reported by the Dow Jones News Service, Associated Press, Business Wire, GlobeNewswire or comparable national news service or in a document publicly filed by the Corporation with the Securities and Exchange Commission pursuant to Section 13, 14 or 15(d) of the 1934 Act; and Section 6. Special Meetings. (a) Special meetings of the stockholders of the Corporation may be called, for any purpose as is a proper matter for stockholder action under Delaware law, by (i) the Chairperson of the Board of Directors, (ii) the Chief Executive Officer if the Chairperson of the Board of Directors is unavailable, or (iii) the Board of Directors pursuant to a resolution adopted by a majority of the total number of authorized directors (whether or not there exist any vacancies in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption). 26 (b) The Board of Directors shall determine the time and place, if any, of such special meeting. Upon determination of the time and place, if any, of the meeting, the Secretary of the Corporation shall cause a notice of meeting to be given to the stockholders entitled to vote, in accordance with the provisions of Section 7 of these Bylaws. No business may be transacted at such special meeting other than specified in the notice of meeting. (c) Nominations of persons for election to the Board of Directors may be made at a special meeting of stockholders at which directors are to be elected (i) by or at the direction of the Board of Directors or (ii) by any stockholder of the Corporation who is a stockholder of record at the time of giving notice provided for in this paragraph, who shall be entitled to vote at the meeting and who delivers written notice to the Secretary of the Corporation setting forth the information required by Section 5(b) (i). In the event the Corporation calls a special meeting of stockholders for the purpose of electing one or more directors to the Board of Directors, any such stockholder of record may nominate a person or persons (as the case may be), for election to such position(s) as specified in the Corporation’s notice of meeting, if written notice setting forth the information required by Section 5(b)(i) of these Bylaws shall be received by the Secretary of the Corporation at the principal executive offices of the Corporation not later than the close of business on the later of the ninetieth (90th) day prior to such meeting or the tenth (10th) day following the day on which public announcement is first made of the date of the special meeting and of the nominees proposed by the Board of Directors to be elected at such meeting. The stockholder shall also update and supplement such information as required under Section 5(c). In no event shall an adjournment or a postponement of a special meeting for which notice has been given, or the public announcement thereof has been made, commence a new time period for the giving of a stockholder’s notice as described above. (d) Notwithstanding the foregoing provisions of this Section 6, a stockholder must also comply with all applicable requirements of the 1934 Act and the rules and regulations thereunder with respect to matters set forth in this Section 6. Nothing in these Bylaws shall be deemed to affect any rights of stockholders to request inclusion of proposals in the Corporation’s proxy statement pursuant to Rule 14a-8 under the 1934 Act; provided, however, that any references in these Bylaws to the 1934 Act or the rules and regulations thereunder are not intended to and shall not limit the requirements applicable to nominations for the election to the Board of Directors to be considered pursuant to Section 6(c) of these Bylaws. Section 7. Notice of Meetings. Except as otherwise provided by law, notice, given in writing or by electronic transmission, of each meeting of stockholders shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting to each stockholder entitled to vote at such meeting, such notice to specify the place, if any, date and hour, in the case of special meetings, the purpose or purposes of the meeting, and the means of remote communications, if any, by which stockholders and proxy holders may be deemed to be present in person and vote at any such meeting. If mailed, notice is given when deposited in the United States mail, postage prepaid, directed to the stockholder at such stockholder’s address as it appears on the records of the Corporation. Notice of the time, place, if any, and purpose of any meeting of stockholders may be waived in writing, signed by the person entitled to notice thereof, or by electronic transmission by such person, either before or after such meeting, and will be waived by any stockholder by his or her attendance thereat in person, by remote communication, if applicable, or by proxy, except when the stockholder attends a meeting for the express purpose of objecting, at 26 the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Any stockholder so waiving notice of such meeting shall be bound by the proceedings of any such meeting in all respects as if due notice thereof had been given. Section 8. Quorum. At all meetings of stockholders, except where otherwise provided by statute or by the Amended and Restated Certificate of Incorporation, or by these Bylaws, the presence, in person, by remote communication, if applicable, or by proxy duly authorized, of the holders of a majority of the voting power of the outstanding shares of stock entitled to vote shall constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of stockholders may be adjourned, from time to time, either by the chairperson of the meeting or by vote of the holders of a majority of the voting power of the shares represented thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or convened meeting, at which a quorum is present, may continue to transact business until adjournment, notwithstanding the withdrawal of enough stockholders to leave less than a quorum. Except as otherwise provided by statute or by applicable stock exchange rules, or by the Amended and Restated Certificate of Incorporation or these Bylaws, in all matters other than the election of directors, the affirmative vote of the majority of voting power of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the subject matter shall be the act of the stockholders. Except as otherwise provided by statute or by applicable stock exchange rules, the Amended and Restated Certificate of Incorporation or these Bylaws, directors shall be elected by a plurality of the votes of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting and entitled to vote generally on the election of directors. Where a separate vote by a class or classes or series is required, except where otherwise provided by the statute, or by applicable stock exchange rules, or by the Amended and Restated Certificate of Incorporation or these Bylaws, a majority of the voting power of the outstanding shares of such class or classes or series, present in person, by remote communication, if applicable, or represented by proxy duly authorized, shall constitute a quorum entitled to take action with respect to that vote on that matter. Except where otherwise provided by statute or by applicable stock exchange rules or by the Amended and Restated Certificate of Incorporation or these Bylaws, the affirmative vote of the majority (plurality, in the case of the election of directors) of shares of such class or classes or series present in person, by remote communication, if applicable, or represented by proxy at the meeting shall be the act of such class or classes or series. Section 9. Adjournment and Notice of Adjourned Meetings. Any meeting of stockholders, whether annual or special, may be adjourned from time to time either by the chairperson of the meeting or by the vote of a majority of the voting power of the shares present in person, by remote communication, if applicable, or represented by proxy at the meeting. When a meeting is adjourned to another time or place, if any, notice need not be given of the adjourned meeting if the time and place, if any, thereof are announced at the meeting at which the adjournment is taken. At the adjourned meeting, the Corporation may transact any business which might have been transacted at the original meeting. If the adjournment is for more than thirty (30) days or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting. Section 10. Voting Rights. For the purpose of determining those stockholders entitled to vote at any meeting of the stockholders, except as otherwise provided by law, only persons in 26 whose names shares stand on the stock records of the Corporation on the record date, as provided in Section 12 of these Bylaws, shall be entitled to vote at any meeting of stockholders. Every person entitled to vote shall have the right to do so either in person, by remote communication, if applicable, or by an agent or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a stockholder. No proxy shall be voted after three (3) years from its date of creation unless the proxy provides for a longer period. Section 11. Joint Owners of Stock. If shares or other securities having voting power stand of record in the names of two (2) or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety, or otherwise, or if two (2) or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the Corporation is given written notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, their acts with respect to voting shall have the following effect: (a) if only one (1) votes, his or her act binds all; (b) if more than one (1) votes, the act of the majority so voting binds all; (c) if more than one (1) votes, but the vote is evenly split on any particular matter, each faction may vote the securities in question proportionally, or may apply to the Delaware Court of Chancery for relief as provided in the DGCL, Section 217(b). If the instrument filed with the Secretary of the Corporation shows that any such tenancy is held in unequal interests, a majority or even-split for the purpose of subsection (c) of Section 11 shall be a majority or even-split in interest. Section 12. List of Stockholders. The Secretary of the Corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at said meeting, arranged in alphabetical order, showing the address of each stockholder and the number and class of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, (a) on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of the meeting, or (b) during ordinary business hours, at the principal place of business of the Corporation. In the event that the Corporation determines to make the list available on an electronic network, the Corporation may take reasonable steps to ensure that such information is available only to stockholders of the Corporation. The list shall be open to examination of any stockholder during the time of the meeting as provided by law. Section 13. Action Without Meeting. No action shall be taken by the stockholders except at an annual or special meeting of stockholders called in accordance with these Bylaws, and no action shall be taken by the stockholders by written consent or by electronic transmission. Section 14. Organization. (a) At every meeting of stockholders, the Chairperson of the Board of Directors, or, if a Chairperson has not been appointed or is absent, the Chief Executive Officer, or if no Chief Executive Officer is then serving or is absent, the President, or, if the President is absent, a chairperson of the meeting chosen by a majority in interest of the stockholders entitled to vote, present in person or by proxy, shall act as chairperson. The Chairperson of the Board may appoint the Chief Executive Officer as chairperson of the meeting. The Secretary of the Corporation, or, in his or her absence, an Assistant Secretary of the Corporation or other officer or 26 other person directed to do so by the chairperson of the meeting, shall act as secretary of the meeting. (b) The Board of Directors of the Corporation shall be entitled to make such rules or regulations for the conduct of meetings of stockholders as it shall deem necessary, appropriate or convenient. Subject to such rules and regulations of the Board of Directors, if any, the chairperson of the meeting shall have the right and authority to prescribe such rules, regulations and procedures and to do all such acts as, in the judgment of such chairperson, are necessary, appropriate or convenient for the proper conduct of the meeting, including, without limitation, establishing an agenda or order of business for the meeting, rules and procedures for maintaining order at the meeting and the safety of those present, limitations on participation in such meeting to stockholders of record of the Corporation and their duly authorized and constituted proxies and such other persons as the chairperson shall permit, restrictions on entry to the meeting after the time fixed for the commencement thereof, limitations on the time allotted to questions or comments by participants and regulation of the opening and closing of the polls for balloting on matters which are to be voted on by ballot. The date and time of the opening and closing of the polls for each matter upon which the stockholders will vote at the meeting shall be announced at the meeting. Unless and to the extent determined by the Board of Directors or the chairperson of the meeting, meetings of stockholders shall not be required to be held in accordance with rules of parliamentary procedure. ARTICLE IV DIRECTORS Section 15. Number and Term of Office. The authorized number of directors of the Corporation shall be fixed in accordance with the Amended and Restated Certificate of Incorporation. Directors need not be stockholders unless so required by the Amended and Restated Certificate of Incorporation. If for any cause, the directors shall not have been elected at an annual meeting, they may be elected as soon thereafter as convenient at a special meeting of the stockholders called for that purpose in the manner provided in these Bylaws. Section 16. Powers. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by statute or by the Amended and Restated Certificate of Incorporation. Section 17. Classes of Directors. Subject to the rights of the holders of any series of Preferred Stock to elect additional directors under specified circumstances, following the closing of the initial public offering pursuant to an effective registration statement under the 1933 Act, covering the offer and sale of Common Stock of the Corporation to the public (the “Initial Public Offering”), the directors shall be divided into three classes designated as Class I, Class II and Class III, respectively. The Board of Directors is authorized to assign members of the Board of Directors already in office to such classes at the time the classification becomes effective. At the first annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class I directors shall expire and Class I directors shall be elected for a full term of three years. At the second annual 26 meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class II directors shall expire and Class II directors shall be elected for a full term of three years. At the third annual meeting of stockholders following the closing of the Initial Public Offering, the term of office of the Class III directors shall expire and Class III directors shall be elected for a full term of three years. At each succeeding annual meeting of stockholders, directors shall be elected for a full term of three years to succeed the directors of the class whose terms expire at such annual meeting. Notwithstanding the foregoing provisions of this Section 17, each director shall serve until his or her successor is duly elected and qualified or until his or her earlier death, resignation or removal. No decrease in the number of directors constituting the Board of Directors shall shorten the term of any incumbent director. Section 18. Vacancies. Unless otherwise provided in the Amended and Restated Certificate of Incorporation, and subject to the rights of the holders of any series of Preferred Stock or as otherwise provided by applicable law, any vacancies on the Board of Directors resulting from death, resignation, disqualification, removal or other causes and any newly created directorships resulting from any increase in the number of directors shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled only by the affirmative vote of a majority of the directors then in office, even though less than a quorum of the Board of Directors, or by a sole remaining director, and not by the stockholders, provided, however, that whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Amended and Restated Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series shall, unless the Board of Directors determines by resolution that any such vacancies or newly created directorships shall be filled by stockholders, be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by a sole remaining director so elected, and not by the stockholders. Any director elected in accordance with the preceding sentence shall hold office for the remainder of the full term of the director for which the vacancy was created or occurred and until such director’s successor shall have been elected and qualified. A vacancy in the Board of Directors shall be deemed to exist under this Bylaw in the case of the death, removal or resignation of any director. Section 19. Resignation. Any director may resign at any time by delivering his or her notice in writing or by electronic transmission to the Secretary of the Corporation, such resignation to specify whether it will be effective at a particular time. If no such specification is made, the resignation shall be deemed effective at the time of delivery of the resignation to the Secretary of the Corporation. When one or more directors shall resign from the Board of Directors, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office for the unexpired portion of the term of the director whose place shall be vacated and until his or her successor shall have been duly elected and qualified. 26 Section 20. Removal. Subject to any limitation imposed by law, any individual director or directors may be removed with cause by the affirmative vote of the holders of at least sixty-six and two-thirds percent (66 2/3%) of the voting power of all then outstanding shares of capital stock of the Corporation entitled to vote generally at an election of directors, voting together as a single class. Section 21. Meetings. (a) Regular Meetings. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation, regular meetings of the Board of Directors may be held at any time or date and at any place within or without the State of Delaware which has been designated by the Board of Directors and publicized among all directors, either orally or in writing, by telephone, including a voice-messaging system or other system designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means. No further notice shall be required for regular meetings of the Board of Directors. (b) Special Meetings. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation, special meetings of the Board of Directors may be held at any time and place within or without the State of Delaware whenever called by the Chairperson of the Board, the Chief Executive Officer or a majority of the total number of authorized directors. (c) Meetings by Electronic Communications Equipment. Any member of the Board of Directors, or of any committee thereof, may participate in a meeting by means of conference telephone or other communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting by such means shall constitute presence in person at such meeting. (d) Notice of Special Meetings. Notice of the time and place of all special meetings of the Board of Directors shall be orally or in writing, by telephone, including a voice messaging system or other system or technology designed to record and communicate messages, facsimile, telegraph or telex, or by electronic mail or other electronic means, during normal business hours, at least twenty-four (24) hours before the date and time of the meeting. If notice is sent by U.S. mail, it shall be sent by first class mail, charges prepaid, at least three (3) days before the date of the meeting. Notice of any meeting may be waived in writing, or by electronic transmission, at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends the meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. (e) Waiver of Notice. The transaction of all business at any meeting of the Board of Directors, or any committee thereof, however called or noticed, or wherever held, shall be as valid as though it had been transacted at a meeting duly held after regular call and notice, if a quorum be present and if, either before or after the meeting, each of the directors not present who did not receive notice shall sign a written waiver of notice or shall waive notice by electronic transmission. All such waivers shall be filed with the corporate records or made a part of the minutes of the meeting. 26 Section 22. Quorum and Voting. (a) Unless the Amended and Restated Certificate of Incorporation requires a greater number, and except with respect to questions related to indemnification arising under Section 44 for which a quorum shall be one-third of the exact number of directors fixed from time to time, a quorum of the Board of Directors shall consist of a majority of the exact number of directors fixed from time to time by the Board of Directors in accordance with the Amended and Restated Certificate of Incorporation; provided, however, at any meeting whether a quorum be present or otherwise, a majority of the directors present may adjourn from time to time until the time fixed for the next regular meeting of the Board of Directors, without notice other than by announcement at the meeting. (b) At each meeting of the Board of Directors at which a quorum is present, all questions and business shall be determined by the affirmative vote of a majority of the directors present, unless a different vote be required by law, the Amended and Restated Certificate of Incorporation or these Bylaws. Section 23. Action Without Meeting. Unless otherwise restricted by the Amended and Restated Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or committee, as the case may be, consent thereto in writing or by electronic transmission, and such writing or writings or transmission or transmissions are filed with the minutes of proceedings of the Board of Directors or committee. Such filing shall be in paper form if the minutes are maintained in paper form and shall be in electronic form if the minutes are maintained in electronic form. Section 24. Fees and Compensation. Directors shall be entitled to such compensation for their services as may be approved by the Board of Directors, including, if so approved, by resolution of the Board of Directors, a fixed sum and expenses of attendance, if any, for attendance at each regular or special meeting of the Board of Directors and at any meeting of a committee of the Board of Directors. Nothing herein contained shall be construed to preclude any director from serving the Corporation in any other capacity as an officer, agent, employee, or otherwise and receiving compensation therefor. Section 25. Committees. (a) Executive Committee. The Board of Directors may designate an Executive Committee to consist of one (1) or more members of the Board of Directors. The Executive Committee, to the extent permitted by law and provided in the resolution of the Board of Directors shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any Bylaw of the Corporation. 26 (b) Other Committees. The Board of Directors may, from time to time, designate such other committees as may be permitted by law. Such other committees designated by the Board of Directors shall consist of one (1) or more members of the Board of Directors and shall have such powers and perform such duties as may be prescribed by the resolution or resolutions creating such committees, but in no event shall any such committee have the power or authority in reference to (i) approving or adopting, or recommending to the stockholders, any action or matter (other than the election or removal of directors) expressly required by the DGCL to be submitted to stockholders for approval, or (ii) adopting, amending or repealing any Bylaw of the Corporation. (c) Term. The Board of Directors, subject to any requirements of any outstanding series of Preferred Stock and the provisions of subsections (a) or (b) of this Section 25, may at any time increase or decrease the number of members of a committee or terminate the existence of a committee. The membership of a committee member shall terminate on the date of his or her death or voluntary resignation from the committee or from the Board of Directors. The Board of Directors may at any time for any reason remove any individual committee member and the Board of Directors may fill any committee vacancy created by death, resignation, removal or increase in the number of members of the committee. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee, and, in addition, in the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. (d) Meetings. Unless the Board of Directors shall otherwise provide, regular meetings of the Executive Committee or any other committee designated pursuant to this Section 25 shall be held at such times and places as are determined by the Board of Directors, or by any such committee, and when notice thereof has been given to each member of such committee, no further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be held at any place which has been determined from time to time by such committee, and may be called by any director who is a member of such committee, upon notice to the members of such committee of the time and place of such special meeting given in the manner provided for the giving of notice to members of the Board of Directors of the time and place of special meetings of the Board of Directors. Notice of any special meeting of any committee may be waived in writing or by electronic transmission at any time before or after the meeting and will be waived by any director by attendance thereat, except when the director attends such special meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Unless otherwise provided by the Board of Directors in the resolutions authorizing the creation of the committee, a majority of the authorized number of members of any such committee shall constitute a quorum for the transaction of business, and the act of a majority of those present at any meeting at which a quorum is present shall be the act of such committee. Unless the Board of Directors shall otherwise provide, each committee shall conduct its business in the same manner as the Board of Directors conducts its business pursuant to Article IV of these Bylaws. 26 Section 26. Duties of Chairperson of the Board of Directors and Lead Independent Director. (a) The Chairperson of the Board of Directors, if appointed and when present, shall preside at all meetings of the stockholders and the Board of Directors. The Chairperson of the Board of Directors shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. (b) The Chairperson of the Board of Directors, or if the Chairperson is not an independent director, one of the independent directors, may be designated by the Board of Directors as lead independent director to serve until replaced by the Board of Directors (“Lead Independent Director”). The Lead Independent Director will perform such other duties as may be established or delegated by the Board of Directors. Section 27. Organization. At every meeting of the directors, the Chairperson of the Board of Directors, or, if a Chairperson has not been appointed or is absent, the Lead Independent Director, or if the Lead Independent Director has not been appointed or is absent, the Chief Executive Officer (if a director), or, if a Chief Executive Officer is absent, the President (if a director), or if the President is absent, the most senior Vice President (if a director), or, in the absence of any such person, a chairperson of the meeting chosen by a majority of the directors present, shall preside over the meeting. The Secretary of the Corporation, or in his or her absence, any Assistant Secretary of the Corporation or other officer, director or other person directed to do so by the person presiding over the meeting, shall act as secretary of the meeting. ARTICLE V OFFICERS Section 28. Officers Designated. The officers of the Corporation shall include, if and when designated by the Board of Directors, the Chief Executive Officer, the President, one or more Vice Presidents, the Secretary, the Chief Financial Officer and the Treasurer. The Board of Directors may also appoint one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents with such powers and duties as it shall deem necessary. The Board of Directors may assign such additional titles to one or more of the officers as it shall deem appropriate. Any one person may hold any number of offices of the Corporation at any one time unless specifically prohibited therefrom by law. The salaries and other compensation of the officers of the Corporation shall be fixed by or in the manner designated by the Board of Directors. Section 29. Tenure and Duties of Officers. (a) General. All officers shall hold office at the pleasure of the Board of Directors and until their successors shall have been duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant for any reason, the vacancy may be filled by the Board of Directors. 26 (b) Duties of Chief Executive Officer. The Chief Executive Officer shall preside at all meetings of the stockholders and at all meetings of the Board of Directors (if a director), unless the Chairperson of the Board of Directors or the Lead Independent Director has been appointed and is present. Unless an officer has been appointed Chief Executive Officer of the Corporation, the President shall be the chief executive officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. To the extent that a Chief Executive Officer has been appointed and no President has been appointed, all references in these Bylaws to the President shall be deemed references to the Chief Executive Officer. The Chief Executive Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. (c) Duties of President. The President shall preside at all meetings of the stockholders and at all meetings of the Board of Directors (if a director), unless the Chairperson of the Board of Directors, the Lead Independent Director or the Chief Executive Officer has been appointed and is present. Unless another officer has been appointed Chief Executive Officer of the Corporation, the President shall be the chief executive officer of the Corporation and shall, subject to the control of the Board of Directors, have general supervision, direction and control of the business and officers of the Corporation. The President shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. (d) Duties of Vice Presidents. A Vice President may assume and perform the duties of the President in the absence or disability of the President or whenever the office of President is vacant. A Vice President shall perform other duties commonly incident to their office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or, if the Chief Executive Officer has not been appointed or is absent, the President shall designate from time to time. (e) Duties of Secretary. The Secretary of the Corporation shall attend all meetings of the stockholders and of the Board of Directors and shall record all acts and proceedings thereof in the minute book of the Corporation. The Secretary of the Corporation shall give notice in conformity with these Bylaws of all meetings of the stockholders and of all meetings of the Board of Directors and any committee thereof requiring notice. The Secretary of the Corporation shall perform all other duties provided for in these Bylaws and other duties commonly incident to the office and shall also perform such other duties and have such other powers, as the Board of Directors shall designate from time to time. The Chief Executive Officer, or if no Chief Executive Officer is then serving, the President may direct any Assistant Secretary of the Corporation or other officer to assume and perform the duties of the Secretary in the absence or disability of the Secretary, and each Assistant Secretary of the Corporation shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time. (f) Duties of Chief Financial Officer. The Chief Financial Officer shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner and shall render statements of the financial affairs of the Corporation in such form and as often as 26 required by the Board of Directors or the Chief Executive Officer, or if no Chief Executive officer is then serving, the President. The Chief Financial Officer, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Chief Financial Officer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time. To the extent that a Chief Financial Officer has been appointed and no Treasurer has been appointed, all references in these Bylaws to the Treasurer shall be deemed references to the Chief Financial Officer. The President may direct the Treasurer, if any, or any Assistant Treasurer, or the controller or any assistant controller to assume and perform the duties of the Chief Financial Officer in the absence or disability of the Chief Financial Officer, and each Treasurer and Assistant Treasurer and each controller and assistant controller shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President shall designate from time to time. (g) Duties of Treasurer. Unless another officer has been appointed Chief Financial Officer of the Corporation, the Treasurer shall be the chief financial officer of the Corporation and shall keep or cause to be kept the books of account of the Corporation in a thorough and proper manner and shall render statements of the financial affairs of the Corporation in such form and as often as required by the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President, and, subject to the order of the Board of Directors, shall have the custody of all funds and securities of the Corporation. The Treasurer shall perform other duties commonly incident to the office and shall also perform such other duties and have such other powers as the Board of Directors or the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President and the Chief Financial Officer (if not Treasurer) shall designate from time to time. Section 30. Delegation of Authority. The Board of Directors may from time to time delegate the powers or duties of any officer to any other officer or agent, notwithstanding any provision hereof. Section 31. Resignations. Any officer may resign at any time by giving notice in writing or by electronic transmission to the Board of Directors or to the Chief Executive Officer, or if no Chief Executive Officer is then serving, the President or to the Secretary of the Corporation. Any such resignation shall be effective when received by the person or persons to whom such notice is given, unless a later time is specified therein, in which event the resignation shall become effective at such later time. Unless otherwise specified in such notice, the acceptance of any such resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to the rights, if any, of the Corporation under any contract with the resigning officer. Section 32. Removal. Any officer may be removed from office at any time, either with or without cause, by the affirmative vote of a majority of the directors in office at the time, or by the unanimous written consent of the directors in office at the time, or by any committee or by the Chief Executive Officer or by other superior officers upon whom such power of removal may have been conferred by the Board of Directors. 26 ARTICLE VI EXECUTION OF CORPORATE INSTRUMENTS AND VOTING OF SECURITIES OWNED BY THE CORPORATION Section 33. Execution of Corporate Instruments. The Board of Directors may, in its discretion, determine the method and designate the signatory officer or officers, or other person or persons, to execute on behalf of the Corporation any corporate instrument or document, or to sign on behalf of the Corporation the corporate name without limitation, or to enter into contracts on behalf of the Corporation, except where otherwise provided by law or these Bylaws, and such execution or signature shall be binding upon the Corporation. All checks and drafts drawn on banks or other depositaries on funds to the credit of the Corporation or in special accounts of the Corporation shall be signed by such person or persons as the Board of Directors shall authorize so to do. Unless authorized or ratified by the Board of Directors or within the agency power of an officer, no officer, agent or employee shall have any power or authority to bind the Corporation by any contract or engagement or to pledge its credit or to render it liable for any purpose or for any amount. Section 34. Voting of Securities Owned By the Corporation. All stock and other securities of other Corporations owned or held by the Corporation for itself, or for other parties in any capacity, shall be voted, and all proxies with respect thereto shall be executed, by the person authorized so to do by resolution of the Board of Directors, or, in the absence of such authorization, by the Chairperson of the Board of Directors, the Chief Executive Officer, the President, or any Vice President. ARTICLE VII SHARES OF STOCK Section 35. Form and Execution of Certificates. The shares of the Corporation shall be represented by certificates, or shall be uncertificated if so provided by resolution or resolutions of the Board of Directors. Certificates for the shares of stock, if any, shall be in such form as is consistent with the Amended and Restated Certificate of Incorporation and applicable law. Every holder of stock in the Corporation represented by certificate shall be entitled to have a certificate signed by or in the name of the Corporation by any two authorized officers of the Corporation, including but not limited to, the Chief Executive Officer, the President, the Chief Financial Officer, any Vice President, the Treasurer or Assistant Treasurer or the Secretary or Assistant Secretary, certifying the number of shares owned by him in the Corporation. Any or all of the signatures on the certificate may be facsimiles. In case any officer, transfer agent, or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent, or registrar before such certificate is issued, it may be issued with the same effect as if he were such officer, transfer agent, or registrar at the date of issue. Section 36. Lost Certificates. A new certificate or certificates shall be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, 26 stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen, or destroyed. The Corporation may require, as a condition precedent to the issuance of a new certificate or certificates, the owner of such lost, stolen, or destroyed certificate or certificates, or the owner’s legal representative, to agree to indemnify the Corporation in such manner as it shall require or to give the Corporation a surety bond in such form and amount as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen, or destroyed. Section 37. Transfers. (a) Transfers of record of shares of stock of the Corporation shall be made only upon its books by the holders thereof, in person or by attorney duly authorized, and, in the case of stock represented by certificate, upon the surrender of a properly endorsed certificate or certificates for a like number of shares. (b) The Corporation shall have power to enter into and perform any agreement with any number of stockholders of any one or more classes of stock of the Corporation to restrict the transfer of shares of stock of the Corporation of any one or more classes owned by such stockholders in any manner not prohibited by the DGCL. Section 38. Fixing Record Dates. (a) In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall, subject to applicable law, not be more than sixty (60) nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. (b) In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty (60) days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto. Section 39. Registered Stockholders. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, 26 and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Delaware. ARTICLE VIII OTHER SECURITIES OF THE CORPORATION Section 40. Execution of Other Securities. All bonds, debentures and other corporate securities of the Corporation, other than stock certificates (covered in Section 35), may be signed by the Chief Executive Officer, the President or any Vice President, or such other person as may be authorized by the Board of Directors, and if such securities require it, the corporate seal may be impressed thereon or a facsimile of such seal may be imprinted thereon and attested by the signature of the Secretary of the Corporation or an Assistant Secretary of the Corporation, or the Chief Financial Officer or Treasurer or an Assistant Treasurer; provided, however, that where any such bond, debenture or other corporate security shall be authenticated by the manual signature, or where permissible facsimile signature, of a trustee under an indenture pursuant to which such bond, debenture or other corporate security shall be issued, the signatures of the persons signing and attesting the corporate seal on such bond, debenture or other corporate security may be the imprinted facsimile of the signatures of such persons. Interest coupons appertaining to any such bond, debenture or other corporate security, authenticated by a trustee as aforesaid, shall be signed by the Treasurer or an Assistant Treasurer of the Corporation or such other person as may be authorized by the Board of Directors, or bear imprinted thereon the facsimile signature of such person. In case any officer who shall have signed or attested any bond, debenture or other corporate security, or whose facsimile signature shall appear thereon or on any such interest coupon, shall have ceased to be such officer before the bond, debenture or other corporate security so signed or attested shall have been delivered, such bond, debenture or other corporate security nevertheless may be adopted by the Corporation and issued and delivered as though the person who signed the same or whose facsimile signature shall have been used thereon had not ceased to be such officer of the Corporation. ARTICLE IX DIVIDENDS Section 41. Declaration of Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Amended and Restated Certificate of Incorporation and applicable law, if any, may be declared by the Board of Directors pursuant to law at any regular or special meeting. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Amended and Restated Certificate of Incorporation and applicable law. Section 42. Dividend Reserve. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Board of Directors shall think conducive to the 26 interests of the Corporation, and the Board of Directors may modify or abolish any such reserve in the manner in which it was created. ARTICLE X FISCAL YEAR Section 43. of the Board of Directors. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution ARTICLE XI INDEMNIFICATION Section 44. Indemnification of Directors, Executive Officers, Other Officers, Employees and Other Agents. (a) Directors and Executive Officers. The Corporation shall indemnify its directors and executive officers (for the purposes of this Article XI, “executive officers” shall have the meaning defined in Rule 3b-7 promulgated under the 1934 Act) to the extent not prohibited by the DGCL or any other applicable law; provided, however, that the Corporation may modify the extent of such indemnification by individual contracts with its directors and executive officers; and, provided, further, that the Corporation shall not be required to indemnify any director or executive officer in connection with any proceeding (or part thereof) initiated by such person unless (i) such indemnification is expressly required to be made by law, (ii) the proceeding was authorized by the Board of Directors of the Corporation, (iii) such indemnification is provided by the Corporation, in its sole discretion, pursuant to the powers vested in the Corporation under the DGCL or any other applicable law or (iv) such indemnification is required to be made under subsection (d). (b) Other Officers, Employees and Other Agents. The Corporation shall have power to indemnify its other officers, employees and other agents as set forth in the DGCL or any other applicable law. The Board of Directors shall have the power to delegate the determination of whether indemnification shall be given to any such person except executive officers to such officers or other persons as the Board of Directors shall determine. (c) Expenses. The Corporation shall advance to any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director or executive officer, of the Corporation, or is or was serving at the request of the Corporation as a director or executive officer of another Corporation, partnership, joint venture, trust or other enterprise, prior to the final disposition of the proceeding, promptly following request therefor, all expenses incurred by any director or executive officer in connection with such proceeding provided, however, that if the DGCL requires, an advancement of expenses incurred by a director or executive officer in his or her capacity as a director or executive officer (and not in any other capacity in which service was or is rendered by such indemnitee, including, without limitation, service to an employee benefit plan) shall be made only upon delivery to the Corporation of an undertaking (hereinafter an “undertaking”), by or on behalf of such indemnitee, 26 to repay all amounts so advanced if it shall ultimately be determined by final judicial decision from which there is no further right to appeal (hereinafter a “final adjudication”) that such indemnitee is not entitled to be indemnified for such expenses under this section or otherwise. Notwithstanding the foregoing, unless otherwise determined pursuant to paragraph (e) of this section, no advance shall be made by the Corporation to an executive officer of the Corporation (except by reason of the fact that such executive officer is or was a director of the Corporation in which event this paragraph shall not apply) in any action, suit or proceeding, whether civil, criminal, administrative or investigative, if a determination is reasonably and promptly made (i) by a majority vote of directors who were not parties to the proceeding, even if not a quorum, or (ii) by a committee of such directors designated by a majority vote of such directors, even though less than a quorum, or (iii) if there are no such directors, or such directors so direct, by independent legal counsel in a written opinion, that the facts known to the decision- making party at the time such determination is made demonstrate clearly and convincingly that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation. (d) Enforcement. Without the necessity of entering into an express contract, all rights to indemnification and advances to directors and executive officers under this Bylaw shall be deemed to be contractual rights and be effective to the same extent and as if provided for in a contract between the Corporation and the director or executive officer. Any right to indemnification or advances granted by this section to a director or executive officer shall be enforceable by or on behalf of the person holding such right in any court of competent jurisdiction if (i) the claim for indemnification or advances is denied, in whole or in part, or (ii) no disposition of such claim is made within ninety (90) days of request therefor. To the extent permitted by law, the claimant in such enforcement action, if successful in whole or in part, shall be entitled to be paid also the expense of prosecuting the claim. In connection with any claim for indemnification, the Corporation shall be entitled to raise as a defense to any such action that the claimant has not met the standards of conduct that make it permissible under the DGCL or any other applicable law for the Corporation to indemnify the claimant for the amount claimed. In connection with any claim by an executive officer of the Corporation (except in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that such executive officer is or was a director of the Corporation) for advances, the Corporation shall be entitled to raise a defense as to any such action clear and convincing evidence that such person acted in bad faith or in a manner that such person did not believe to be in or not opposed to the best interests of the Corporation, or with respect to any criminal action or proceeding that such person acted without reasonable cause to believe that his or her conduct was lawful. Neither the failure of the Corporation (including its Board of Directors, independent legal counsel or its stockholders) to have made a determination prior to the commencement of such action that indemnification of the claimant is proper in the circumstances because he has met the applicable standard of conduct set forth in the DGCL or any other applicable law, nor an actual determination by the Corporation (including its Board of Directors, independent legal counsel or its stockholders) that the claimant has not met such applicable standard of conduct, shall be a defense to the action or create a presumption that claimant has not met the applicable standard of conduct. In any suit brought by a director or executive officer to enforce a right to indemnification or to an advancement of expenses hereunder, the burden of proving that the director or executive officer is not entitled to 26 be indemnified, or to such advancement of expenses, under this section or otherwise shall be on the Corporation. (e) Non-Exclusivity of Rights. The rights conferred on any person by this Bylaw shall not be exclusive of any other right which such person may have or hereafter acquire under any applicable statute, provision of the Amended and Restated Certificate of Incorporation, Bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding office. The Corporation is specifically authorized to enter into individual contracts with any or all of its directors, officers, employees or agents respecting indemnification and advances, to the fullest extent not prohibited by the DGCL, or by any other applicable law. (f) Survival of Rights. The rights conferred on any person by this Bylaw shall continue as to a person who has ceased to be a director, officer, employee or other agent and shall inure to the benefit of the heirs, executors and administrators of such a person. (g) Insurance. To the fullest extent permitted by the DGCL or any other applicable law, the Corporation, upon approval by the Board of Directors, may purchase insurance on behalf of any person required or permitted to be indemnified pursuant to this section. (h) Amendments. Any repeal or modification of this section shall only be prospective and shall not affect the rights under this Bylaw in effect at the time of the alleged occurrence of any action or omission to act that is the cause of any proceeding against any agent of the Corporation. (i) Saving Clause. If this Bylaw or any portion hereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each director and executive officer to the full extent not prohibited by any applicable portion of this section that shall not have been invalidated, or by any other applicable law. If this section shall be invalid due to the application of the indemnification provisions of another jurisdiction, then the Corporation shall indemnify each director and executive officer to the full extent under any other applicable law. (j) Certain Definitions. For the purposes of this Bylaw, the following definitions shall apply: (i) The term “proceeding” shall be broadly construed and shall include, without limitation, the investigation, preparation, prosecution, defense, settlement, arbitration and appeal of, and the giving of testimony in, any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative. (ii) The term “expenses” shall be broadly construed and shall include, without limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in settlement or judgment and any other costs and expenses of any nature or kind incurred in connection with any proceeding. Corporation, any constituent Corporation (including any constituent of a constituent) (iii) The term the “Corporation” shall include, in addition to the resulting 26 absorbed in a consolidation or merger which, if its separate existence had continued, would have had power and authority to indemnify its directors, officers, and employees or agents, so that any person who is or was a director, officer, employee or agent of such constituent Corporation, or is or was serving at the request of such constituent Corporation as a director, officer, employee or agent of another Corporation, partnership, joint venture, trust or other enterprise, shall stand in the same position under the provisions of this section with respect to the resulting or surviving Corporation as he would have with respect to such constituent Corporation if its separate existence had continued. (iv) References to a “director,” “executive officer,” “officer,” “employee,” or “agent” of the Corporation shall include, without limitation, situations where such person is serving at the request of the Corporation as, respectively, a director, executive officer, officer, employee, trustee or agent of another Corporation, partnership, joint venture, trust or other enterprise. (v) References to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to an employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, or agent with respect to an employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner he reasonably believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this section. ARTICLE XII NOTICES Section 45. Notices. (a) Notice to Stockholders. Written notice to stockholders of stockholder meetings shall be given as provided in Section 7 herein. Without limiting the manner by which notice may otherwise be given effectively to stockholders under any agreement or contract with such stockholder, and except as otherwise required by law, written notice to stockholders for purposes other than stockholder meetings may be sent by U.S. mail or nationally recognized overnight courier, or by facsimile, telegraph or telex or by electronic mail or other electronic means. (b) Notice to Directors. Any notice required to be given to any director may be given by the method stated in subsection (a), or as otherwise provided in these Bylaws, with notice other than one which is delivered personally to be sent to such address as such director shall have filed in writing with the Secretary of the Corporation, or, in the absence of such filing, to the last known address of such director. (c) Affidavit of Mailing. An affidavit of mailing, executed by a duly authorized and competent employee of the Corporation or its transfer agent appointed with respect to the class of stock affected, or other agent, specifying the name and address or the names and 26 addresses of the stockholder or stockholders, or director or directors, to whom any such notice or notices was or were given, and the time and method of giving the same, shall in the absence of fraud, be prima facie evidence of the facts therein contained. (d) Methods of Notice. It shall not be necessary that the same method of giving notice be employed in respect of all recipients of notice, but one permissible method may be employed in respect of any one or more, and any other permissible method or methods may be employed in respect of any other or others. (e) Notice to Person With Whom Communication is Unlawful. Whenever notice is required to be given, under any provision of law or of the Amended and Restated Certificate of Incorporation or Bylaws of the Corporation, to any person with whom communication is unlawful, the giving of such notice to such person shall not be required and there shall be no duty to apply to any governmental authority or agency for a license or permit to give such notice to such person. Any action or meeting which shall be taken or held without notice to any such person with whom communication is unlawful shall have the same force and effect as if such notice had been duly given. In the event that the action taken by the Corporation is such as to require the filing of a certificate under any provision of the DGCL, the certificate shall state, if such is the fact and if notice is required, that notice was given to all persons entitled to receive notice except such persons with whom communication is unlawful. (f) Notice to Stockholders Sharing an Address. Except as otherwise prohibited under DGCL, any notice given under the provisions of DGCL, the Amended and Restated Certificate of Incorporation or these Bylaws shall be effective if given by a single written notice to stockholders who share an address if consented to by the stockholders at that address to whom such notice is given. Such consent shall have been deemed to have been given if such stockholder fails to object in writing to the Corporation within sixty (60) days of having been given notice by the Corporation of its intention to send the single notice. Any consent shall be revocable by the stockholder by written notice to the Corporation. ARTICLE XIII AMENDMENTS Section 46. [ ]. Subject to the limitations set forth in Section 44(h) of these Bylaws or the provisions of the Amended and Restated Certificate of Incorporation, the Board of Directors is expressly empowered to adopt, amend or repeal these Bylaws of the Corporation. Any adoption, amendment or repeal of these Bylaws of the Corporation by the Board of Directors shall require the approval of a majority of the authorized number of directors. The stockholders also shall have power to adopt, amend or repeal these Bylaws of the Corporation; provided, however, that, in addition to any vote of the holders of any class or series of stock of the Corporation required by law or by the Amended and Restated Certificate of Incorporation, such action by stockholders shall require the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of all of the then-outstanding shares of the capital stock of the Corporation entitled to vote generally in the election of directors, voting together as a single class. 26 ARTICLE XIV LOANS TO OFFICERS Section 47. Loans to Officers. Except as otherwise prohibited by applicable law, the Corporation may lend money to, or guarantee any obligation of, or otherwise assist any officer or other employee of the Corporation or of its subsidiaries, including any officer or employee who is a director of the Corporation or its subsidiaries, whenever, in the judgment of the Board of Directors, such loan, guarantee or assistance may reasonably be expected to benefit the Corporation. The loan, guarantee or other assistance may be with or without interest and may be unsecured, or secured in such manner as the Board of Directors shall approve, including, without limitation, a pledge of shares of stock of the Corporation. Nothing in these Bylaws shall be deemed to deny, limit or restrict the powers of guaranty or warranty of the Corporation at common law or under any statute. ARTICLE XV EXCLUSIVE FORUM PROVISIONS Section 48. Federal Forum Selection. Unless the Corporation consents in writing to the selection of an alternative forum (an “Alternative Forum Consent”), the federal district courts of the United States of America shall, to the fullest extent permitted by law, be the sole and exclusive forum for the resolution of any complaint asserting a cause of action arising under the 1933 Act. Any person or entity purchasing, holding, owning or otherwise acquiring any interest in any security of the Corporation shall be deemed to have notice of and consented to the provisions of this Section 48. The existence of any prior Alternative Forum Consent shall not act as a waiver of the Corporation’s ongoing consent right as set forth above in this Section 48 with respect to any current or future actions or claims arising under the 1933 Act. 26 CERTIFICATION OF AMENDED AND RESTATED BYLAWS OF APPLIED THERAPEUTICS, INC. a Delaware Corporation I, Shoshana Shendelman, certify that I am the Secretary of Applied Therapeutics, Inc., a Delaware corporation (the “Corporation”), that I am duly authorized to make and deliver this certification, that the attached Amended and Restated Bylaws are a true and complete copy of the Amended and Restated Bylaws of the Corporation in effect as of the date of this certificate. Dated: March 16, 2021 /s/ Shoshana Shendelman Shoshana Shendelman, Ph.D. Secretary 26 CERTAIN IDENTIFIED INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS NOT MATERIAL AND IS THE TYPE OF INFORMATION THAT THE REGISTRANT CUSTOMARILY AND ACTUALLY TREATS AS PRIVATE [***] INDICATES THAT INFORMATION HAS BEEN AND CONFIDENTIAL. REDACTED. Exhibit 10.9 EXCLUSIVE LICENSE AND SUPPLY AGREEMENT by and between APPLIED THERAPEUTICS, INC. and MERCURY PHARMA GROUP LIMITED January 3, 2023 TABLE OF CONTENTS SECTION 1. DEFINITIONS SECTION 2. LICENSE SECTION 3. ALLIANCE MANAGERS SECTION 4. DEVELOPMENT SECTION 5. REGULATORY AFFAIRS SECTION 6. PRICING AND MARKET ACCESS SECTION 7. COMMERCIALIZATION SECTION 8. MANUFACTURE AND SUPPLY SECTION 9. FINANCIAL PROVISIONS SECTION 10. ACCOUNTING AND PROCEDURES FOR PAYMENT SECTION 11. PATENTS AND INFRINGEMENT SECTION 12. CONFIDENTIALITY; PUBLICATION SECTION 13. WARRANTIES SECTION 14. NON-COMPETITION SECTION 15. TERM SECTION 16. TERMINATION SECTION 17. INDEMNIFICATION, INSURANCE AND LIABILITY SECTION 18. GOVERNING LAW AND JURISDICTION SECTION 19. MISCELLANEOUS i 1 16 21 22 23 26 27 32 41 43 45 49 51 53 53 54 61 64 66 EXCLUSIVE LICENSE AND SUPPLY AGREEMENT This Exclusive License and Supply Agreement (this “Agreement”) dated as of January 3, 2023 is made by and between Applied Therapeutics, Inc., a company organized and existing under the laws of the State of Delaware in the U.S. with its head office at 545 5th Ave Suite 1400, New York, NY 10017 (“Applied”), and Mercury Pharma Group Limited (trading as Advanz Pharma Holdings), a company organized and existing under the laws of England and Wales with its head office at Capital House, 85 King William Street, London, EC4N 7BL, United Kingdom and registered under number 02330913 (“Advanz”) (each, a “Party” and collectively, the “Parties”). WHEREAS, Applied is engaged in, among other things, Developing the Compound and the Product and owns or otherwise controls certain Patent Rights and Technology relating thereto; WHEREAS, Advanz has experience and expertise in the marketing and selling of pharmaceutical products, and desires to acquire the licenses set out in this Agreement including an exclusive license in the Territory to Commercialize the Product in the Field, upon the terms and subject to the conditions set forth herein; and WHEREAS, Applied desires to grant such license to Advanz. NOW, THEREFORE, in consideration of the mutual covenants and agreements provided herein, Applied and Advanz hereby agree as follows: SECTION 1. DEFINITIONS For purposes of this Agreement, the following definitions shall be applicable: 1.1 “Acquiror Assets” means, with respect to Patent Rights or Technology (and all Intellectual Property (other than Patent Rights) therein), as applicable, such Patent Rights or Technology (and all Intellectual Property (other than Patent Rights) therein) owned or otherwise Controlled by the Acquiror Group other than: (a) any Patent Rights or Technology (and all Intellectual Property (other than Patent Rights) therein) the Control of which is transferred from Applied and or its Affiliates (other than the Acquiror Group) to the Acquiror Group; (b) any improvements, enhancements, modifications and updates to (a); and (c) any Patent Rights and Technology (and Intellectual Property (other than Patent Rights) therein) owned or Controlled by the Acquiror Group access to which is provided to Applied or any of its Affiliates (other than the Acquiror Group), each to the extent necessary or useful for the Exploitation of the Compound or Product in the Field in the Territory and which are “Applied Patent Rights” or “Applied Technology” as appropriate. 1.2 “Acquiror Group” means a Third Party acquiror of Applied or any Affiliate of such acquiror (other than Applied or any Affiliate controlled (as defined in Section 1.10) by Applied). 18 1.3 “Additional Indication” means (a) an Indication for the Product outside the Field; and (b) solely to the extent for one of the Licensed Indications, any of Applied’s products other than the Product. 1.4 “Additional Indication Notice” shall have the meaning assigned to it in Section 2.5(a). 1.5 “Advanz” shall have the meaning assigned to it in the Preamble. 1.6 “Advanz Confidential Information” means all information or data, including proprietary information and materials, relating to the business, operations, Technology, Commercialization, Development and Manufacturing activities of Advanz (including sales data of Advanz and any information of Advanz created under or in connection with this Agreement by Advanz), whether in oral, written, graphic, machine-readable form, or any other form, disclosed or made available by or on behalf of Advanz to Applied, Applied’s Affiliates, or its or their respective directors, officers, employees, consultants, contractors or agents or otherwise acquired by any such Persons as a result of or in connection with this Agreement or the Parties’ discussions (whether prior to the execution hereof or thereafter). Information will be considered Advanz Confidential Information under this Agreement if a reasonable person, given the nature of information and the circumstances of disclosure, would consider such information to be confidential. Information shall not be considered to be Advanz Confidential Information to the extent that such information is: (a) as of the date of disclosure known to Applied or its Affiliates, as demonstrable in any tangible medium in existence at the time of disclosure; (b) wholly disclosed in published literature, or otherwise is or becomes generally known to the public through no breach by Applied of this Agreement; (c) obtained by Applied or its Affiliates from a Third Party free from any obligation of confidentiality to Advanz or its Affiliates; or (d) independently developed by Applied or its Affiliates without use of or reference to the Advanz Confidential Information. 1.7 1.8 “Advanz Indemnitees” shall have the meaning assigned to it in Section 17.2. “Advanz Recall” shall have the meaning assigned to it in Section 5.5(a). 1.9 “Advanz Regulatory Activities” means, with respect to the Product for use in the Field in the Territory: (a) collaborating with Applied in accordance with Section 5.3, in connection with determining regulatory plans and strategies for the Product in the Field in the Territory, including the preparation and submission of, the Marketing Authorization Applications hereunder; (b) collaborating with Applied in respect of preparation of the Marketing Authorization Applications in accordance with Section 5.1(b), submitting the Marketing Authorization Applications in Advanz’s name, paying all associated application fees and maintaining any resulting Marketing Authorizations; (c) preparing and filing, in Advanz’s name, the respective local documents and other to Commercialization (and other Exploitation under Advanz’s control as a result of Advanz exercising its Step-In Rights) of the Product in the Field in the Territory from and after receiving the Product with applicable Regulatory Authorities; and Marketing Authorization for (d) complying with the Advanz obligations in Section 8.2. (including Regulatory Filings) with respect filings 18 1.10 “Affiliate” means, with respect to a Party, any Person that, directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with such Party, but for only so long as such control exists. As used in this Section 1.10, “control” means (a) to possess, directly or indirectly, the power to direct or cause the direction of the management or policies of an entity, whether through ownership of voting securities or voting rights, by contract or otherwise; or (b) direct or indirect beneficial ownership of more than fifty percent (50%) (or such lesser percentage which is the maximum allowed to be owned by a foreign entity in a particular jurisdiction) of the voting equity securities in such entity and the terms “controlled” and “controlling” have meanings correlative thereto. In the case of Advanz, this definition shall exclude any entities which are under common control with Advanz solely as a result of being controlled by Nordic Capital branded or associated investment or management vehicles. 1.11 “Agreement” shall have the meaning assigned to it in the Preamble. 1.12 “Alliance Manager” shall have the meaning assigned to it in Section 3.1. 1.13 “Annual Net Sales” means Net Sales for any Calendar Year. 1.14 “Antitrust Laws” means any Applicable Laws having the purpose or effect of prohibiting, restricting or regulating monopolization, lessening of competition, or restraint of trade. 1.15 “Applicable Laws” means the applicable provisions of any and all national, supranational, regional, state, and local laws, treaties, statutes, or rules, regulations, administrative codes, binding guidance, requirements (whether regulatory, administrative or criminal, including all requirements related to privacy and anti-corruption requirements), ordinances, judgments, decrees, directives, injunctions, orders, or permits (including Marketing Authorizations and their equivalents) of or from any court, Regulatory Authority, or other Governmental Authority having jurisdiction over or related to the subject item. 1.16 “Applied” shall have the meaning assigned to it in the Preamble. 1.17 “Applied Confidential Information” means all information or data relating to the Applied Technology, Compound or Product (except to the extent this is Advanz Confidential Information) including all pre-clinical or clinical data, manufacturing processes, controls and data, and regulatory dossiers, as well as any other information, including proprietary information and materials, regarding the business, operations, Technology and the supply, Manufacture, Development, Commercialization and other Exploitation activities of Applied, whether in oral, written, graphic, machine-readable form, or any other form, disclosed or made available by or on behalf of Applied to Advanz, Advanz’s Affiliates, or its and their respective directors, officers, employees, consultants, contractors or agents or otherwise acquired by any such Persons as a result of or in connection with this Agreement or the Parties’ discussions (whether prior to the execution hereof or thereafter). Information will be considered Applied Confidential Information under this Agreement if a reasonable person, given the nature of information and the circumstances of disclosure, would consider such information to be confidential. Information shall not be considered to be Applied Confidential Information to the extent that such information is: (a) as of the date of disclosure known to Advanz or its Affiliates, as demonstrable in any tangible medium 18 in existence at the time of disclosure; (b) wholly disclosed in published literature, or otherwise is or becomes generally known to the public through no breach by Advanz of this Agreement; (c) obtained by Advanz or its Affiliates from a Third Party free from any obligation of confidentiality to Applied or its Affiliates (including in the exercise of its rights or performance of its obligations under this Agreement); or (d) independently developed by Advanz or its Affiliates without use of or reference to the Applied Confidential Information. 1.18 “Applied Indemnitees” shall have the meaning assigned to it in Section 17.1. 1.19 “Applied Patent Rights” means all Patent Rights owned or otherwise Controlled by Applied or any of its controlled Affiliates as of the Effective Date or at any time during the Term, excluding Acquiror Assets, to the extent that they relate to the Exploitation of the Compound or Product in the Field in the Territory (including the composition of matter, manufacture or use of the foregoing), including the Patent Rights listed in Exhibit B, other than Patent Rights which are Acquiror Assets. 1.20 “Applied Recall” shall have the meaning assigned to it in the Section 5.5(a). 1.21 “Applied Technology” means any Technology and all Intellectual Property (other than Patent Rights) therein, owned or otherwise Controlled by Applied or any of its controlled Affiliates as of the Effective Date or at any time during the Term, excluding Acquiror Assets, that is necessary or useful for the Development, Manufacture, Commercialization or other Exploitation of the Compound or Product in the Field in the Territory, other than Technology which is Acquiror Assets. 1.22 “Audit” shall have the meaning assigned to it in Section 10.8. 1.23 “Bulk Product” means the Product (AT-007 liquid suspension) in bulk bottle format for supply to secondary packaging facilities identified by Advanz. 1.24 “Business Day” means a day other than a Saturday, Sunday, or bank or other public holiday in New York, New York or London, United Kingdom. 1.25 “Calendar Quarter” means each of the four (4) three (3)-month periods commencing on January 1 of any Calendar Year and ending on (respectively) March 31, June 30, September 30, and December 31 of such Calendar Year. 1.26 “Calendar Year” means the twelve (12)-month period commencing on January 1 and ending on December 31 of any calendar year; provided that the first Calendar Year of the Term shall commence on the Effective Date and end on December 31 of such calendar year and the last Calendar Year of the Term shall end on the date of expiration or termination of this Agreement. 1.27 “cGDP” means the European current good distribution practice standards on the distribution of products, including requirements for transport, storage, distribution and wholesale as specified by Applicable Laws of the relevant Countries at the time of distribution conducted in accordance with this Agreement. 18 1.28 “cGMP” means the good manufacturing practice standards for methods to be used in, and the facilities or controls to be used for, the manufacture, processing, packing, distribution or holding of a pharmaceutical product or drug substance as specified by Applicable Laws of the relevant Countries at the time of manufacturing conducted in accordance with this Agreement, including (a) Directive 2003/94/EC; (b) Volume 4, Rules Governing Medicinal Products in the EU, Part I and II; and (c) the Human Medicines Regulations 2012, each as amended from time to time. 1.29 “Claims” shall have the meaning assigned to it in Section 17.1. 1.30 “Columbia” shall have the meaning assigned to it in Section 1.31. 1.31 “Columbia License” means that certain Exclusive License Agreement by and between The Trustees of Columbia University in the City of New York (“Columbia”) and Applied, dated October 26, 2016. 1.32 “Columbia Patents” shall have the meaning assigned to it in Section 11.1. 1.33 “Commercial Event Milestone 1” shall have the meaning assigned to it in Section 9.2(a). 1.34 “Commercial Event Milestone 2” shall have the meaning assigned to it in Section 9.2(a). 1.35 “Commercial Event Milestone 3” shall have the meaning assigned to it in Section 9.2(a). 1.36 “Commercial Event Milestone 4” shall have the meaning assigned to it in Section 9.2(a). 1.37 “Commercial Event Milestone Payments” means the Event Milestone Payments opposite each Commercial Event Milestone, as set forth in Section 9.2(a). 1.38 “Commercial Event Milestones” means Commercial Event Milestone 1, Commercial Event Milestone 2, Commercial Event Milestone 3 and Commercial Event Milestone 4. 1.39 “Commercialization” means with respect to a pharmaceutical product, any and all activities directed to the marketing, promotion, importation, labeling, distribution, exportation, transport, offering for sale, sale of and having sold such pharmaceutical product, but excluding, Development and Manufacturing. “Commercialize” and “Commercializing” have correlative meanings. 1.40 “Commercialization Plan” shall have the meaning assigned to it in Section 7.2. 1.41 “Commercially Reasonable Efforts” means with respect to the efforts to be expended by a Party with respect to the objective that is the subject of such efforts, reasonable, good faith efforts and resources to accomplish such objective that such Party would normally use 18 to accomplish a similar objective under similar circumstances, it being understood and agreed that such efforts shall be similar to those efforts and resources consistent with industry practice in pursuing the Commercialization or other Exploitation (as applicable) of pharmaceutical products for treatment of rare diseases in the specialty pharmaceutical industry, taking into account all relevant factors, including the orphan drug and specialty pharmaceutical status of the pharmaceutical product and other regulatory matters, safety and efficacy matters, labeling or anticipated labeling, pricing, present and future market potential, past performance of the pharmaceutical product, financial return (but without taking into account the Royalties or Event Milestone Payments made or required to be made hereunder in the case of Commercialization), medical and clinical considerations, present and future regulatory environment and competitive market conditions, all as measured by the facts and circumstances at the time such efforts are due . 1.42 “Competing Product” means any pharmaceutical product, compound, drug substance or preparation for the treatment of a Licensed Indication, or that shows pharmacological activity with respect to aldose reductase, and that is not the Product or Compound. 1.43 “Compound” 2-(4-oxo-3-((5-(trifluoromethyl)benzo[d]thiazol-2- yl)methyl)-3,4-dihydrothieno[3,4-d]pyridazin-1-yl)acetic acid (AT-007 with CAS registry number 2170729-29-8) and the structure shown on Exhibit A, also called govorestat, including all salts, hydrates, solvates, salts and isomers. means 1.44 “Confidential Information” means the Applied Confidential Information or the Advanz Confidential Information, as applicable. 1.45 “Continuity Plan” shall have the meaning assigned to it in Section 19.17. 1.46 “Control” or “Controlled” means, with respect to any Intellectual Property, the legal authority or right (whether by ownership, license or otherwise, but without taking into account any rights granted by one Party to the other Party pursuant to this Agreement) of a Party to grant the applicable access to, or license or sublicense under, such Intellectual Property to the other Party pursuant to this Agreement, without breaching the terms of any agreement or other arrangement with a Third Party, or violating any Applicable Laws. 1.47 “Cost of Goods Sold” or “COGs” means Applied’s actual, directly attributable and allocable and, where reasonably requested, evidenced internal and external Costs and Expenses reasonably incurred in Manufacturing Bulk Product for Advanz, including [***] directly relating to the Manufacture of the Product calculated in accordance with Exhibit I and including the components set out in Exhibit G. 1.48 “Costs and Expenses” means any direct internal and external costs and expenses that would normally be incurred by the Party by which they are incurred under similar circumstances, it being understood and agreed that such costs and expenses shall be similar to those costs and expenses consistent with industry practice and shall not include any extraordinary costs. 1.49 “Country” means a generally recognized sovereign entity or regulatory jurisdiction. 18 1.50 “Cover(ed)(ing)” means, with respect to any Patent Right and the subject matter at issue, that, but for ownership or a license granted under a Valid Claim of such Patent, the Development, Manufacture, Commercialization or other Exploitation of the subject matter at issue would infringe such Valid Claim, or, in the case of a Patent Application, would infringe a Valid Claim in such Patent Application if it were to issue as a Patent. 1.51 “Damages” shall have the meaning assigned to it in Section 17.1. 1.52 “Development” or “Develop” means conducting pre-clinical studies and clinical trials (including the Required Existing Studies, Required Post-MA Studies and Other Post- Approval Studies, but excluding, for clarity, PV and Risk Management Studies), as well as developing manufacturing data, processes and controls required for Marketing Authorization, and collecting, validating and analyzing data in connection with the foregoing. 1.53 “Development Costs” means any costs, fees or expenses incurred in connection with Development of the Product, as further described in Section 4.3. 1.54 “Dispute” shall have the meaning assigned to it in Section 18.3. 1.55 “Dispute Notice” shall have the meaning assigned to it in Section 18.3(a). 1.56 “Dossier” means the complete master regulatory dossier in e-CTD format for the Product prepared by or on behalf of Applied for submission by Advanz in order to obtain a Marketing Authorization for the Product for use in the Field in the Territory. 1.57 “Early Access Program” means any program in the Territory to provide patients with the Product for use in the Field prior to Marketing Authorization and prior to Launch in any Country in the Territory. “Early Access Programs” include, for example, any named patient programs or compassionate use programs. 1.58 “Effective Date” means the date of this Agreement. 1.59 “EMA” means the European Medicines Agency or any successor agency thereto. 1.60 “English Courts” shall have the meaning assigned to it in Section 18.3(c)(iv). 1.61 “Estimated Cost” shall have the meaning assigned to it in Section 8.5(a)(i). 1.62 “Event Milestone” shall have the meaning assigned to it in Section 9.2(a). 1.63 “Event Milestone Payments” means the amounts set forth in Section 9.2(a) opposite the respective Event Milestones. 1.64 “Exploit(ation)” means to research, Develop, Manufacture, Commercialize or otherwise use or dispose of. 1.65 “Facility” means, as applicable, those facilities used by or on behalf of Applied (including by its Affiliates, licensees, sublicensees or designees) in the Manufacture or storage of 18 (a) Compound, (b) Bulk Product, or (c) materials or services utilized in the Manufacture of Compound or Bulk Product . For the avoidance of doubt, “Facility” includes the facilities of Applied’s Third Party contract manufacturers. 1.66 “Field” means the use of the Product for the Licensed Indications in humans. 1.67 “Financial Stability Event” shall have the meaning assigned to it in Section 19.17. 1.68 “FM Continuity Plan” shall have the meaning assigned to it in Section 19.1. 1.69 “Force Majeure Event” shall have the meaning assigned to it in Section 19.1. 1.70 “Forecast” shall have the meaning assigned to it in Section 8.4(a). 1.71 “Galactosemia” means the genetic metabolic disorder in humans resulting in deficiencies in enzymes in the Le Loir pathway of galactose metabolism, resulting in the inability to convert galactose to glucose, known as of the Effective Date as “galactosemia.” 1.72 “Governmental Authority” means any court, agency, department, authority or other instrumentality of any national, state, county, city or other political subdivision. 1.73 “IFRS” means international financial reporting standards, which are generally accepted accounting principles. 1.74 “Indemnified Party” shall have the meaning assigned to it in Section 17.4(a). 1.75 “Indemnifying Party” shall have the meaning assigned to it in Section 17.4(a). 1.76 “Indication” means a separate and distinct disease, disorder, illness, or health condition in humans and all of its associated signs, symptoms, stages, or progression (including precursor conditions), in each case for which a separate, or supplemental, Marketing Authorization Application may be filed. For clarity, subpopulations or patients with a primary disease or condition, however stratified (including stratification by stages of progression, particular combinations of symptoms associated with the primary disease or condition, prior treatment courses, response to prior treatment, family history, clinical history, genotype, phenotype, or other stratification) shall not be deemed to be separate “Indications” for the purposes of this Agreement. 1.77 Section 7.2. “Initial Commercialization Plan” shall have the meaning assigned to it in 1.78 “Initial Forecast” shall have the meaning assigned to it in Section 8.4(a). 1.79 “Initial Royalty Term” means, on a Country-by-Country basis, the period beginning on the Effective Date and ending on the later of: (a) the expiration date of the last Valid Claim Covering the composition of matter of the Compound in the Territory; or (b) ten (10) years from EMA’s grant of the Marketing Authorization for the Product. 18 1.80 “Intellectual Property” means all Patent Rights, Trademarks, registered designs, design rights, copyrights (including rights in computer software and moral rights), domain names, rights in databases and rights in data, trade secrets, know-how and any and all other intellectual property and proprietary rights in any Country throughout the world, whether registered or not, together with all applications and registrations therefor and all renewals and extensions of such rights or applications whether vested, contingent or future. 1.81 “Inventory Stock” shall have the meaning assigned to it in Section 8.11(a). 1.82 “IP Rights” shall have the meaning assigned to it in Section 18.2(a). 1.83 “Launch” means, on a Licensed Indication-by-Licensed Indication and Country-by- Country basis, the first sale of the Product by Advanz or any of its Affiliates or Sublicensees to a Third Party for end use of the Product for use in such Licensed Indication in such Country after Marketing Authorization has been granted with respect to the Product for use in such Licensed Indication in such Country. For clarity, clinical trials, so-called “named patient sales,” and “compassionate use sales” or sales under Early Access Programs (other than the Early Access Program in France in accordance with Section 16.1(e)(i)(B)) shall not be construed as a “Launch” hereunder. 1.84 “Licensed Indications” means SORD and Galactosemia. 1.85 “Licensed Trademarks” means those Trademarks that are Controlled by Applied in the Territory that are used or intended for use to identify the Product for use in the Field in the Territory, as set out in Exhibit C attached hereto (and any such other Trademarks that are Controlled by Applied in the Territory that the Parties agree in writing after the Effective Date shall be used to identify the Product in the Territory, including pursuant to Section 7.4(b)). 1.86 “Long Range Forecast” shall have the meaning assigned to it in Section 8.4(b). 1.87 “Major Markets” means [***]. 1.88 “Manufacture” means any and all activities related to making, having made, production, manufacture, processing, filling, shipping and holding of any compound or pharmaceutical product, including process development, testing method development, process qualification and validation, scale-up, pre-clinical, clinical and commercial manufacture and analytic development, product characterization, stability testing, quality assurance and quality control, but excluding, for the avoidance of doubt, Secondary Packaging and Release. “Manufactured” and “Manufacturing” have correlative meanings. 1.89 “Marketing Authorization” means a Regulatory Approval that grants the right to place a pharmaceutical product on a market in the Territory (including any individual Country within the Territory). For the avoidance of doubt, “Marketing Authorization” includes any conditional or qualified authorization. 1.90 “Marketing Authorization Application” means an application for a Marketing Authorization. 18 1.91 “Material Safety Issue” means Applied’s good faith and reasonably evidenced belief that there is an unacceptable risk for harm in humans based upon the observation of serious adverse effects in humans after dosing the Product. 1.92 “MHRA” means the Medicines and Healthcare products Regulatory Agency in the United Kingdom or any successor agency thereto. 1.93 “Miami” has the meaning assigned to it in Section 1.94. 1.94 “Miami License” means that certain Exclusive License Agreement by and between University of Miami (“Miami”) and Applied dated as of October 28, 2020. 1.95 “Net Sales” means, with respect to a Product, the gross amounts invoiced by Advanz or its Affiliates or Sublicensees for sale of Product to Third Parties and less the following customary deductions, determined in accordance with IFRS and accounting standards and methods consistently applied throughout Advanz’s organization, to the extent specifically and solely allocated to such Product and actually and properly taken, paid, accrued, allowed, included or allocated: [***] 1.96 “Non-Conformance Dispute” shall have the meaning assigned to it in Section 8.7(c). 1.97 “Notice of Non-Conformance” shall have the meaning assigned to it in Section 8.7(a). 1.98 “Other Post-Approval Studies” means, with respect to the Compound or Product, in each case, for use in the Field in the Territory, any pre-clinical or clinical studies commenced after receipt of Marketing Authorization for such Product for such use, that are not Required Existing Studies or Required Post-MA Studies including: (a) Phase IV studies (including health outcomes and health services utilization research, epidemiologic studies, and health economic studies) to expand the clinical knowledge of the Product in a post marketing and real world setting; (b) clinical studies or programs for expanded or compassionate access; and (c) investigator initiated trials. 1.99 “Out-of-Scope Product” means the Product for use in an Indication or other use outside the Field (without limiting Advanz’s rights to any ROFO Product pursuant to Section 2.5), a compound other than the Compound or a pharmaceutical product other than the Product. 1.100 “Party” or “Parties” shall have the meaning assigned to such terms in the Preamble. 1.101 “Patent Application” means any application for a Patent. 1.102 “Patent Challenge” shall have the meaning assigned to it in Section 2.6(a). 1.103 “Patent Rights” means Patents and Patent Applications. 18 1.104 “Patents” means including all continuations, continuations-in-part, divisions, provisionals and renewals, and letters of patent granted with respect to any of the foregoing, patents of addition, supplementary protection certificates, registration or confirmation patents and all reissues, re-examination and extensions thereof. issued patents, whether U.S. or foreign, 1.105 “Person” means an individual, corporation, partnership, company, joint venture, unincorporated organization, limited liability company or partnership, sole proprietorship, association, bank, trust company or trust, whether or not legal entities, or any Governmental Authority. 1.106 “Pharmacovigilance Agreement” shall have the meaning assigned to it in Section 5.4. 1.107 “PMAC Members” shall have the meaning assigned to it in Section 6.1(b). 1.108 “Price Approval” means, in any Country where a Governmental Authority authorizes reimbursement for, or approves or determines pricing for, pharmaceutical products, receipt (or, if required to make such authorization, approval or determination effective, publication) of such reimbursement authorization or pricing approval or determination (as the case may be). 1.109 “Pricing and Market Access Activities” means, with respect to the Product in the Field in the Territory, strategy, activities and undertakings regarding: (a) pricing and price terms, including obtaining and maintaining Price Approvals, negotiating discounts, rebates and other price-related matters with payors and purchasers or in relation to formulary placement for Products; (b) reimbursement programs; and (c) all other market access matters, including establishing and maintaining relationships, and contracting with hospitals, pharmacies, group purchasing organizations and healthcare insurers and other similar Third Parties. 1.110 “Pricing and Market Access Committee” or the “PMAC” shall have the meaning assigned to it in Section 6.1(a). 1.111 “Product” means any pharmaceutical product that contains the Compound, as the sole active ingredient or together with one or more other active ingredients, in any dosage form, strength or formulation. 1.112 “Product Non-Conformance” shall have the meaning assigned to it in Section 8.7(a). 1.113 “Product Recall” shall mean any Advanz Recall or Applied Recall. 1.114 “Product Specifications” means those Manufacturing, performance, quality-control release, and other specifications for the Compound or Product (including Bulk Product) for use in the Field in the Territory, which are initially as set forth in the applicable Marketing Authorization for the Product, as such specifications may be amended from time to time pursuant to the terms of this Agreement. 1.115 “Proposal” shall have the meaning assigned to it in Section 2.5(b). 18 1.116 “Purchase Order” shall have the meaning assigned to it in Section 8.4(a). 1.117 “PV and Risk Management Studies” means any (a) post authorization safety study (“PASS”); (b) risk management plan (“RMP”) requirement (such as product safety or disease registry); and (c) pharmacovigilance surveillance activity with respect to the Compound or Product, in each case, for use in the Field in the Territory, as required by any Regulatory Authority in any Country in the Territory following receipt of a Marketing Authorization for the Product for use in such Licensed Indication. 1.118 “Quality Agreement” means the Quality Agreement to be entered into between Applied and Advanz with respect to the Bulk Product being supplied by Applied for commercial supply to Advanz under the terms of this Agreement. 1.119 “Regulatory Activities” means the Advanz Regulatory Activities or any regulatory activities undertaken by Applied with respect to the Product, as applicable. 1.120 “Regulatory Approval” means any approval, with respect to any Country, that are necessary for the Commercialization or other Exploitation of a pharmaceutical product in such Country. “Regulatory Approval” (a) includes all approvals, product and establishment licenses, registrations or authorizations of any federal, state or local authority, department, bureau or other Governmental Authority, necessary for the manufacture, use, storage, importation, export, transport, sale, or placing on the market of a pharmaceutical product in a Country and (b) includes any Marketing Authorization. 1.121 “Regulatory Authority” means, in respect of a particular Country, the Governmental Authority having responsibility for granting Regulatory Approvals in such Country. 1.122 “Regulatory Filing” means all applications, filings, submissions, approvals, licenses, registrations, permits, notifications and authorizations (or waivers) with respect to the Commercialization or other Exploitation of a compound or pharmaceutical product made to or received from any Regulatory Authority in the Territory, including any Marketing Authorization Applications and labels. 1.123 “Reimbursing Party” shall have the meaning assigned to it in Section 10.1(b). 1.124 “Requested Actions” shall have the meaning assigned to it in Section 8.14(c). 1.125 “Required Existing Studies” means all clinical studies for the Compound or Product which are ongoing at the Effective Date including: (a) the long-term extension trial evaluating the safety and pharmacokinetics of the Compound, in adult human subjects with Galactosemia being conducted by Applied and referred to as the ACTION-Galactosemia study (the “AT-007-1006 Study”), (b) the pediatric trial evaluating the safety, pharmacokinetics and reduction in the toxic biomarker, galactitol, as well as long-term clinical outcomes, such as speech, memory, cognition, behavior, growth and development and motor skills of the Compound in children (ages 2-17) being conducted by Applied and referred to as the ACTION-Galactosemia Kids study (the “AT-007-1002 Study”); and (c) the registrational clinical trial evaluating biomarker efficacy, clinical outcomes and safety in human subjects (ages 16 and older) with SORD treated with the Compound 18 vs. placebo being conducted by Applied and referred to as the INSPIRE study (the “AT-007-1005 Study”). 1.126 “Required Post-MA Studies” means, in each case, with respect to the Product for use in the Field in the Territory, any (a) pre-clinical or clinical study as part of a pediatric investigational plan (a “PIP”) required by a Regulatory Authority within the Territory, either as a condition of expanding the approved Indication under a Marketing Authorization for another subpopulation or as an associated commitment of a Marketing Authorization; (b) confirmatory studies for Galactosemia for adults if the Product is being Commercialized under conditional Marketing Authorization; (c) post authorization efficacy study (“PAES”) including for paediatric use in respect of Galactosemia and in general in respect of SORD (but not including, for clarity, any studies under the foregoing subsection (a)); or (d) other pre-clinical or clinical trial, in each case of the foregoing (c) and (d), as required by any Regulatory Authority in any Country in the Territory to maintain an existing Marketing Authorization for the Product for use in such Licensed Indication. 1.127 “ROFO Negotiation Period” shall have the meaning assigned to it in Section 2.5(b). 1.128 “ROFO Product” shall have the meaning assigned to it in Section 2.5(a). 1.129 “ROFO Response Period” shall have the meaning assigned to it in Section 2.5(b). 1.130 “Royalties” shall have the meaning assigned to it in Section 9.3. 1.131 “Safety Stock” shall have the meaning assigned to it in Section 8.11(b). 1.132 “Secondary Source Site” shall have the meaning assigned to it in Section 8.12. 1.133 “Secondary Packaging and Release” means finishing, labelling, packaging (including design of artwork and any translations) and quality release activities to the extent relating to the Product for use in the Field in the Territory. 1.134 “Secondary Packaging and Release Estimated Cost” shall have the meaning assigned to it in Section 8.6(d). 1.135 “Shelf Life Requirements” shall have the meaning assigned to it in Section 8.4(e). 1.136 “SORD” means sorbitol dehydrogenase deficiency. 1.137 “Step-In Notice” means notification by Advanz to Applied that it intends to exercise its Step-In Rights in accordance with Section 8.14. 1.138 “Step-In Rights” means the right of Advanz to step-in to continue any activities undertaken or required to be undertaken by Applied or any other Person on Applied’s behalf relating to or associated with the Exploitation of the Product in accordance with this Agreement, as and to the extent applicable, pursuant to Section 8.14. 18 1.139 “Sublicense” means the grant by Advanz of a sublicense under any of the rights licensed by Applied to Advanz pursuant to Section 2.1. 1.140 “Sublicensee” means a Third Party to whom Advanz has granted a Sublicense in accordance with the terms and conditions set forth herein. 1.141 “Supply Shortage” shall have the meaning assigned to it in Section 8.13. 1.142 “Tax” means any U.S. and non-U.S. federal, state, local, regional, municipal, or other tax or taxation, levy, duty, charge, withholding, or other assessment of any kind (including any related fine, penalty, addition to tax, surcharge, or interest) imposed by, or payable to, a Governmental Authority, including sales, use, excise, stamp, transfer, property, value added, goods and services, withholding, and franchise taxes 1.143 “Technology” means all technical, scientific, regulatory and other information, results, knowledge, techniques and data (including biological, chemical, pharmacological, toxicological, pharmaceutical, physical and analytical, safety, quality control, and preclinical and clinical data), in whatever form and whether or not confidential, patented or patentable, including inventions, invention disclosures, discoveries, plans, processes, practices, methods, knowledge, instructions, formulations, compositions, specifications and manufacturing data or descriptions. “Technology” does not include Intellectual Property claiming any of the foregoing. skill, experience, ideas, concepts, formulae, 1.144 “Term” shall have the meaning assigned to it in Section 15.1. 1.145 “Territory” means those Countries set forth on Exhibit D attached hereto. 1.146 “Third Party” means any Person other than Advanz, Applied, or any of their respective Affiliates. 1.147 “Third Party Claim” shall have the meaning assigned to it in Section 17.4(a). 1.148 “Third Party License” means each license agreement between Applied and a Third Party pursuant to which or from which Applied licenses in Applied Patent Rights or Applied Technology as of the Effective Date, as notified to Advanz and set out in Exhibit E attached hereto. 1.149 “Third Party Product Claim” shall have the meaning assigned to it in Section 17.3(a). 1.150 “Total Supply Price” shall have the meaning assigned to it in Section 8.5(a)(ii). 1.151 “Trademarks” means trade names, brand names, trade dress, logos, slogans, trademarks and service marks and all other indicia of origin (whether registered or unregistered), and registrations, applications for registration, renewals and extensions thereof, together with all translations, adaptations, combinations and derivations thereof and all goodwill associated therewith. 18 1.152 “United Kingdom” means the United Kingdom of Great Britain and Northern Ireland. 1.153 “United States” or “U.S.” means the United States of America, including its territories and possessions. 1.154 “Valid Claim” means (a) a claim of an issued and unexpired Patent which has not been held unpatentable, invalid or unenforceable in a final decision of a court or other Governmental Authority of competent jurisdiction from which no appeal may be or has been taken, and which has not been admitted to be invalid or unenforceable through reissue, re- examination or disclaimer; or (b) a claim of a Patent Application, which claim has been pending less than [***] from the original priority date of such claim in a given jurisdiction, unless or until such claim thereafter issues as a claim of an issued Patent (from and after which time the same shall be deemed a Valid Claim subject to clause (a) above). 1.155 “VAT” has the meaning assigned to it in Section 10.9(b). 1.156 Construction. Except where expressly stated otherwise in this Agreement, the following rules of interpretation apply to this Agreement: (a) “include,” “includes” and “including” are not limiting and mean include, includes and including, without limitation; (b) definitions contained in this Agreement are applicable to the singular as well as the plural forms of such terms; (c) references to an agreement, statute or instrument mean such agreement, statute or instrument as from time to time amended, modified or supplemented; (d) references to a Person are also to its permitted successors and assigns; (e) references to a “Section,” or “Exhibit” refer to a Section of, or any Exhibit to, this Agreement unless otherwise indicated; (f) the word “will” shall be construed to have the same meaning and effect as the word “shall”; (g) the word “any” shall mean “any and all” unless otherwise indicated by context; (h) the headings in this Agreement are for convenience only and shall not affect its construction; (i) a reference to a particular law or regulation is a reference to it as amended, extended or re-enacted from time to time and includes any subordinate legislation made from time to time under that legislation or legislative provision; (j) except as otherwise required in accordance with Section 3.1, references to “writing” or “written” shall include emails; and (k) nothing in this Agreement shall in any way restrict or limit any obligation of either Party to mitigate any loss or damage they may suffer in consequence of any breach by the other Party of the terms of this Agreement, in consequence of any matter giving rise to a claim against the other Party or otherwise in connection with this agreement. SECTION 2. LICENSE 2.1 Licenses to Advanz. Applied hereby grants to Advanz, and Advanz hereby accepts: (a) an exclusive (including with respect to Applied and its Affiliates, except as set forth in Section 2.2), perpetual, irrevocable (except where Section 16.3(b) applies), sub-licensable (in accordance with Section 2.4), non-transferable (except as provided in Section 19.6), royalty- bearing license under the Applied Patent Rights and Applied Technology necessary or useful for, and for purposes of, the following with respect to the Product in the Field in the Territory: (i) Secondary Packaging and Release in accordance with Section 8; 18 (ii) Commercializing the Product; and (iii) the performance of Advanz’s obligations under Sections 5 and 6; (b) a sole (which for the purposes of this Section 2.2(b) shall be interpreted to include a right for Applied to sub-license its rights under this license to Applied’s subcontractors or providers for purposes of Manufacture or Development), perpetual, irrevocable (except where Section 16.3(b) applies), sub-licensable (in accordance with Section 2.4), non-transferable (except as provided in Section 19.6), royalty-bearing license under the Applied Patent Rights and Applied Technology necessary or useful for the performance of Advanz’s obligations under Sections 7.4(g) and 11 and undertaking any activities required during Step-In Rights to: (i) (ii) have Manufactured the Product for the Field in the Territory in accordance with Section 8.14; conduct Development of Section 4.3(c) or Section 8.14; and the Product to the extent permitted by (iii) undertake infringement proceedings as set out in Sections 7.4 and 11; and (c) a non-exclusive, perpetual, irrevocable (except where Section 16.3(b) applies), sub- licensable (in accordance with Section 2.4), non-transferable (except as provided in Section 19.6), royalty-bearing license under the Applied Patent Rights and Applied Technology necessary or useful for permitting Advanz to exercise any of its other rights and perform any other obligations set out in this Agreement. 2.2 Other License Provisions. (a) The license granted to Advanz pursuant to Section 2.1 shall be a sole license with respect to Applied to the extent it is necessary or useful for Applied to perform its obligations under this Agreement; for clarity, such sole license grant does not include the right for Applied or any of its Affiliates to Commercialize the Product in the Field in the Territory. (b) The Parties expressly acknowledge and agree that the license grants in favor of Advanz in Section 2.1 do not include and shall not be construed as limiting (i) Applied’s right to Develop or Manufacture the Product (or the Compound, whether or not for use in the Product), (ii) Applied’s right to Develop, Manufacture or Commercialize the Product for use outside of the Field or outside of the Territory, or (iii) any of Applied’s other rights in respect of the Product (including its rights under the Applied Patent Rights) outside of the Field or outside of the Territory. (c) In addition to the terms and conditions of this Agreement, Advanz accepts those terms and conditions of the Third Party Licenses set forth on Exhibit H as they relate to the Product and the rights sublicensed to Advanz under this Agreement. For purposes of clarity, Advanz acknowledges that in the event Applied does not have exclusive rights to Applied Patent Rights or Applied Technology licensed or obtained by Applied pursuant to a Third Party License, Advanz’s rights to such Applied Patent Rights or Applied Technology under the sublicenses granted under Section 2.1 will only be those rights granted by the Third Party to Applied. Applied shall comply 18 with its obligations under and enforce its rights under any Third Party License and shall ensure that any amendments are not detrimental to Advanz. If any Third Party License expires or terminates for any reason, Applied shall provide all reasonable assistance to enable Advanz to enter into a direct contract with the Third Party licensor. 2.3 Non-Assertion of Rights. (a) During the Term, Advanz shall not, and shall cause its Affiliates not to, assert any Patent Rights or Technology owned or Controlled by Advanz or its Affiliates against Applied, its Affiliates or permitted sublicensees, distributors or end users in (i) exercising Applied’s rights and performing its obligations pursuant to this Agreement or (ii) using or Commercializing the Compound or Product outside the Territory or outside of the Field. (b) The covenant not to sue in Section 2.3(a) shall bind any acquiror of Advanz and inure to the benefit of the respective successors and permitted assigns of Applied, its Affiliates and permitted sublicensees, distributors and end users. 2.4 (a) Sublicensing and Subcontracting. Advanz may grant Sublicenses to: (i) (ii) (iii) its contractors and other vendors for or in relation to Secondary Packaging and Release activities; its Affiliates, which Sublicense shall automatically terminate when such Affiliate ceases to be an Affiliate of Advanz; and reputable Third Parties, with respect to rights to Commercialize, conduct Regulatory Activities and Pricing and Market Access Activities in relation to the Product in the Territory; provided that Advanz must obtain the express written consent of Applied prior to entering into a Sublicense with a Third Party hereunder (excluding for the avoidance of doubt, any sublicenses granted pursuant the foregoing subsections (i) or (ii)), such consent not to be unreasonably withheld, conditioned or delayed and to be provided within ten (10) days of Advanz’s request. For clarity, the Parties acknowledge and agree that Advanz’s contractors and logistics providers are not Sublicensees for the purpose of this Agreement to the extent such contractors and logistics providers do not obtain a sublicense under any Third Party Licenses and Advanz shall be entitled to engage such Third Parties without Applied’s consent and the provisions of this Section 2.4 other than Section 2.4(e) shall not apply to such arrangements. to (b) Each Sublicense granted by Advanz pursuant to Section 2.4(a), other than Section 2.4(a)(i) shall be subject and subordinate to the terms and conditions of this Agreement shall contain the following provisions which, where the Sublicensee is an Affiliate of Advanz, may be in the form of a side letter: (i) a requirement that such Sublicensee submit applicable sales or other reports consistent with the requirements set forth in Section 10.1, (ii) a requirement to keep 18 books and records, and permit Advanz to audit (either directly or through an independent auditor) such books and records, which Advanz shall enforce if directed and reasonably required by Applied on Applied’s behalf, (iii) a requirement that such Sublicensee comply with the confidentiality and non-use provisions of Section 12 with respect to both Parties’ Confidential Information, (iv) a requirement to comply with all other applicable terms of this Agreement, (v) a provision prohibiting such Sublicensee from further sublicensing the rights granted to it under the Sublicense, (vi) with respect to any Sublicenses granting an Affiliate of Advanz set out in Exhibit J (together with any additional Affiliates notified to Applied by Advanz from time to time and for which Applied receives consent from [***], which, upon receipt of such consent, shall be deemed to be included in Exhibit J) a sublicense under the [***], (A) a provision naming [***] as a third party beneficiary to enable [***], to the extent permitted under Applicable Laws, solely to enforce the Applied Patent Rights and/or Applied Technology (in each case, which are owned by [***]) and (B) and a provision stating that [***] has no liability to any such Sublicensee, Advanz shall provide Applied with a copy of each such Sublicense (or any amendment to an existing agreement) within ten (10) days after the execution of the applicable agreement (or amendment); provided that Advanz may redact confidential information from such Sublicense that is not reasonably necessary to demonstrate Advanz’s compliance with the obligations set forth in this Agreement, including this Section 2.4. (c) Each Party may, subject to Section 12 and Sections 2.4(a) and (b), subcontract its obligations under this Agreement to an Affiliate or Third Party as it would in the normal course of its business without the prior written consent of the other Party. (d) Each Party shall ensure that each of its Affiliates, sublicensees and subcontractors that perform activities on behalf of such Party under this Agreement accepts and complies with all of the applicable terms and conditions of this Agreement as if such Affiliates or sublicensees or subcontractors were Parties to this Agreement. (e) Each Party shall remain fully responsible and fully liable for its Affiliates’ and sublicensees’ or subcontractors’ performance under this Agreement as if it were its own. (f) For clarity, the Parties acknowledge and agree that if this Agreement is terminated, all Sublicenses shall automatically terminate (other than those Sublicenses that are necessary to enable Advanz to exercise its Step-In Rights). 2.5 Right of First Offer for Additional Indications. Applied hereby grants to Advanz a right of first offer for the Commercialization in the Territory of any Additional Indication, upon the terms and subject to the conditions set forth in this Section 2.5. (a) Upon determining that it will seek to Commercialize an Additional Indication in any Country in the Territory (“ROFO Product”) through a license or collaboration with a Third Party, Applied shall notify Advanz in writing thereof (such notice, an “Additional Indication Notice”). (b) Advanz may, within [***] of its receipt of the Additional Indication Notice (the “ROFO Response Period”), make a written proposal of key terms to Applied for the exclusive Commercialization of the ROFO Product for use in such Additional Indication and in which 18 Country in the Territory (a “Proposal”). Applied and Advanz shall then negotiate exclusively in good faith for a period not to exceed [***] from the date Applied received the Proposal, in an effort to reach a definitive agreement for the exclusive Commercialization of the ROFO Product for use in such Additional Indication and in which Country in the Territory (the “ROFO Negotiation Period”). (c) In the event that (i) Advanz fails to, or notifies Applied in writing that it will not, submit a Proposal to Applied prior to the expiration of the ROFO Response Period, (ii) Advanz and Applied agree to discontinue negotiations during the ROFO Negotiation Period, or (iii) Advanz and Applied fail to enter into such a definitive agreement within the ROFO Negotiation Period, Applied shall be free to proceed with the Commercialization of the ROFO Product for use in such Additional Indication in the Countries of the Territory set out in the Proposal (including by entering into an agreement with one or more Third Parties therefor) subject to Sections 2.5(d) and 2.5(e). (d) Applied hereby grants Advanz “most favored nation status” such that it agrees it will not (i) offer nor accept terms which are more favorable to any Third Party than the terms which are contained in the Proposal or which have been negotiated with Advanz during the ROFO Negotiation Period, nor (ii) enter into an agreement with a Third Party in respect of an Additional Indication, in each case ((i) and (ii)) before the end of the ROFO Negotiation Period. (e) If Applied does offer or agree terms which are more favorable to any Third Party than the terms which are contained in the Proposal or which have been negotiated with Advanz during the ROFO Negotiation Period or during the [***] period immediately following the expiry of the ROFO Negotiation Period, it shall promptly provide notice thereof to Advanz. Advanz shall have thirty (30) days after receipt of such notice to reach agreement with Applied in respect of such terms or such terms as may be agreed between the Parties and, if the Parties are unable to reach agreement during such period, Applied shall be free to enter an arrangement for the exclusive Commercialization of the ROFO Product for use in such Additional Indication with a Third Party. (f) If Applied Develops the ROFO Product for use in an Additional Indication, and Advanz does not secure the rights to Commercialize the ROFO Product in the Territory for use in such Additional Indication, then: (i) (ii) (iii) such Additional Indication shall not be included in the ROFO Product’s then-existing Marketing Authorizations in the Territory; the Licensed Trademarks shall not be applied to the Additional Indication; and within [***] after the end of the ROFO Negotiation Period or at such other time as the Parties mutually agree in writing, the Parties shall discuss the potential adverse impact that the Commercialization of the ROFO Product in the Territory for use in any such Additional Indication by a Third Party may have on the Commercialization of the ROFO Product by Advanz for use in the Field in the Territory provided that such discussions do not (A) involve the sharing of commercially sensitive information about the 18 distribution strategy of Third Parties; nor (B) otherwise aim at coordinating the distribution strategy of Advanz and/or any Third Parties. Each Party agrees that Advanz’s commercial obligations under this Agreement will be adjusted if Advanz can reasonably demonstrate that the Commercialization of the ROFO Product in the Territory for use in any such Additional Indication by a Third Party will compromise the potential for Advanz’s sale of the Product. 2.6 Patent Challenges. (a) During the Term of this Agreement, Advanz hereby covenants and agrees not to, and shall ensure that its Affiliates or Sublicensees do not, directly or indirectly, commence any legal proceeding, or, directly or indirectly, provide support or assistance in respect of any legal proceeding commenced by a Third Party, that challenges the validity, enforceability or ownership of any Applied Patent Right to the extent such Applied Patent Right relates to the Compound or Product or the Development, Manufacture, Commercialization or other Exploitation of the Compound or Product (a “Patent Challenge”). Without limiting the generality of the foregoing, Advanz specifically agrees that filing a request for re-examination, knowingly copying patent claims so as to institute an interference, or filing an opposition with respect to any of the Applied Patent Rights shall be deemed a Patent Challenge hereunder. (b) If Advanz or any of its Affiliates or Sublicensees directly or indirectly commences (or provides any support or assistance in respect of) any Patent Challenge, Applied shall have the right to immediately terminate this Agreement by written notice effective upon receipt by Advanz. The foregoing right of Applied to terminate this Agreement shall not apply to any such challenge that arises out of or is in connection with any legal action commenced by Applied against Advanz, in which Applied asserts any Applied Patent Rights or other Patent Rights against Advanz, whether arising out of or in connection with this Agreement or otherwise. 2.7 No Implied License; Negative Covenant. Except for the licenses and other rights expressly granted to Advanz herein, all right, title and interest in and to the Applied Patent Rights, Applied Technology, and Applied Confidential Information (and all modifications, derivatives and improvements thereof), and any and all Intellectual Property and other rights of Applied or its Affiliates not expressly granted to Advanz hereunder (including, for clarity, all of the foregoing with respect to any Out-of-Scope Products), shall remain solely with Applied, its Affiliate or its Third Party licensors, as applicable, and Advanz hereby covenants not to practice any such Intellectual Property outside the scope of the licenses granted hereunder. Except as expressly provided in this Agreement, neither Party will be deemed by this Agreement to have been granted any license or other rights to the other Party’s Intellectual Property, either expressly or by implication, estoppel or otherwise. Notwithstanding anything to the contrary in this Agreement, the Parties acknowledge and agree that the Development and Commercialization of any Out-of- Scope Products (including any Additional Indications) shall not be within the scope of the licenses granted to Advanz pursuant to Section 2 hereunder (except as expressly provided in Section 2.5). 18 SECTION 3. ALLIANCE MANAGERS to 3.1 the facilitate In order Alliance Managers. information-sharing and communication provided for in this Agreement, upon or promptly following the execution of this Agreement, the Parties shall each designate an employee of appropriate experience and authority (an “Alliance Manager”) to act as the first and primary point-of-contact for ordinary course communications regarding the matters contemplated by this Agreement. Except with respect to Disputes, termination or assignment notices, consents or other matters of legal import (in which cases formal notice shall be delivered in accordance with Section 19.8), or with respect to Pricing and Market Access Activities (in which case notice shall be delivered to the Pricing and Market Access Committee), where this Agreement provides for notice or other written communication to a Party, such notice or information shall be provided to the applicable Alliance Manager or its designee and may be provided by email. A Party may change its Alliance Manager at any time upon reasonable prior notice in writing to the other Party. SECTION 4. DEVELOPMENT 4.1 Development Responsibilities. Subject to this Section 4, as between the Parties, Applied shall have sole authority for, and be solely responsible for, the Development of the Product in the Field including any and all clinical studies with respect to the Product, except as otherwise expressly provided in this Section 4. Applied shall use best endeavors to conduct the Development necessary to obtain Marketing Authorization approval for the Product in the Field in the Territory and shall use Commercially Reasonable Efforts to comply with any timeframe or other requirements therefor specified by the Regulatory Authorities and shall provide Advanz with regular updates on any pre-clinical studies or clinical trials conducted as part of the Development of the Product in the Field in the Territory, whether before or after grant of any Marketing Authorization. Applied shall use Commercially Reasonable Efforts to assist Advanz in filing and obtaining Marketing Authorizations for the Product for use in the Field in all Countries in the Territory in accordance with Section 5; provided that, Advanz acknowledges and agrees that, notwithstanding anything in this Agreement to the contrary, Applied makes no guarantees or assurances regarding any such Marketing Authorization or the Commercialization of the Product. 4.2 Changes to Specifications and Other Modifications to the Product. In the event of any changes required by Applicable Laws, the Parties shall use Commercially Reasonable Efforts to comply with such changes (for clarity, without limitation to Section 8.8 hereof). In the event of other changes or proposed improvements regarding the Product relating to the Field in the Territory, the Parties shall discuss in good faith any such changes and improvements and the allocation of requirements and responsibilities on each Party with respect thereto. Required Post- MA Studies or Other Post-Approval Studies in connection with any such changes and improvements shall be subject to Section 4.3 hereof. 4.3 (a) Development Costs. Required Existing Studies. Applied shall be responsible for [***] of all Costs and Expenses incurred in conducting the Required Existing Studies. 18 (b) Required Post-MA Studies. The Parties will share the amount of Costs and Expenses incurred in conducting the Required Post-MA Studies as follows: (i) (ii) If data from the Required Post-MA Study (A) is to be used or referred to as part of any regulatory or market access requirement or commitment outside the Territory as well as within the Territory, or (B) would benefit Commercialization of the Product outside the Territory as well within the Territory, then Applied shall bear [***] of the Costs and Expenses, and Advanz shall bear [***] of the Costs and Expenses; and If data from the Required Post-MA Study is to be used or referred to as part of any regulatory or market access requirement or commitment only within the Territory, Applied shall bear [***] of the Costs and Expenses, and Advanz shall bear [***] of the Costs and Expenses except that [***] the Costs and Expenses relating to any Required Post-MA Study set out in limb (C) of the Required Post-MA Study definition. (c) Advanz Development. For clarity, except where Advanz exercises its Step-In Rights under Sections 8.14 or 16.3(a) as applicable and with reference to Section 18.2, Advanz shall not have any rights to Develop the Product; provided that, solely if Applied provides its express written consent (not to be unreasonably withheld), Advanz will have the right to conduct Other Post-Approval Studies for use in the Field in the Territory. In the event that Applied consents to any such Other Post-Approval Study, (i) [***], and (ii) Advanz will grant to Applied a perpetual, irrevocable (except where Section 16.3(b) applies) license to Exploit any data or other Intellectual Property developed in the conduct thereof, to the extent related to the Product, for use inside and outside the Field in Applied’s business, on commercially reasonable terms. (d) Other Post-Approval Studies outside the Territory. Notwithstanding anything to the contrary, nothing herein shall prevent Applied from conducting, at its sole discretion, any Development with respect to the Product, whether for use inside or outside the Field, including any Other Post-Approval Studies. In the event that Applied conducts any such studies related to the Product in the Field that include the Territory, Applied shall: (i) notify Advanz in advance thereof and reasonably consult with Advanz in connection therewith; (ii) [***]; and (iii) grant to Advanz a perpetual, irrevocable license (except where Section 16.3(b) applies) to Exploit any data or other Intellectual Property developed in the conduct thereof, to the extent related to the Product, for use in Advanz’s business relating to the Product in the Territory and in the Field on commercially reasonable terms. SECTION 5. REGULATORY AFFAIRS 5.1 (a) Responsibility. Advanz shall be responsible for conducting and shall conduct the Advanz Regulatory Activities, in accordance with Applicable Laws and the terms and conditions hereof. (b) Regardless of which Parties’ Regulatory Activities are involved, all Regulatory Filings with Regulatory Authorities in the Territory pertaining to the Product within the Field, including any Marketing Authorization Applications and any resulting Marketing Authorizations, 18 shall be submitted by, made and held in the name of Advanz, an Advanz-specified Affiliate or designee company. Applied shall prepare the Marketing Authorization Applications for the Product in the Field in the Territory, including completing any forms and compiling the Dossier and other information required to submit any such Marketing Authorization Application and Advanz shall submit such Marketing Authorization Application. Applied shall provide a copy of the Dossier to Advanz as soon as possible and no later than [***] before the planned submission date to the applicable Regulatory Authority to enable Advanz to provide comments and the Parties to reach an agreement on the content of the Dossier. Obtaining and maintaining such Marketing Authorizations shall be a collaborative effort between the Parties. For the avoidance of doubt, Applied shall be responsible for [***] the preparation and provision of all data and information which is required to be included in or with the Dossier to obtain the applicable Marketing Authorization (whether conditional or otherwise) for the Product in the Field in the Territory (including a full environmental risk assessment report, GCP inspections, ERA, GLP statements, any phase 3 studies for pediatric Galactosemia (excluding, for clarity, any PIP) or in general in respect of SORD and other non-clinical studies) [***]. Prior to submission of any Marketing Authorization Application or amendment thereto by Advanz, the Parties will collaborate to ensure mutual agreement on the final Marketing Authorization Application (or any amendment thereto) to be submitted; provided that Advanz may not finally submit the same without Applied’s prior written consent (not to be unreasonably withheld, conditioned or delayed). With respect to any other Regulatory Filings for the Product in the Field in the Territory, Advanz shall prepare and submit such Regulatory Filings at its cost and expense (subject to Section 5.2(b)); provided that Applied shall reasonably cooperate with respect thereto and shall provide necessary data and information in its possession at its cost and expense. (c) No later than [***] before the planned submission date of the first Marketing Authorization Application, the Parties shall enter into a Quality Agreement including Applied’s obligations to carry out ongoing stability studies and annual quality review (PQR) in relation to the Product at its cost and expense. 5.2 Communications with Regulatory Authorities. (a) Advanz shall provide Applied with notice of all meetings and discussions (including advisory committee meetings or any other meeting of experts convened by a Regulatory Authority) scheduled with a Regulatory Authority concerning any Advanz Regulatory Activities promptly after the scheduling of such meeting, conference, or discussion (and in any event, within [***] or such shorter time as reasonably necessary to enable Applied’s participation in accordance with this Section 5.2(a)). Applied shall be entitled to have one or more representatives present at all such meetings to the extent permissible under Applicable Laws and reasonably practicable under the circumstances. The Parties shall use all reasonable efforts to agree in advance on the scheduling of such meetings, conferences and discussions and shall discuss in good faith the objectives to be accomplished at such meetings, conferences and discussions and the agenda therefor, if any. (b) Advanz shall provide Applied with copies of all material submissions to any Regulatory Authority relating to the Advanz Regulatory Activities. Such copies shall be provided sufficiently in advance of such planned submission to the applicable Regulatory Authority in order to allow Applied to provide comments regarding such submission. Advanz shall consider and 18 reflect Applied’s comments in good faith with respect to such submission, and, to the extent such submission constitutes a Regulatory Filing hereunder, may not finally submit the same without Applied’s prior written consent not to be unreasonably delayed, withheld or conditioned, such consent to be provided or rejected within [***] of Advanz’s request. If Applied does not respond within [***], it shall be deemed to have given its consent. (c) Without limitation to the Parties’ cooperation under Sections 5.3 and 5.4, each Party shall provide to the other Party, as soon as reasonably practicable but in no event more than three (3) Business Days (or twenty-four (24) hours, to the extent the same concerns any safety issue) after its receipt, copies of any material documents or other material correspondence received from a Regulatory Authority pertaining to the Compound or the Product. 5.3 Cooperation; Regulatory Information. Subject to the remainder of this Section 5, the Quality Agreement and the Pharmacovigilance Agreement, each Party agrees to provide the other with all reasonable information and assistance and take actions reasonably requested by the other Party to undertake its respective Regulatory Activities or that are necessary or desirable to enable the other Party to comply with Applicable Laws with respect to the Product (including, for clarity, to enable Advanz to apply for, update or maintain the Marketing Authorization in the Territory or comply with regulatory requirements with respect to the Product outside the Territory). For the avoidance of doubt, with the exception of clinical studies (which are excluded from this Section 5.3 but with respect to which certain data may be provided pursuant to Section 4.3 or Section 5.1), the foregoing shall include any and all such data and other information generated by each Party in the course of its performance under this Agreement, the Quality Agreement, or the Pharmacovigilance Agreement, which information: (a) Applied shall have the rights to use in respect of its business regarding the Product generally (whether inside or outside the Field or Territory); and (b) Advanz shall have the rights to use in respect of its business regarding the Product in the Field in the Territory. For clarity and subject to the other terms of the Agreement including Section 4.3(b), to the extent that either Party provides reasonably requested assistance to the other Party in compliance with this Section 5.3, the requesting Party shall promptly reimburse such Party for any reasonable Costs and Expenses incurred in respect thereof. 5.4 Pharmacovigilance. Subject to the remainder of this Section 5.4, Advanz shall have the primary responsibility for conducting all pharmacovigilance activities with respect to the Product in the Field in the Territory, including conducting PV and Risk Management Studies, post- marketing surveillance, addressing product complaints, and investigating and reporting safety data and adverse events, as required under Applicable Laws, at its cost and expense, unless otherwise agreed in the written pharmacovigilance agreement to be entered into between the Parties (the “Pharmacovigilance Agreement”). Advanz shall keep Applied duly informed of any matters which Advanz reasonably believes may present a material risk to the Product (including outside the Field or the Territory) or should otherwise be recorded by Applied on the global safety database for the Product held by Applied. After the Effective Date, and in no case later than Advanz obtaining Marketing Authorization for the Product in the Field in the Territory, the safety units of each of the Parties shall meet and agree upon a Pharmacovigilance Agreement that shall set forth in greater detail such pharmacovigilance the Pharmacovigilance Agreement shall also set forth a process for exchanging all relevant information and data, including adverse event reports and other safety information relating to the Product as reasonably necessary to enable each Party (and, in the case of Applied, its licensees in responsibilities. Without foregoing, limiting the 18 any Country outside the Territory) to comply with Applicable Laws and requirements of Regulatory Authorities in relation to the Product. Notwithstanding anything to the contrary herein, the Pharmacovigilance Agreement shall provide that Applied shall own and maintain the global safety database for the Product. Except as may be otherwise mutually agreed in the Pharmacovigilance Agreement, each Party will bear its own Costs and Expenses in connection with its activities thereunder. 5.5 Recalls or Other Corrective Action. (a) Advanz shall promptly notify Applied and provide all reasonably pertinent information regarding any potential recall or market withdrawal or other material corrective action related to the Product in the Field in the Territory proposed to be undertaken by Advanz (an “Advanz Recall”). Applied shall promptly notify Advanz and provide all reasonably pertinent information regarding any potential recall or market withdrawal or other material corrective action related to the Product or Compound proposed to be undertaken by Applied or its Sublicensees outside of the Territory or the Field (an “Applied Recall”). (b) To the extent reasonably practicable, the Parties shall consult regarding the diagnosis and assessment of the circumstances leading to any Product Recall relating to Manufacturing, and each Party shall consider in good faith all information and considerations presented by the other Party The Parties recognize that in the case of an urgent safety issue, such advance consultation may not be possible. Nevertheless, each Party shall reasonably cooperate with the other Party to manage any messaging or communication with Regulatory Authorities in connection with any Product Recall (whether before or after such Product Recall). (c) The final decision to initiate any Advanz Recall shall be made by Advanz, at its sole discretion, and the final decision to initiate any Applied Recall shall be made by Applied, at its sole discretion. (d) Advanz shall be responsible for executing any Advanz Recall at its cost and expense, save that to the extent that any Advanz Recall is due to the breach of this Agreement, gross negligence, or willful acts or omissions of Applied, Applied shall, at its own cost, be responsible for supplying replacement Bulk Product and shall promptly reimburse Advanz for all fines or penalties and all reasonable Costs and Expenses incurred by Advanz in connection with the Advanz Recall. 5.6 Early Access Programs. Advanz shall have the right to decide whether to participate in any Early Access Programs applicable to the Product in the Field in the Territory [***]. 5.7 Safety and Regulatory Inspections. Advanz and Applied shall promptly (but in any event no later than five (5) Business Days after receiving the applicable notice) notify each other of any audit or inspection of Advanz or Applied or their Affiliates, Sublicensees or subcontractors by any Regulatory Authority relating specifically to the Product and shall share with each other all relevant information in their control, to the extent this relates to the Product. Subject to any required approvals of the Regulatory Authority and of any relevant Third Party, Applied shall have 18 the right, but not the obligation, to be present at and participate in any such audit or inspection relating specifically to the Product, at its sole cost and expense. SECTION 6. PRICING AND MARKET ACCESS 6.1 Pricing and Market Access Committee. (a) As soon as reasonably practicable following the Effective Date (and, in any case within forty-five (45) days thereof), the Parties shall form a committee (the “Pricing and Market Access Committee” or the “PMAC”) to exchange information and facilitate communication and oversight with respect to Pricing and Market Access Activities in the Field in the Territory hereunder. (b) The PMAC shall be composed of [***] members (the “PMAC Members”). Each Party shall have the right to appoint [***] of its employees to serve as PMAC Members, each of whom shall have appropriate knowledge with respect to pricing, reimbursement, and other market access affairs in the Territory. Upon written notice to the other Party, each Party shall be entitled to appoint an appropriately qualified substitute PMAC Member. The PMAC shall meet (either in person or via telephone or video conference) at mutually agreeable dates; provided that the PMAC Members shall meet as frequently as reasonably necessary to achieve the goals set forth in this Section 6. Upon invitation of either Party, other representatives of the Parties shall be allowed to attend such meetings (provided such representatives are subject to reasonable confidentiality restrictions). Each Party shall bear all expenses of its respective PMAC Members and representatives with respect to their participation in the PMAC. 6.2 Market Access Activities. (a) Advanz shall have the sole responsibility for undertaking all Pricing and Market Access Activities in Advanz’s name in the Territory including obtaining and maintaining any and all applicable Price Approvals, with respect to the Product in the Field in the Territory, subject to this Section 6. Advanz shall reasonably consult and cooperate with Applied through the PMAC in undertaking all such activities. Without limiting the foregoing, Advanz shall use Commercially Reasonable Efforts to obtain the best possible reimbursement price for the Product in the Field in each Country in the Territory in which such pricing and reimbursement is applicable. (b) Advanz will keep Applied reasonably informed through the PMAC (and at any time upon Applied’s request) regarding the status and details of Pricing and Market Access Activities in each applicable Country in the Territory. In the event that Advanz reasonably requests any data or information from Applied that is reasonably necessary or useful to conduct any Pricing and Market Access Activities, Applied shall provide such data or information to Advanz in a prompt manner in respect of the nature and complexity of such request. Advanz may provide any such data or information directly to a Regulatory Authority or applicable Third Party at its sole discretion. (c) Advanz shall consider in good faith all input provided by Applied in the PMAC or otherwise from time to time with respect to such Pricing and Market Access Activities (including strategy and approach). For the avoidance of doubt, Advanz will be free to determine the resale price of the Product in the Territory. 18 SECTION 7. COMMERCIALIZATION 7.1 Diligence. Advanz shall have the exclusive right to Commercialize, and shall be responsible for paying all Costs and Expenses associated with the Commercialization of, the Product in the Field in the Territory. Without limiting the foregoing, during the Initial Royalty Term, Advanz shall use Commercially Reasonable Efforts to Launch and Commercialize the Product in all of the Major Markets for which Marketing Authorization for a Licensed Indication is obtained (which in Germany shall be within [***] after the grant of any Marketing Authorization for the Product for such Licensed Indication by EMA and in France shall be within [***] from securing Price Approval and/or Third Party reimbursement approval where applicable); provided that: (a) Applied has delivered Product in accordance with the quantities and delivery date set out in the Purchase Order in compliance with cGMP, the specifications, the applicable Marketing Authorization, Applicable Laws and the Quality Agreement, and (b) the Launch in the applicable Country will not reasonably result in the infringement of Intellectual Property owned by a Third Party. 7.2 Commercialization Plan. Within [***] after the Effective Date, Advanz shall prepare and provide to Applied a Commercialization plan for the Product in the Field in the Territory (the “Initial Commercialization Plan”). Advanz shall update such plan (any such updated plan, the “Commercialization Plan”) at least once per Calendar Year. Each such subsequent Commercialization Plan shall be submitted to Applied for review and discussion no later than [***] prior to the beginning of the immediately succeeding Calendar Year. Applied may propose to Advanz revisions to any such subsequent Commercialization Plan, and any proposed material updates or amendments Initial Commercialization Plan and any subsequent Commercialization Plan, that Applied reasonably believes are appropriate, and Advanz shall consider any such proposed revisions in good faith. the to 7.3 Product Diversion. (a) Advanz hereby agrees to refrain from selling the Product to any Person if Advanz has knowledge or reason to believe that such Product is intended for transshipment or delivery by such Person outside the Territory or for use outside of the Field (whether within or outside the Territory). If Advanz determines that any such diversion is occurring, then Advanz will use Commercially Reasonable Efforts to promptly cease delivery of the Product to the applicable Third Parties and revenue generated from such sales, will be paid by Advanz to Applied. (b) Applied hereby agrees to refrain from selling the Product to any Person if Applied has knowledge or reason to believe that such Product is intended for transshipment or delivery by such Person to the Territory for use in the Field. If Applied determines that any such diversion is occurring, then Applied will use Commercially Reasonable Efforts to promptly cease delivery of the Product to the applicable Third Parties and revenue generated from such sales, will be paid by Applied to Advanz. 7.4 Trademarks. 18 (a) License to Advanz. Applied hereby grants to Advanz a, perpetual, irrevocable (except where Section 16.3(b) applies), sub-licensable (in accordance with Section 2.4), non- transferable (except as provided in Section 19.6), royalty-bearing license to use the Licensed Trademarks in the Territory: (i) (ii) on an exclusive basis with respect to Secondary Packaging and Release in accordance with Section 8, Commercialization of the Product for use in the Field in the Territory and the performance of Advanz’s obligations under Sections 5 and 6 for purposes of performing such obligations; on a sole basis (which for the purposes of this Section 7.4(a)(ii) shall be interpreted to include a right for Applied to sub-license its rights under this license to Applied’s Bulk Product contract manufacturer) with respect to the performance of Advanz’s obligations under Sections 7.4(g) and 11 and undertaking any activities required during Step-In to have Manufactured the Product for the Field in the Territory in accordance with Section 8.14, to conduct Development of the extent permitted by Section 4.3(c) and to undertake infringement proceedings in accordance with Section 7.4 or 11; and the Product to (iii) on a non-exclusive basis with respect to permitting Advanz to exercise any of its other rights and perform any other obligations set out in this Agreement, each in accordance with this Agreement. Advanz shall cooperate with Applied in respect of recording (and take any actions reasonably requested by Applied to record) this trademark license (including, as may be appropriate, executing a short form thereof for purposes of recordation) with the appropriate Governmental Authorities throughout the Territory to the extent reasonably required or requested by Applied (and Applied shall be responsible for paying all Costs and Expenses associated with such recordation). Where applicable under Section 16.3, Advanz shall cooperate with Applied to effect a cancellation or termination of any such recordation with the appropriate Governmental Authorities in the Territory, and, if requested by Applied, Advanz agrees to grant to Applied an irrevocable power of attorney coupled with an interest to effect such cancellation within twenty (20) days after the termination of this Agreement. (b) Product Trademarks. Advanz may choose to use the Licensed Trademarks or any other product Trademarks to Commercialize the Product in the Field in the Territory; provided that (i) use of such other product Trademarks shall be subject to Applied’s approval in advance in writing, which approval shall not be unreasonably withheld, conditioned or delayed, and (ii) Applied shall own all such other product Trademarks, which shall be deemed Licensed Trademarks hereunder. For the avoidance of doubt, Applied shall have no right, title or interest in any Trademark using or incorporating Advanz’s corporate name. Advanz shall use the Licensed Trademarks (including such other product Trademarks referred to in the foregoing sentence) and no other product Trademarks to Commercialize the Product in the Field in the Territory. For clarity, nothing in this Section 7.4(b) shall restrict Advanz from using the Advanz corporate name 18 on package inserts, packaging or trade packaging associated with the Product in the Territory in accordance with Applicable Laws. (c) Ownership of Licensed Trademarks. Advanz acknowledges the exclusive ownership by Applied of the Licensed Trademarks (and any Trademark containing, comprising, derivative of or confusingly similar to the Licensed Trademarks) including any product Trademarks selected by Advanz pursuant to Section 7.4(b). Advanz shall not (and shall ensure that its Affiliates do not), directly or indirectly, during the Term of thereafter, register or attempt to register (or obtain any other ownership right in) any such Trademarks in its own name or challenge or assist others to challenge any such Trademarks (or the validity or enforceability of, or Applied’s rights in, the same). This Agreement does not confer on Advanz any goodwill associated with the Licensed Trademarks or generated from the use thereof (all of which shall inure to Applied). (d) Use of Licensed Trademarks. Advanz shall comply with any applicable branding guidelines applicable across its organization in respect of the Licensed Trademarks that are provided to Advanz by Applied from time to time. Advanz shall submit to Applied samples of all the uses of the Licensed Trademarks (including on any packaging or labeling of Products bearing the Licensed Trademarks), for Applied’s approval prior to the first use thereof. Applied will have the right to inspect, upon reasonable notice and during normal business hours, Advanz’s and its Affiliates’ and Sublicensees’ premises, records, operations, materials and samples in connection with the use of the Licensed Trademarks to ensure compliance with this Agreement. (e) Quality Control. (i) (ii) The quality of the Product (including all associated packaging and labeling bearing the Licensed Trademarks) sold or distributed by Advanz in the Territory under or in connection with the Licensed Trademarks and the use by Advanz of the Licensed Trademarks (including in marketing, advertising and promotional materials) shall, subject to Applied’s compliance with Section 8.2, comply with cGMP and cGDP. Advanz shall (A) comply with all Applicable Laws pertaining to the proper use and designation of the Licensed Trademarks, (B) use the Licensed Trademarks only in the form and manner and with appropriate legends as prescribed or otherwise approved from time to time during the Term by Applied, (C) display the proper form of trademark notice associated with the Licensed Trademarks, (D) not use any Licensed Trademark as a corporate name, business name, or trade name, (E) not use any Licensed Trademark in a manner that would reasonably be expected to materially impair the validity, reputation, or distinctiveness of any Licensed Trademark or create a combination mark with any other Trademarks, (F) use any Licensed Trademark at a level of quality set out in Section 7.4(e)(i), and (G) not use any Licensed Trademark in a manner that would reasonably be expected to materially tarnish, impair or otherwise adversely affect the reputation of Advanz, Applied or any of their respective Affiliates. 18 (f) Prosecution and Maintenance of Trademarks. Applied shall prosecute and maintain (and defend against oppositions and challenges to) the Licensed Trademarks in the Territory in the name of Applied, at its sole cost and expense. Applied shall keep Advanz reasonably informed of any actions taken in respect of the prosecution and maintenance of (and defense against oppositions and challenges to) Licensed Trademarks in the Territory (and shall provide Advanz with updates regarding the status of any Licensed Trademarks in the Territory upon Advanz’s request). (g) Enforcement of Trademarks. Each Party will promptly notify the other in the event of any actual, potential or suspected infringement of any Licensed Trademark by any Third Party in the Territory. (i) Applied shall at its cost: (A) (B) institute litigation or take other remedial measures in connection with Third Party infringement or other violation of Licensed Trademarks in the Major Markets; and use Commercially Reasonable Efforts to institute litigation or take other remedial measures in connection with Third Party infringement or other violation of Licensed Trademarks in all other Countries in the Territory. If Applied elects not to initiate litigation or take other remedial measures against a Third Party who is alleged to be infringing or otherwise violating a Licensed Trademark in a Country other than a Major Market in the Territory in the Field within [***] of Advanz’s request that Applied do the same (provided that, if Applied intends to undertake such defense, Applied shall notify Advanz that it intends to do so with [***] of Advanz’s request), then it shall consult with Advanz to discuss the repercussions of such a decision on Advanz’s other markets in the Territory. If Advanz, at its sole but reasonable discretion, considers that a failure to institute litigation or take other remedial measures will have an adverse impact on Advanz’s business relating to the Products, then Advanz shall have the right to initiate litigation or take other remedial measures at its own cost. Applied shall provide to Advanz all reasonable assistance in connection with such litigation or other remedial measures. Advanz shall be entitled to retain any recoveries obtained resulting from any such litigation or other measures. Applied shall have the sole right, but not the obligation, to institute litigation or take other remedial measures in connection with Third Party infringement or other violation of Licensed Trademarks outside the Territory or outside of the Field. Any Costs and Expenses incurred by Applied instituting litigation or taking other remedial measures under Section 7.4(g)(i), (ii) or (iii) shall be the responsibility of Applied. All recoveries obtained by Applied resulting (ii) (iii) (iv) 18 from such litigation or other appropriate action under Section 7.4(g)(i), (ii) or (iii) shall be retained by Applied. (h) Use of Names. Subject to Section 12.6, no right, expressed or implied, is granted by this Agreement to a Party to use in any manner the name or any other trade name of the other Party or its Affiliates in connection with this Agreement. (i) Advanz Product Promotional Materials. Upon Applied’s request, Advanz will provide to Applied samples of relevant marketing, advertising, promotional, training and educational materials solely for the Product that are developed by or on behalf of Advanz or its Affiliates or Sublicensees in the Territory. Applied may adapt such materials for use outside of the Field or Territory to the extent that such materials are in Applied’s control. In the event that Applied intends to use such materials (or adaptation thereof) outside of the Field of Territory, the Parties will negotiate in good faith a sublicensable license to such materials on commercially reasonable terms. (j) Applied Product Promotional Materials. Upon Advanz’s request, Applied will provide to Advanz samples of relevant marketing, advertising, promotional, training and educational materials solely for the Product that are developed by or on behalf of Applied or its Affiliates or Sublicensees outside the Territory. Advanz may adapt such materials for use in the Field in the Territory to the extent that such materials are in Advanz’s control. In the event that Advanz intends to use such materials (or adaptation thereof) in the Field in the Territory, the Parties will negotiate in good faith a sublicensable license to such materials on commercially reasonable terms. SECTION 8. MANUFACTURE AND SUPPLY. 8.1 Commercial Supply of Product. Applied shall Manufacture, or shall have Manufactured, and supply, and, subject to Sections 8.12 to 8.14, Advanz shall purchase solely from Applied, Advanz’s and its Affiliates’ and Sublicensees’ requirements of: (a) (b) Bulk Product; and [***] flavoring packaged separately (i.e., unmixed). In each case, for patient end use in the Field in the Territory pursuant to and in accordance with this Agreement and the Quality Agreement. Subject to Section 8.6(d), Advanz shall be responsible for Secondary Packaging and Release for the Product for use in the Field in the Territory, including all specialty pharmaceutical services, logistics and distribution. If Advanz’s Step-In Rights are exercised in accordance with Section 8.14, Applied shall reasonably assist Advanz in procuring that Applied’s Bulk Product’s contract manufacturer enters into a quality agreement with Advanz with respect to such supply arrangements. 8.2 Applied Manufacturing Activities. Except as otherwise expressly set forth herein, as between the Parties, Applied shall have the sole authority and exclusive right to Manufacture the Compound and Bulk Product. Subject to Section 8.9, Applied shall ensure that the Bulk Product hereunder for supply to Advanz complies with Applicable Laws, cGMP and the Regulatory Approvals for the Bulk Product for use in the Field in the Territory, including the 18 Product Specifications; provided that Advanz shall comply with all handling, storage and other requirements under Applicable Laws and the Regulatory Approvals from and delivery to Advanz of Bulk Product by Applied. Applied shall have no responsibility or liability to Advanz hereunder for any non-compliance arising from the acts or omissions of Advanz, its Affiliates or sublicensees from the point of delivery to Advanz. 8.3 Inspections and Audits. Upon reasonable notice and during regular business hours, Advanz or its designee and/or any Regulatory Authority or its designee may inspect Applied’s Facilities and audit Applied’s records, to confirm Applied’s compliance with this Agreement (including Applied’s allocation of stock of Bulk Product under Section 8.10) and to ensure compliance with cGMP and Applicable Laws to the extent they relate to the Product for use in the Field in the Territory. Applied shall also grant Advanz and its designees and/or any Regulatory Authority or its designees reasonable access to Applied’s business and operations personnel involved in the performance of this Agreement during normal business hours for such foregoing purposes. Except where any audit is required by a Regulatory Authority or is an audit initiated by Advanz on account of Applied’s actual or alleged material breach of this Agreement, such audits may be conducted by Advanz no more than once annually, unless any such audit reveals a material noncompliance with cGMP or Applicable Laws, in which case a follow-up audit may be conducted to ensure that such noncompliance has been satisfactorily remedied. Advanz’s and any Regulatory Authority’s rights of audit and inspection in this Section 8.3 shall also apply in respect to Applied’s Bulk Product contract manufacturer and Applied shall ensure that terms substantially similar to those set out in this Section 8.3 are contained in its agreement with its Bulk Product contract manufacturer. Audits initiated by Advanz under this Section 8.3 or requested by a Regulatory Authority shall be at Advanz’s sole expense. If Applied ceases to be a publicly listed company, Advanz reserves the right to require additional financial audit rights are added to this Section 8.3. 8.4 Forecasting and Ordering. (a) Forecasts; Purchase Orders. At least [***] prior to the first requested delivery date for Bulk Product, Advanz shall deliver to Applied Advanz’s [***] projection of the quantities of Bulk Product that Advanz anticipates ordering from Applied pursuant to this Agreement for the [***] commencing with the first Calendar Quarter that includes the first requested delivery date (the “Initial Forecast”), together with a firm purchase order (a “Purchase Order”) for Bulk Product for the first [***] covered by such Initial Forecast. The quantities of Bulk Product specified for the following [***] of such Initial Forecast shall be non-binding. Thereafter, [***] prior to the first Business Day of each subsequent Calendar Quarter during the Term, Advanz shall deliver to Applied a rolling [***] forecast updating the prior forecast (together with the Initial Forecast, each a “Forecast”), together with a Purchase Order for the first [***] of such Forecast. The quantities of Bulk Product specified for the following [***] of such Forecast shall be non-binding. Unless agreed separately between the Parties in writing, each Purchase Order shall specify no more than one (1) delivery date for the Bulk Product in each [***]. Purchase Orders shall be in writing, and no verbal communications shall be construed to mean a commitment to purchase or sell. Each Purchase Order delivered by Advanz to Applied pursuant to this Section 8.4(a) shall be binding on Applied, unless such Purchase Order exceeds the Initial Forecast by more than [***]of quantity of Bulk Product, in which case Applied may notify Advanz in writing of its rejection in respect of the quantity in excess of the Initial Forecast within [***] of receipt of such Purchase Order. 18 (b) Long Range Capacity Planning. Concurrent with the Initial Forecast, for the purposes of discussion and planning of Manufacturing capacity, Advanz shall provide a non- binding forecast of its projected Bulk Product needs for the [***] following that specified in the Initial Forecast as described in Section 8.4(a) (a “Long Range Forecast”). Each Long Range Forecast shall be deemed to be revised by any subsequent Long Range Forecast. In the event Applied anticipates that it will be unable to supply the quantities of Bulk Product reflected in a Long Range Forecast, Applied shall promptly notify Advanz and the Parties shall work to remedy the shortfall in accordance with and subject to the terms of this Section 8 in an effort to assure that the necessary capacity exists. Unless otherwise agreed to by the Parties during the Term, the Long Range Forecast shall be updated by Advanz annually [***] of each Calendar Year during the Term. (c) Receipt and Acceptance. Advanz shall purchase all Bulk Product ordered and specified in a Purchase Order. Purchase Orders may be delivered electronically or by other means to such location as Applied shall designate. Nothing in any such Purchase Order or written acceptance shall supersede or conflict with the terms and conditions of this Agreement or the Quality Agreement. All Purchase Orders, confirmations of receipt of Purchase Orders and other notices contemplated under this Section 8.4(c) shall be sent to the attention of such persons as each Party may identify to the other in writing from time to time in accordance with Section 19.8. (d) First-Expiry First-Out. Advanz shall use Commercially Reasonable Efforts to use its inventory of Bulk Product on a first-expiry first-out (FEFO) basis in order to ensure that the Bulk Product in its inventory always has the maximum period of time remaining on the shelf life. (e) Shelf Life. Applied shall ensure that all Bulk Product has at the date of delivery a shelf life of the greater of: [***] (“Shelf Life Requirements”). 8.5 (a) Pricing, Invoicing and Supply Price Reconciliation. Supply Delivery Price; Invoices. (i) Applied has provided Advanz with details of its current COGs together with an estimate of the COGs for Bulk Product in the first Calendar Year of the first Launch. At least [***] preceding the first requested delivery date for Bulk Product, Applied shall, based on the Initial Forecast and Long Range Forecast delivered concurrently with the Initial Forecast, update its previous estimate in good faith of the COGs for Bulk Product for the remainder of the Calendar Year in which the first Launch occurs. Thereafter, Applied shall, based on the then-current Forecast and Long Range Forecast, estimate in good faith the COGs for Bulk Product for such successive Calendar Year (being the “Estimated Cost”), and shall notify Advanz in writing prior to [***] of each successive Calendar Year of such Estimated Cost with: (y) reasonable supporting documentation regarding the calculation of such Estimated Costs; (z) evidence to support any increase in Estimated Cost compared to the then current Estimated Cost. Any increase in the Estimated Costs compared to the then current COGs shall be reasonable and evidence- based. Should Applied’s Bulk Product contract manufacturer’s costs decrease, the Estimated Cost shall reflect such decrease accordingly and 18 Applied shall provide the supporting documentation and evidence set out at (y) and (z) in respect of such decrease. (ii) Each delivery of Bulk Product under a Purchase Order hereunder shall be accompanied by an invoice. Applied shall invoice Bulk Product at [***] (the “Total Supply Price”). Advanz shall issue payment against such invoices within thirty (30) days after the end of the calendar month in which the invoice is received. Applied shall include the following information, where applicable, on all invoices: the type, description, and quantity of the Bulk Product delivered; the date of shipment; the Total Supply Price; any applicable taxes, transportation charges or other charges provided for in the applicable Purchase Order; and the applicable Purchase Order number. (b) Taxes. All Taxes, including, but not limited to, sales, use, excise, value added and other similar Taxes (but excluding income Taxes and similar Taxes), which Applied is required by Applicable Laws to collect from Advanz with respect to the Manufacture and supply of Bulk Product to Advanz shall be stated in Applied’s invoice and shall be paid by Advanz to Applied. For the avoidance of doubt, any and all applicable Taxes shall be payable by Advanz in addition to the Total Supply Price payable on such Bulk Product. 8.6 Shipping, Delivery and Secondary Packaging and Release. (a) Delivery. Applied shall deliver (or have delivered) to Advanz in accordance with this Section 8.6 the quantities of Bulk Product specified for a given delivery date in each Purchase Order, except that, without limiting Section 19.1, if Applied provides written notice to Advanz at least thirty (30) days prior to a scheduled date for delivery, Applied shall be permitted to delay delivery for up to fifteen (15) Business Days after the scheduled date for delivery. (b) Delivery Terms. Bulk Product shall be supplied to [***]. For the avoidance of doubt, each Party agrees that Applied is responsible for loading the Bulk Product onto transport provided by Advanz or its designated carrier. Bulk Product shall be shipped at Advanz’s expense via a carrier reasonably identified by Advanz in the applicable Purchase Order. Advanz shall be responsible for all such shipping costs, including all freight and insurance charges, and for compliance with all Applicable Laws and Regulatory Approvals for the Product in the Field in the Territory. (c) Retention. Unless the Parties agree otherwise, Applied shall maintain analytical samples of each batch of Bulk Product (or, if necessary, Compound) in storage for a time period based upon Applied’s sample retention policy and, in any event, as required by Applicable Laws. (d) Secondary Packaging and Release. Advanz shall be entitled to deduct [***] of its reasonable Costs and Expenses for all Secondary Packaging and Release activities attributable to a particular Calendar Quarter which are incurred by Advanz from Royalties prior to payment of the same by Advanz. Advanz has provided Applied with details of its current Secondary Packaging and Release costs together with an estimate of such costs in the first Calendar Year of the first Launch. At least sixty (60) days preceding the first requested delivery date for Bulk Product, Advanz shall update its previous estimate in good faith for Secondary Packaging and 18 Release costs for the remainder of the Calendar Year in which the first Launch occurs. Thereafter, Advanz shall estimate in good faith the Secondary Packaging and Release costs for such successive Calendar Year (being the “Secondary Packaging and Release Estimated Cost”), and notify Applied in writing prior to September 1st of each successive Calendar Year of such Secondary Packaging and Release Estimated Cost with: (y) reasonable supporting documentation regarding the calculation of such Secondary Packaging and Release Estimated Costs; (z) evidence to support any increase in Secondary Packaging and Release Estimated Cost compared to the then current Secondary Packaging and Release Estimated Cost. Any increase in the Secondary Packaging and Release Estimated Costs compared to the then current Secondary Packaging and Release Estimated Cost shall be reasonable and evidence-based. Should Advanz’s Secondary Packaging and Release Costs decrease, the Secondary Packaging and Release Estimated Cost shall reflect such decrease accordingly and Advanz shall provide the supporting documentation and evidence set out at (y) and (z) in respect of such decrease. 8.7 Certificate of Analysis; Acceptance and Returns. (a) Certificate of Analysis; Batch-Tracing; Notice of Non-Conformance. Applied shall supply to Advanz the applicable batch number for Bulk Product delivered, as well as such other information as the Parties may set forth in the Quality Agreement with respect to Manufacture for all Bulk Product shipped to Advanz hereunder. Advanz will preserve, assign or link its batch numbers with Applied’s batch numbers in order to comply with Applicable Laws and to ensure its batch numbers can be traced to Applied’s batch numbers and that such information can and will be made available to Applied promptly upon request. In addition, Advanz shall (within the time period specified in Section 8.7(b)) inspect, or cause to have inspected, each shipment of Bulk Product for any material damage, defect (including non-conformance with the Product Specifications or cGMP) or shortage (each of the foregoing, “Product Non-Conformance”) and give Applied written notice thereof (a “Notice of Non-Conformance”). (b) Rejection; Latent Defects. (i) (ii) (iii) Advanz shall have [***] following its receipt of each shipment of Bulk Product to inspect such shipment. If Advanz determines that all or any part of a shipment of Bulk Product suffers from any Product Non-Conformance in any material respect, it shall provide Applied a Notice of Non- Conformance in compliance with the procedures set forth in the Quality Agreement(s). Latent defects shall be communicated to Applied, together with appropriate detail, within [***] of the date on which such latent defect was first discovered by Advanz. Failure to provide such written notice within such time periods specified in this Section 8.7(b), as applicable, shall be deemed acceptance of such shipment of Bulk Product by Advanz, and Applied shall have no responsibility or liability to Advanz therefor in respect of any such Product Non-Conformance. 18 (c) Disputes. If Advanz delivers a Notice of Non-Conformance in respect of all or any part of a shipment of Bulk Product, and Applied does not agree with Advanz’s determination that such shipment suffers from any Product Non-Conformance in any material respect (a “Non- Conformance Dispute”), the Parties shall in good faith attempt to resolve such Non-Conformance Dispute through qualified representatives. The Non-Conformance Dispute shall be resolved between such representatives within [***], unless otherwise agreed in writing by the Parties, from the date of Applied’s receipt of a Notice of Non-Conformance to resolve such Non-Conformance Dispute. If such Non-Conformance Dispute is not resolved by such representatives in such [***] period, then Applied shall prepare an investigative report concerning such alleged Product Non- Conformance and such investigative report and Advanz’s original Notice of Non-Conformance shall be submitted to an independent testing laboratory accepted by both Parties with relevant expertise relating to manufacture and supply of pharmaceutical products. The laboratory shall be provided with copies of Applied’s investigative report, Advanz’s original Notice of Non- Conformance, and any response Advanz may provide to Applied’s investigative report (which response shall be provided within seven (7) days of receipt of such investigative report), and shall be final and binding on the Parties. If such Bulk Product is determined to meet the Product Specifications (or is otherwise determined not to suffer from any Product Non-Conformance, as applicable) in all material respects, then Advanz shall pay for the costs of such consultant, and shall promptly reimburse Applied for such reasonable out-of-pocket expenses as Applied incurred in preparing its investigative report in response to the original Notice of Non-Conformance. (d) Remedies. In the event any shipment of Bulk Product is rejected pursuant to this Section 8.7 as a result of any act or omission of Applied, its Affiliates or its their suppliers or contractors, then Advanz shall at its option, as its only remedies (other than with respect to latent defects), either: (i) destroy such rejected Bulk Product at Applied’s expense (in accordance with Applicable Laws); or (ii) return such rejected Bulk Product to Applied or its designee, at a location designated by Applied and at Applied’s expense. Advanz shall notify Applied in writing promptly of the remedy it wishes to claim and Applied shall (at Advanz’s option and sole discretion) either (iii) promptly replace such non-conforming Bulk Product (or short shipment); or (iv) give Advanz a credit in an amount equal to the amount paid or payable by Advanz with respect to such rejected Bulk Product (or short shipment) including in relation to any commercial or tender penalties (which shall be limited to [***] in each Calendar Year) to which Advanz may be subject. Notwithstanding the foregoing and in accordance with Section 1.156(k), Advanz shall use Commercially Reasonable Efforts to work with any Secondary Source Site approved in the Marketing Authorization and use its safety stock in order to mitigate any commercial or tender penalties to which Advanz may be subject. 8.8 Product Specification and Manufacturing Changes. Each Party shall promptly notify the other Party in writing of any request or order received by a Party from a Governmental Authority requiring a change to the Product Specifications and/or Manufacturing. Subject to the Quality Agreement, Applied shall be responsible for conveying any such changes to its applicable suppliers, to the extent such changes relate to the Product Specifications or Manufacturing of Bulk Product; provided that Advanz shall be responsible for implementing, and shall comply at all times, with any changes in respect of the Secondary Packaging and Release of Bulk Product supplied to Advanz hereunder, including all specialty pharmaceutical services, including logistics and distribution responsibilities. 18 8.9 Contract Manufacturer Terms; Changes to Supply Terms Required by Regulatory Approvals and Applicable Laws. Advanz acknowledges and agrees that (a) the Product remains a product in development, subject to change, including as to the requirements set forth in this Section 8, and is subject to change as reasonably required by any Regulatory Approval and Manufacturing requirements; and (b) subject to Advanz’s exercise of its rights under Sections 8.12 through 8.14 (inclusive), Applied shall take full responsibility for the supply obligations of the Bulk Product including enforcing the terms of any applicable supply agreement(s) (at Applied’s expense) with respect to the Bulk Product. 8.10 Equal Priority to Available Bulk Product Between the Parties. Subject to Section 8.13, each Party acknowledges and agrees that, in the event of a shortage of Bulk Product, the Parties will share any deficiencies in their supply requirements ratably in accordance with their volumes for the four (4) Calendar Quarters prior to the Calendar Quarter in which the then-current shortage first commenced. 8.11 inventory of: Inventory Stock and Safety Stock. Applied shall maintain the following levels of (a) the Bulk Product’s components at all times to meet the equivalent of [***] of Advanz’s most recent forecast (the “Inventory Stock”); and (b) inventory Bulk Product at all times to meet the equivalent of [***] of Advanz’s most recent forecast (the “Safety Stock”), provided that such Safety Stock shall not be subject to the Shelf Life Requirements until such time as Applied has registered a shelf life of [***] in respect of the Bulk Product, at which point all inventory Bulk Product shall have a minimum shelf life of [***]. 8.12 Secondary Source Site. At any time after the Effective Date, Advanz shall have the right to establish a reliable Third Party contract manufacturer as a secondary source site for Manufacture of the Bulk Product requirements under this Agreement (the “Secondary Source Site”) for use only in the case of, and duration of, (subject to Section 8.14) a Supply Shortage. Advanz shall notify Applied in writing if it wishes to establish a Secondary Source Site. Applied shall provide all reasonable assistance to Advanz (and/or any Third Party) in the establishment of the Secondary Source Site, including providing all of its then-existing data and information reasonably requested by Advanz to facilitate the technology transfer of the Product to an alternative contract manufacturer and to enable Advanz to fulfil the Manufacturing requirements of any Regulatory Authority in the Territory. The Parties shall cooperate reasonably and in good faith to facilitate the establishment of a Secondary Source Site including any technology transfer. [***] 8.13 Supply Shortage. Subject to Section 19.1 and without limiting Section 8.7(d), if [***] (a “Supply Shortage”), Applied shall notify Advanz immediately in writing and the Parties shall discuss a resolution of the Supply Shortage, which may include exercise of Advanz’s Step-In Rights under Section 8.14(b) such that Advanz may use Commercially Reasonable Efforts to mitigate any Supply Shortage. In the event of a Supply Shortage, Advanz may also, in its sole discretion, as its only remedies, notify Applied that it intends to exercise its: (a) Step-In Rights set 18 out in Section 8.14(b); (b) rights to use the Secondary Source Site in accordance with Section 8.12; and/or (c) claim direct damages for breach of contract in accordance with this Agreement. Notwithstanding the foregoing and in accordance with Section 1.156(k), Advanz shall use Commercially Reasonable Efforts to work with any Secondary Source Site and use any of its safety stock approved in the Marketing Authorization in order to mitigate any damages for breach of contract. 8.14 Step-In Rights. (a) In the event of any of the following: (i) the commencement of a voluntary or involuntary bankruptcy proceeding by or against Applied in the United States (provided that, in the case of an involuntary bankruptcy proceeding, such proceeding has remained undismissed or unstayed for a period of sixty (60) days), (ii) where and to the extent agreed as part of a FM Continuity Plan under Section 19.1, (iii) where Section 16.3(a) is triggered, or (iv) where and to the extent agreed as part of a Continuity Plan under Section 19.17, Advanz shall have the right, following service of a Step-In Notice, to continue any activities undertaken by Applied or any other Person on Applied’s behalf or required to be undertaken by Applied or any other Person on Applied’s behalf, in each case, relating to or associated with the Exploitation of the Product for use in the Field in the Territory (including in relation to Development and Manufacture of the Product) in accordance with this Agreement. (b) In the event of a Supply Shortage, Advanz shall have the right, following service of a Step-In Notice, to continue Manufacture of the Bulk Product for use in the Field in the Territory in accordance with Sections 8.12 and 8.13. (c) Upon, and to the extent necessary for, Advanz’s exercise of its applicable Step-In Rights pursuant to Section 8.14(a) or 8.14(b), (i) Applied shall provide copies of any reports or other material forming part of the Applied Technology including those required for any Regulatory Filing related to the Product (e.g., Dossiers, Required Existing Studies, Required Post-MA Studies and, subject to Section 4.3(d), Other Post Approval Studies conducted by Applied) to the extent not already in Advanz’s possession or control, and (ii) Advanz shall have the right to request, and upon the commencement by Applied of any bankruptcy proceeding allowing Step-In Rights under Section 8.14(a) shall immediately and without further action be deemed to have received immediately prior to the commencement of any such proceeding, a temporary non-exclusive license under Applied’s Third Party License rights to enable continued Exploitation of such rights in accordance with Section 8.14(a) and under Applied’s Third Party License rights and/or Third Party contract manufacturing/supply agreement(s) to enable Advanz’s Manufacture of the Bulk Product by such Third Party contract manufacturer or at any Secondary Source Site (where applicable); provided that, if (x) Advanz has exercised its Step-In Rights due to an applicable bankruptcy proceeding under Section 8.14(a) and/or more than twice in any two (2) year period under Section 8.14(b), or (y) any Supply Shortage lasts for more than twelve (12) months, Advanz shall have the right to request, where practicable, the partial assignment of Third Party License rights or Applied’s Third Party contract manufacturing/supply agreement(s) (or, where any agreement is solely with respect to the Product in the Field in the Territory, complete assignment) to enable such continued Exploitation or Manufacture, as applicable (the foregoing with respect to Third Party agreements, “Requested Actions”). In furtherance of the foregoing subsection (ii), 18 where any Third Party License or Third Party contract manufacturing/supply agreement(s) enables any sublicensee to enter into a direct contract with the Third Party licensor or contract manufacturer, Applied shall provide all reasonable assistance to Advanz in effecting such transfer. Additionally, Applied shall provide all reasonable assistance to Advanz (and/or any Third Party designated by Advanz) while Advanz is seeking the Requested Actions or its own contract with such Third Parties, including providing access to Applied’s then existing data, information, personnel, sites, manufacturers and suppliers, in each case, to the extent reasonably required to facilitate the Manufacture of the Bulk Product for an in-full and on-time delivery of Product for the Field in the Territory. Applied agrees to take all steps necessary to ensure that its manufacturers, suppliers, employees, agents and advisors comply with this provision to enable Advanz to exercise its Step-In Rights. Applied shall be entitled to resume Manufacture once Applied has reasonably demonstrated that it is able to supply Bulk Product in accordance with the terms of this Agreement. 8.15 Effect of Secondary Source Site and Step-in on Royalties. If Advanz: (a) issues a Step-In Notice during Development in accordance with Section 8.14(a), Advanz shall be entitled to off-set Costs and Expenses incurred in establishing its Step-In Rights with respect to Development from any remaining Event Milestone Payments and/or any future Royalties; and (b) establishes its Secondary Source Site as a result of a Supply Shortage and/or otherwise issues a Step-In Notice including after Development in accordance with Section 8.14(a), Advanz shall be entitled to deduct any Costs and Expenses incurred either from establishing its Secondary Source Site or if not already established, from establishing a Manufacturing arrangement with a reputable third party contractor pursuant to Section 8.12, in each case, from Royalties owed to Applied, including [***] of Costs and Expenses relating to Secondary Packaging and Release in accordance with Section 8.6(d). [***] (c) For clarity, Applied will provide assistance, relevant data, rights to Applied Patent Rights, Applied Technology and tech transfer in accordance with Sections 8.12 and 8.14, and Advanz’s rights to Costs and Expenses incurred to establish Manufacturing, Development and other Exploitation arrangements for Step-In Rights, including with third party contract manufacturers and Development and other Exploitation, deducted from Royalties in accordance with this Section 8.15, includes Costs and Expenses with respect to specialized/bespoke equipment but excludes other equipment, software, processes or personnel. SECTION 9. FINANCIAL PROVISIONS 9.1 Upfront Payment. Advanz shall pay to Applied the non-refundable, non-creditable amount of Ten Million Euros (€10,000,000) in immediately available funds, wired to Applied using the wiring instructions provided by Applied in writing to Advanz, within ten (10) Business Days after the Effective Date. 18 9.2 Event Milestone Payments. (a) Subject to the terms and conditions of this Agreement, Advanz shall pay to Applied the amount set forth in the table below opposite the corresponding event milestone (each an “Event Milestone”) as a non-refundable, non-creditable amount paid in accordance with Section 10.4. Event Milestone Successful Completion of the AT-007-1002 Study, where “Successful Completion” means [***] Event Milestone Payment [***] Successful Completion of the AT-007-1005 Study, where “Successful Completion” means [***] a of Grant centralized Marketing Authorization by the EMA allowing sale of the Product in the Territory for use in Marketing Galactosemia, Authorization may conditional authorization or authorization with respect to a sub-population of patients which be a a of Grant centralized Marketing Authorization by the EMA allowing sale of the Product in the Territory for use in SORD, which Marketing Authorization may be a conditional authorization or authorization with respect to a sub-population of patients Annual Net Sales for the Product in the Territory exceeds [***] in a Calendar Year (“Commercial Event Milestone 1”) Annual Net Sales for the Product in the Territory exceeds [***] in a Calendar Year (“Commercial Event Milestone 2”) 18 [***] [***] [***] [***] [***] Payable Within fifteen (15) Business Days from the date of receipt of the invoice applicable to such Event Milestone Payment Within fifteen (15) Business Days from the date of receipt of the invoice applicable to such Event Milestone Payment Within fifteen (15) Business Days from the date of the occurrence of such Event Milestone Within fifteen (15) Business Days from the date of occurrence of such Event Milestone Subject to Section 9.2(b)(iii)(B) Subject to Section 9.2(b)(iii)(B) Event Milestone Annual Net Sales for the Product in the Territory exceeds [***] in a Calendar Year (“Commercial Event Milestone 3”) Annual Net Sales for the Product in the Territory exceeds [***] in a Calendar Year (“Commercial Event Milestone 4”) Event Milestone Payment [***] Payable Subject to Section 9.2(b)(iii)(B) [***] Subject to Section 9.2(b)(iii)(B) (b) For the avoidance of doubt: (i) each Event Milestone Payment shall be payable only on the first occurrence of the corresponding Event Milestone; (ii) no Event Milestone Payment shall be payable more than once; (iii) in respect of the Commercial Event Milestones: (A) should a subsequent Commercial Event Milestone occur before a prior Commercial Event Milestone, then all such preceding Commercial Event Milestone Payments shall be due and payable on the occurrence of such later Commercial Event Milestone (e.g., if Advanz achieves Commercial Event Milestone 4 in the first Calendar Year of this Agreement, the Commercial Event Milestone Payments for Commercial Event Milestone 1, Commercial Event Milestone 2 and Commercial Event Milestone 3 shall become due and payable); (B) at the end of each Calendar Year, Advanz shall provide Applied with its Annual Net Sales figures within thirty (30) days of the end of the Calendar Year; if Advanz has achieved any Commercial Event Milestone, Applied shall issue an invoice which shall be payable by Advanz within thirty (30) days of receipt of such invoice; and (C) Advanz will report Net Sales relating to Commercial Event Milestones at the end of each Calendar Quarter. (c) NOTWITHSTANDING THIS SECTION 9.2, APPLIED MAKES NO REPRESENTATION OR WARRANTY, EITHER EXPRESS OR IMPLIED, THAT IT WILL BE ABLE TO SUCCESSFULLY DEVELOP, OR THAT ADVANZ WILL BE ABLE TO SUCCESSFULLY COMMERCIALIZE, THE PRODUCT. 9.3 Royalties on Net Sales. Subject to the terms hereof, and on and from the Effective Date and for the duration of the Initial Royalty Term, in addition to any applicable Event Milestone Payments, Advanz shall pay to Applied royalties on Annual Net Sales of Product for use in the Field in the Territory (the “Royalties”) at a rate of twenty percent (20%). Upon expiration of the Initial Royalty Term and for the duration of the Term, Advanz shall pay to Applied Royalties at a rate of [***] of Net Sales. [***] of any Costs and Expenses to the extent related to Secondary Packaging and Release which are incurred by Advanz shall be deducted from Royalties prior to payment by Advanz in accordance with Section 8.6(d). SECTION 10.ACCOUNTING AND PROCEDURES FOR PAYMENT 10.1 Periodic Reporting and Reconciliation Payments. (a) Royalty Reports; Payments. Within thirty (30) days after the end of any Calendar Quarter, Advanz shall provide Applied with a report stating the Net Sales and computation thereof (including gross sales in units and in value of the Product made by or on behalf of Advanz, its Affiliates, and Sublicensees, as applicable, in the Territory, and any permitted deductions in accordance with the definition of Net Sales), on a Country-by-Country basis, during such 18 preceding Calendar Quarter, together with the calculation of the Royalties due to Applied, including the method used to calculate the Royalties, and the exchange rates used (together with any other supporting documentation and additional information reasonably requested by Applied, including detailed information reasonably necessary to permit Applied to verify the accuracy of the reported Net Sales, including product names, selling price (including gross selling price where available), country where Manufactured (to the extent Bulk Product is Manufactured pursuant to Advanz’s Step-In Rights under Section 8.14 or pursuant to Section 16.3(a)) and country of Secondary Packaging and Release). Royalty payments relating to such quarterly reports shall be made by Advanz within thirty (30) days following receipt of Applied’s invoice. Advanz shall also provide an equivalent report upon the achievement of any Event Milestones triggering an Event Milestone Payment. Upon the request of Applied and to the extent reasonably practicable, Advanz shall cooperate with Applied in providing assistance with qualitative feedback to assist Applied derive the information required under a Third Party License with respect to Net Sales with respect to each Licensed Indication. (b) Reimbursement Payments. Where either Party is required to reimburse the other Party in accordance with the terms of this Agreement [***] then the Party to whom such reimbursement is owed may, on a monthly basis, send an invoice to such other Party (the “Reimbursing Party”) with respect to such reimbursable amounts, along with reasonable evidence thereof, and such Reimbursing Party shall issue payment against such invoices within thirty (30) days after the end of the calendar month in which the invoice is received. 10.2 Disputes. In the event of a dispute regarding any amount reported by Advanz pursuant to Section 10.1, Applied shall provide a notice of the dispute to Advanz, and the Parties will promptly meet and negotiate in good faith a resolution to such dispute. In the event that the Parties are unable to resolve such dispute within thirty (30) days after notice by Applied, either Party may refer such matter to be determined by the dispute resolution procedures set forth in Section 18.3. 10.3 Currency. Save for the Total Supply Price, all payments to be made hereunder by one Party to the other Party shall be computed and paid in Euros (€). As it relates to the Total Supply Price, payments to be made hereunder shall be computed and paid in United States dollars (USD). 10.4 Method of Payments. Each payment to be made hereunder by Advanz to Applied shall be made by electronic transfer in immediately available funds via either a bank wire transfer, an ACH (automated clearing house) mechanism, or any other means of electronic funds transfer, at Applied’s election, to the account designated (in writing) by Applied on or before the due date set out in Section 9, Section 10.1 or otherwise in this Agreement. With respect to any payment invoiced by Applied to Advanz, Applied may designate a different bank account on such invoice. With respect to any other payment, Applied may designate a different bank account at least thirty (30) days before such payment is due. 10.5 Exportation of Funds. Advanz shall be solely responsibility for procuring any required permits, authorizations, licenses or consents of Governmental Authorities for the export of funds as may be required in the Territory; provided, however, that to the extent that it is impossible to make such payments due to the “blocking” of funds by Applicable Laws, such 18 “blocked” funds shall be deposited to the credit of Applied in such depository as Applied designates subject to such Applicable Laws or Advanz or its Affiliates shall otherwise pay Applied an amount equal to such “blocked” funds. 10.6 No Set-Off. Subject to Section 8.15, all payments which Advanz is required to make under this Agreement shall be made without any set-off, counterclaim or condition. 10.7 Interest for Late Payments. If either Party fails to make any undisputed payment due under this Agreement within thirty (30) days of the date upon which such undisputed payment is due, then interest shall accrue on such payment on a daily basis from the date such payment was originally due at a rate equal to Secured Overnight Financing Rate (SOFR) (as published in The Wall Street Journal, New York edition) plus two percent (2%), or at the maximum rate permitted by Applicable Laws, whichever is the lower, and such interest shall be paid when such payment is made. 10.8 Inspection of Records. Advanz shall, and shall cause its Affiliates and Sublicensees to, keep accurate books and records with respect to the Commercialization (and other Exploitation under Advanz’s control as a result of Advanz exercising its Step-In Rights) hereunder, including setting forth gross sales of the Product and Net Sales sufficient to enable the calculation of amounts payable hereunder to be verified. Advanz will retain such books and records for five (5) years after the end of the Calendar Year in which they are generated (or such longer period as may be required by Applicable Laws) in order to enable audit of such records as set forth below. Applied shall appoint an independent Third Party (approved in advance by Advanz and subject to a reasonably acceptable confidentiality agreement) to examine Advanz’s books and records at any reasonable time, upon reasonable notice and at the facility(ies) where the books and records are normally kept (an “Audit”) in order to verify Advanz’s compliance with the terms and conditions hereof and the calculation of amounts payable hereunder. The foregoing right of examination may be exercised only once during each twelve (12)-month period of the Term, unless (a) a prior Audit has revealed a discrepancy demonstrating an underpayment by Advanz of five percent (5%) or more, in which case Applied may conduct such additional Audits as may be reasonably required to ensure such discrepancy has been cured and/or has not reoccurred, or (b) Applied otherwise has a good faith reason to believe that Advanz may be in breach of the terms and conditions hereof. Advanz shall bear the Cost and Expense of any such examination and review if there is an underpayment by Advanz of five percent (5%) or more. If such Audit reveals that Advanz has made an: (x) underpayment of any payments due to Applied under this Agreement, then Advanz shall promptly pay Applied the amount of such underpayment or overpayment as was revealed by such Audit; or (y) overpayment of any payments due to Applied under this Agreement, then Applied shall promptly issue a credit note to Advanz for the amount of such underpayment as was revealed by such Audit. 10.9 Tax Matters. (a) Taxes. To the extent they are applicable to Advanz, Advanz shall assume and pay any and all Taxes (excluding income Taxes and similar Taxes), customs, duties, assessments, excises and other charges levied upon the importation of or assessed against the Products supplied or rights licensed by Applied hereunder, or for or on account of the Commercialization of the Product in the Territory. 18 (b) VAT. It is understood and agreed between the Parties that any payments made by Advanz under this Agreement are exclusive of any value added or similar Tax (“VAT”) imposed upon such payments. (c) Withholding Tax. To the extent Advanz is required to deduct and withhold Taxes on any payments to Applied hereunder, the sum payable by Advanz (in respect of which such deduction or withholding is required to be made) shall be increased to the extent necessary to ensure that Applied receives a sum equal to the sum which it would have received had no such deduction or withholding Tax been applicable (i.e., the payment to Applied shall be “grossed up” with sums corresponding to the applicable deduction or withholding Tax, such that the net effect of such withholding Tax on Applied is zero). Advanz shall pay the amounts of such Taxes to the proper Governmental Authority in a timely manner and promptly transmit to Applied an official Tax certificate or other evidence of such payment of such deduction or withholding Tax. (d) Cooperation. Each Party shall provide the other with reasonable assistance to enable the recovery, as permitted by Applicable Laws, of withholding Taxes, VAT, or similar obligations resulting from payments made under this Agreement, such recovery to be for the benefit of the Party bearing such withholding Tax, VAT, or similar obligation. Applied shall provide to Advanz any Tax forms that may be reasonably requested by and necessary for Advanz not to withhold tax or to withhold Tax at a reduced rate under Applicable Laws (including an applicable income Tax treaty). Each Party further agrees to provide reasonable cooperation to the other Party, at the other Party’s expense, in connection with any official or unofficial Tax audit or contest relating to payments made by Advanz to Applied under this Agreement. SECTION 11.PATENTS AND INFRINGEMENT 11.1 Filing and Prosecution. Applied shall at its cost, subject to Sections 11.2 through 11.3, use Commercially Reasonable Efforts to obtain, prosecute and maintain its Patent Rights included in the Applied Patent Rights, including to: (a) file Patent Applications on any invention included in the Applied Patent Rights or Applied Technology (which Patent Applications shall be Applied Patent Rights hereunder); (b) prosecute all pending and new Patent Applications included within the Applied Patent Rights; (c) respond to oppositions, interferences, nullity actions, re-examinations, inter pates reviews, revocation actions and similar proceedings filed by Third Parties against the grant of Patents for such Patent Applications; and (d) except as set out at (y) below, maintain in force any Patent Rights in the Territory included within the Applied Patent Rights by duly filing all necessary papers and paying any fees required by Applicable Laws of the particular Country in which the Patent Right was granted. Applied shall at its cost, subject to Sections 11.2 through 11.3, (x) reject the competence of the Unitary Patent Court in respect of any Applied Patent Rights; and (y) maintain and defend the Patents in the Territory sublicensed to Advanz under this Agreement which are the subject of 18 the Columbia License (the “Columbia Patents”) by duly filing all necessary papers and paying any fees required by Applicable Laws of the particular Country in which the Patent was granted. Applied shall be responsible for all the Costs and Expenses it incurs in connection with the actions taken under this Section 11.1 (subject to Sections 11.2 and 11.3). 11.2 Correspondence. Applied will keep Advanz informed of the status of the Applied Patent Rights to the extent the Applied Patent Rights cover the Commercialization of the Product in the Field in the Territory (but specifically excluding Applied Patent Rights directed solely to an Out-of-Scope Product) solely to the extent a change in the status of such Applied Patent Rights could reasonably be expected to impair the Commercialization of the Product in the Field in the Territory in a material respect. For clarity, Applied shall have ultimate decision-making authority with respect to filings and prosecution and maintenance of Applied Patent Rights, and will use its good faith business judgement in making all such decisions. If Applied decides not to commence or proceed with any filings or prosecution of its Applied Patent Rights or maintenance of its Applied Patent Rights (except the Columbia Patents), it shall advise Advanz promptly of this decision. If Advanz decides it wishes to have any such filings, prosecution or maintenance continued, it shall notify Applied promptly. Applied shall continue to use Commercially Reasonable Efforts to continue with any such filings, prosecution or maintenance, with Advanz reimbursing Applied’s Costs and Expenses monthly on an as incurred basis. Applied shall retain sole and exclusive ownership of the foregoing. 11.3 Notices. Applied agrees that it will, and will cause its Affiliates to, execute and file those notices and other filings as Advanz shall reasonably request be made, from time to time with any patent office in the Territory with respect to the rights granted under this Agreement, at Advanz’s sole cost and expense. 11.4 Third Party Royalty Obligations. (a) If either Party reasonably determines in good faith that in order to avoid infringement or other violation of any Patent Right not licensed hereunder, it is reasonably necessary to obtain a license from a Third Party in order to Manufacture, Commercialize or otherwise Exploit the Product in a Country in the Territory and to pay a royalty or other consideration under such license (including in connection with the settlement of a claim of infringement or other violation of Patent Rights), then the Parties shall discuss the pertinent Patent Right of such Third Party and such Party’s determination. If the Parties decide that Advanz should enter into such license, Advanz shall (i) use Commercially Reasonable Efforts to negotiate and enter into a license for such Patent Rights of such Third Party on commercially reasonable terms and notified to Applied and (ii) be responsible for making any payments to such Third Party in respect of such license, which shall be reimbursed by Applied on request from Advanz. If Applied should enter into such license, Applied shall make any payments to such Third Party in respect of such license directly. (b) If: (i) Advanz is subject to a final court or other binding order or ruling requiring any payments, including the payment of a royalty to a Third Party holder of 18 Patent Rights in respect of sales of the Product in a Country in the Territory; or (ii) Applied is subject to a final court or other binding order or ruling requiring any payments, including the payment of a royalty to a Third Party holder of Patent Rights in respect of sales of the Product in a Country in the Territory, the amount of such payments made a Party to the Third Party holder of Patent Rights shall be shared equally between the Parties such that (A) if Advanz make such payment [***] of such amount shall be deducted from Royalties for such Calendar Quarter in which they are due and payable; and (B) if Applied makes such payment, Advanz shall promptly reimburse Applied in respect of [***] of such amount. For clarity, any litigation relating to the foregoing shall be handled as provided in Section 11.6. 11.5 Third-Party Infringement. Each Party will promptly notify the other in the event of any actual, potential or suspected infringement or other violation in the Territory of a Patent under the Applied Patent Rights by any Third Party. (a) Infringement of Applied Patent Rights in the Field. Subject to any rights of an owner of the Applied Patent Rights under a Third Party License: (i) Applied shall have the first right, but not the obligation, to institute litigation or take other remedial measures in connection with Third Party infringement or other violation of the Applied Patent Rights occurring in the Field within the Territory. If Applied chooses not to initiate litigation or take other remedial measures against a Third Party who is alleged to be infringing or otherwise violating the Applied Patent Rights in the Territory in the Field (other than Applied Patent Rights directed solely to an Out-of-Scope Product) within [***] of Advanz’s request that Applied do the same (provided that, if Applied intends to initiate such litigation or remedial measures, Applied shall notify Advanz that it intends to do so with [***] of Advanz’s request), then Advanz shall have the right to initiate litigation or take other appropriate action to the extent (A) such Third Party infringement or other violation would reasonably be expected to impair or has impaired the Commercialization of the Product in the Field in the Territory (subject to obtaining Applied’s prior written approval, such approval not to be unreasonably withheld, conditioned or delayed) and (B) such litigation or other appropriate action does not conflict with the enforcement rights (and otherwise complies with the rights) of the owner of any Applied Patent Rights under a Third Party License. Applied shall notify Advanz promptly if it becomes aware that the owner of any Applied Patent Rights under a Third Party License intends to initiate litigation or take other appropriate action. Each Party agrees to reasonably cooperate with the other in connection with any such litigation or measures taken by such other Party in accordance with this Section 11.5(a)(i) (including, as may be required, timely joining as a party in any such litigation). The Party initiating such litigation or other measures shall bear: (x) all Costs and 18 Expenses; (y) any losses in connection with any such litigation or other measures; and (z) be entitled to retain any recoveries obtained resulting from any such litigation or other measures after making any payments to the owner of any Applied Patent Right or Applied Technology required under a Third Party License, subject to such amounts being evidenced in writing to Advanz where Advanz is the Party taking the action and bearing the Costs and Expenses. The Party initiating such litigation or other measures in accordance with this Section 11.5(a)(i) shall consult with the other Party as to the strategy for the same and shall consider in good faith any comments from the other Party and keep the other Party reasonably informed of any steps taken with respect thereto. (ii) Applied shall have the sole right, but not the obligation, to institute litigation or take other remedial measures in connection with Third Party infringement or other violation of any Applied Patent Rights occurring outside of the Territory and with respect to Third Party infringement or other violation of any Applied Patent Rights directed solely to any Out-of-Scope Product or occurring outside the Field (within or outside of the Territory), and any such litigation or remedial measures shall be at Applied’s sole cost and expense. Applied shall retain all recoveries received by Applied and bear all losses arising as a result of its enforcement of Applied Patent Rights under this Section 11.5(a)(ii). 11.6 Other Actions by a Third Party. Each Party shall promptly notify the other in the event of any (a) claims by a Third Party of alleged infringement or other violation of Patent Rights by Advanz or Applied or any of their respective Affiliates or Sublicensees with respect to the Development, Manufacture, Commercialization or other Exploitation of the Product or (b) legal or administrative action by any Third Party involving an Applied Patent Right (other than Applied Patent Rights directed solely to an Out-of-Scope Product) of which it becomes aware, including any nullity, revocation, reexamination or compulsory license proceeding. Subject to any rights of an owner of the applicable Applied Patent Rights under a Third Party License and to Section 11.1(y), Applied shall have the first right, but no obligation, to defend against any such claim or action involving such Applied Patent Right in the Territory. If Applied chooses not to defend against any such claim or action involving an Applied Patent Right within [***] of Advanz’s request that Applied do the same (provided that, if Applied intends to undertake such defense, Applied shall notify Advanz that it intends to do so within [***] of Advanz’s request), then Advanz shall have the right to defend such claim or action (to the extent that such right to defend does not conflict with (and otherwise complies with)) the rights of the owner of any Applied Patent Rights under a Third Party License. Applied shall notify Advanz promptly if it becomes aware that the owner of any Applied Patent Rights under a Third Party License intends to initiate litigation or take other appropriate action. Each Party, upon request of the other Party, shall reasonably cooperate with the other Party’s defense of any such claims or actions (including, as may be required, timely joining as a party in any such claim or action). The Party defending against any such claim or action in accordance with this Section 11.6 shall consult with the other Party as to the strategy for the same and shall consider in good faith any comments from the other Party and keep the other Party reasonably informed of any steps taken with respect thereto. No settlement of any such claim or action shall be entered into by a Party (without the written consent 18 of the other Party, which shall not be unreasonably delayed, conditioned or withheld) if such settlement would reasonably be expected to have a material adverse effect on the rights or interest of the other Party or any of its Affiliates or impose any costs or liability on, or involve any admission by, the other Party or any of its Affiliates. In the event Advanz is defending against such claim or action, Applied shall have the right to join such defense using its own counsel at its own cost and expense. The Party defending such litigation or other measures shall bear all Costs and Expenses and any losses in connection with any such litigation or other measures and be entitled to retain any recoveries obtained resulting from any such litigation or other measures after making any payments to the owner of any Applied Patent Right or Applied Technology required under a Third Party License, subject to such amounts being evidenced in writing to Advanz where Advanz is the defending Party and provided that, in respect of Section 11.6(a), where either Party is subject to a final court or other binding order or ruling requiring any payments, including the payment of a royalty to a Third Party holder of Patent Rights in respect of sales of the Product in a Country in the Territory, the amount of such payments made a Party to the Third Party holder of Patent Rights shall be shared [***] between the Parties such that (x) if Advanz make such payment [***] of such amount shall be deducted from Royalties for such Calendar Quarter in which they are due and payable; and (y) if Applied makes such payment, Advanz shall promptly reimburse Applied in respect of [***] of such amount. 11.7 Patent Marking. Advanz shall, and shall cause its Affiliates and Sublicenses to, at Advanz’s cost and expense, comply with the patent marking statutes of which it is notified by Applied in each Country in the Territory in which the Product is Commercialized by or on behalf of Advanz hereunder. SECTION 12.CONFIDENTIALITY; PUBLICATION 12.1 Confidentiality. Except to the extent expressly authorized by this Agreement or otherwise agreed in writing by the Parties, the Parties agree that for the Term and for ten (10) years thereafter, each Party shall (a) keep confidential and shall not publish or otherwise disclose any Confidential Information furnished to it by the other Party pursuant to this Agreement, in a manner no less protective than the actions it would customarily take to preserve the confidentiality of its own similar types of confidential information, and (b) not use for any purpose any Confidential Information furnished to it by the other Party other than for the performance of its obligations or the exercise of its rights hereunder in accordance with the terms hereof. 12.2 Permitted Disclosures. Notwithstanding the foregoing, each Party may disclose the other Party’s Confidential Information (a) to such Party’s employees, consultants (including, for greater certainty, financial advisors and its lenders), Affiliates, agents, contractors, or permitted sublicensees who are bound by obligations relating to confidentiality at least as restrictive of those contained herein and who have a need to know such information in connection with such Party’s performance of its obligations or practice or enforcement of its rights under this Agreement, (b) to Regulatory Authorities in connection with any Regulatory Filings made by either Party for Development, Manufacture, Commercialization or other Exploitation of a Product in compliance with Applicable Laws and the terms hereof (inside or outside the Territory, in the case of Applied), or (c) pursuant to Section 12.3 or 12.4. 18 12.3 Terms of Agreement. The Parties agree that the terms of this Agreement will be considered Confidential Information of both Parties. Subject to Section 12.4 below, no Party shall, without the prior written consent of the other Party, disclose in any manner to any Third Party the terms and conditions of this Agreement, except for terms or subject matter which has been the subject of prior public disclosure or has been mutually approved for such disclosure and except as set forth below. In addition: (a) either Party may disclose such terms as are required to be disclosed in its publicly-filed financial statements, or other public statements or reports, pursuant to Applicable Laws, regulations or stock exchange rules (e.g., the rules of the U.S. Securities and Exchange Commission, the NYSE American, the NYSE, NASDAQ, or any other stock exchange on which securities issued by either Party may be listed) and publicly file this Agreement as an exhibit with such report; provided that, such Party shall provide the other Party with a copy of the proposed text of such statements or disclosure (including any exhibits containing this Agreement) sufficiently in advance of the scheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment upon the proposed text (including redacted versions of this Agreement), (b) either Party shall have the further right to disclose the terms of this Agreement under a confidentiality obligation no less protective than those set forth in this Agreement, to any actual or potential licensee, sublicensee, acquirer, merger partner, investor, business partner or potential providers of financing and each of their respective advisors or (c) Applied shall have the right to disclose information to the owner of any Applied Patent Right or Applied Technology under a confidentiality obligation no less protective than those set forth in this Agreement to the extent reasonably necessary for Applied to comply with its reporting or notice obligations under any applicable Third Party Licenses; and (d) Applied and Advanz shall have the right to disclose information regarding the Development, Commercialization or other Exploitation status of the Product in the Field in the Territory to the extent such disclosure by Applied or Advanz, as applicable, is required by Applicable Laws, regulations or stock exchange rules; provided that, such Party shall provide the other Party with a copy of the proposed text of such statements or disclosure (including any exhibits containing this Agreement) sufficiently in advance of the scheduled release or publication thereof to afford such other Party a reasonable opportunity to review and comment upon the proposed text (including redacted versions of this Agreement). 12.4 Mandatory Disclosure. (a) Notification and Consultation. Except with respect to disclosures permitted by Section 12.3, in the event that a Party is required by Applicable Laws (including rules of an applicable stock exchange), or pursuant to legal, governmental or self-regulatory organization proceedings (including by court order or judicial or administrative process) to disclose any part of the other Party’s Confidential Information (including terms or conditions of this Agreement), such Party shall (i) promptly notify the other Party of each such requirement and identify the documents so required thereby, so that the other Party may seek an appropriate protective order, confidential treatment or other remedy concerning any such disclosure or waive compliance by such Party with the provisions of this Agreement and (ii) consult with the other Party with respect to taking legally available steps to resist or narrow the scope of such requirement. (b) Limited Disclosure. If, in the absence of such a protective order, confidential treatment request, other remedy or waiver by the other Party, such Party is nonetheless required to disclose any part of the other Party’s Confidential Information or any terms or conditions of this 18 Agreement, such Party may disclose such Confidential Information or terms or conditions without liability under this Agreement, except that such Party shall furnish only that portion of the Confidential Information or terms or conditions that in its good faith judgment, after consultation with legal counsel, it is legally required to provide. 12.5 Publication. Nothing herein shall prevent Applied or its Affiliates (or their respective employees, consultants, contractors, licensees and agents) from publishing or presenting information relating to the Compound or Product or otherwise (a) limit the rights of Applied’s Third Party clinical investigators to publish the results of their studies or (b) prevent Applied or its Affiliates (or their respective employees, consultants, contractors, licensees, and agents) from complying with Applicable Laws with respect to the disclosure of clinical study data and results or of any other material matter or information. Advanz shall not publish or present any information relating to the Compound or Product without Applied’s prior written consent. 12.6 Publicity. The public announcement of the execution of this Agreement is set forth on Exhibit F attached hereto and shall be promptly disseminated as a press release following the execution of this Agreement by both Parties. Each Party shall, if reasonably practicable under the circumstances, give the other Party sufficient advance notice of at least twenty-four (24) hours of the text of any public statement concerning the terms of, or events related to, this Agreement or concerning the Compound or Product so that the other Party will have the opportunity to comment upon such statement. Such Party shall give due consideration to any specific reasonable comments of the other Party on such text timely received from the other Party. SECTION 13.WARRANTIES 13.1 Mutual Warranties. Each of Advanz and Applied hereby warrants to the other Party as of the Effective Date as follows: (a) It is duly organized, validly existing and in good standing under the Applicable Laws of the jurisdiction of its incorporation or formation, as applicable. It has the requisite corporate or other entity power and authority to conduct its business as presently being conducted and as proposed to be conducted by it. (b) It has the requisite corporate or other entity power and authority to enter into this Agreement and to perform its obligations hereunder. All corporate or other entity actions on its part, necessary for (i) the authorization, execution, delivery and performance by it of this Agreement, and (ii) the consummation of the transactions contemplated hereby, have been duly taken. (c) Assuming the due authorization, execution and delivery by the other Party, this Agreement constitutes a legally valid and binding obligation of such Party, enforceable against it in accordance with its terms (except in all cases as such enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar Applicable Laws affecting the enforcement of creditors’ rights generally and except that the availability of the equitable remedy of specific performance or injunctive relief is subject to the discretion of the court or other tribunal before which any proceeding may be brought). 18 (d) There is no contractual restriction or obligation binding on such Party or its Affiliates which would be materially contravened by execution and delivery of this Agreement or by the performance of its terms. There are no governmental filings or consents required of such Party or its Affiliates necessary for the consummation of this Agreement and the transactions contemplated hereby. (e) Such Party is not debarred, and such Party in relation to the Product is not using, has not used, and will not use in any capacity the services of any Person debarred, in each case under Subsection 306(a) of the Generic Drug Enforcement Act of 1992, or comparable laws, rules and regulations in any other Country in the Territory. 13.2 Additional Representations and Warranties of Applied. Applied hereby further represents and warrants to Advanz as of the Effective Date, that: (a) Exhibit B contains a complete and correct list as of the Effective Date of all Patents Rights Controlled by Applied in the Field and Territory covering the Compound or any Product. (b) Applied owns or has valid rights to use and sublicense, the Applied Patent Rights in existence on the Effective Date, and the Applied Patent Rights set forth on Exhibit B are in full force and effect and have been maintained to date. (c) To the knowledge of Applied, there is no pending action or claim threatened in writing by a Third Party challenging the ownership, validity or scope of any Applied Patent Rights in existence as of the Effective Date. (d) To the knowledge of Applied, subject to having undertaken a reasonable freedom- to-operate investigation, the Manufacture, Commercialization or other Exploitation of Product as contemplated under this Agreement will not infringe or otherwise violate any Patent of any Third Party that exists on the Effective Date or, if and when issued, any Valid Claim within any Third Party Patent Application published before the Effective Date. (e) To the knowledge of Applied, Applied has complied in all material respects with all Applicable Laws, with respect to the Development of Product. (f) Applied has not received any Form 483 observations, warning letters or other communications from a Regulatory Authority which would reasonably be expected to adversely impact the Manufacture or the marketing of Product in any material respect. 13.3 Additional Representation and Warranty of Advanz. Advanz hereby further represents and warrants to Applied as of the Effective Date to the knowledge of Advanz, neither Advanz nor any of its Affiliates (a) is engaged in the Development or Commercialization of a Competing Product nor (b) has in effect a written plan to Develop or Commercialize a Competing Product. 13.4 Solvency Representation and Warranty of Applied. Applied hereby further represents and warrants to Advanz that, as of the Effective Date, Applied does not intend to incur, and is not presently incurring, debts and liabilities that will be beyond its ability to pay as such debts and liabilities mature, to the extent known, probable and estimable. 18 13.5 Certain Covenants of the Parties. (a) Each Party shall conduct, and shall cause its Affiliates to conduct, all its activities contemplated under this Agreement in accordance with all Applicable Laws of the Country in which such activities are conducted. (b) Each Party shall provide written notice to the other Party in the event that it suffers an insolvency related event of the type set out in Section 16.1(b) including the name and contact details of any receiver, trustee, assignee for the benefit of creditors, custodian or other similar official. (c) Advanz shall undertake any actions which it is required to take under any applicable Antitrust Laws in the Territory in connection with transactions contemplated hereunder, or the rights granted to, or obligations of, either Party hereunder, whether at the Effective Date or at any time during the Term. 13.6 Disclaimer of Warranty. EXCEPT AS OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY MAKES ANY, AND EACH PARTY DISCLAIMS ALL, REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, WITH RESPECT TO THE COMPOUND, DRUG SUBSTANCE, PRODUCT, SUCH PARTY’S TECHNOLOGY OR PATENT RIGHTS, OR ANY OTHER MATTER, INCLUDING WARRANTIES OF MERCHANTABILITY, CONDITION, QUALITY, PERFORMANCE, FITNESS FOR A PARTICULAR PURPOSE, AND NONINFRINGEMENT OF THE INTELLECTUAL PROPERTY RIGHTS OF THIRD PARTIES. SECTION 14.NON-COMPETITION 14.1 Advanz Non-Compete. From the Effective Date and throughout the Term, neither Advanz nor any of its Affiliates (including through any acquisition) shall, directly or indirectly, alone or in collaboration with any Third Party Commercialize, in any Country, any Competing Product. SECTION 15.TERM 15.1 Term. This Agreement shall be effective as of the Effective Date and shall remain in effect until terminated pursuant to Section 16 (the “Term”). SECTION 16.TERMINATION 16.1 Termination Rights. This Agreement may be terminated as follows: (a) Material Breach. Either Party may terminate this Agreement at any time upon written notice to the other Party if the other Party is in material default or breach of this Agreement and such material default or breach is not cured within (i) sixty (60) days after written notice thereof is delivered to the defaulting or breaching Party, or (ii) in the case of a breach that cannot be cured within sixty (60) days, within a reasonable period not exceeding ninety (90) days after written notice thereof is delivered to the defaulting or breaching Party, so long as the breaching Party in each case is making a good faith effort to cure such default. For the avoidance of doubt, 18 the Parties agree that any Supply Shortage shall not constitute a material breach of this Agreement and shall not entitle Advanz to terminate this Agreement, and such Supply Shortage shall be addressed in accordance with Sections 8.12 to 8.14 inclusive. Termination shall not be the sole remedy for material breach of this Agreement, and a Party may choose to continue to perform hereunder and, in response to any material breach, may bring a claim for damages and other available remedies under this Agreement, including in accordance with Section 18.3, where applicable, such as a claim for injunctive relief, and bringing such a claim in good faith shall not constitute a breach of this Agreement. (b) Insolvency. Either Party may terminate this Agreement upon written notice to the other Party, if the other Party files, or has filed against it, a petition for voluntary or involuntary bankruptcy or pursuant to any other insolvency law seeking to adjudicate it as bankrupt or insolvent, or seeking dissolution, liquidation, winding up, reorganization, arrangement, adjustment, protection, relief of debtors, an assignment for the benefit of creditors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, assignee for the benefit of creditors, custodian or other similar official for any such Person or for any substantial part of its property, and, if such proceeding is commenced involuntarily, either such proceeding shall remain undismissed or unstayed for a period of sixty (60) days. The voluntary commencement of any of the foregoing proceedings by a Party shall result in an immediate right to terminate by the other Party. (c) Patent Challenge. Applied may terminate this Agreement as provided in and in accordance with Section 2.6(b). (d) Approval Failure; Material Safety Issue. In the event that the Product does not receive Marketing Authorization for use in a Licensed Indication in any Country in the Territory by [***], then Advanz at its sole discretion may terminate this Agreement upon thirty (30) days’ notice; provided that such notice is delivered to Applied by [***]. In the event of a Material Safety Issue, the Parties shall confer and use Commercially Reasonable Efforts to ascertain the appropriate course of action; provided that where no other option or recourse is reasonably available (including recall of the Product) either Party may terminate this Agreement upon the occurrence of a Material Safety Issue in its entirety upon ten (10) days prior written notice to the other Party. (e) Failure to Commercialize. Without limiting its rights under Section 16.1(a) and subject at all times to Applied’s material compliance with its obligations to fulfil Purchase Orders in accordance with Section 8.2, such that Advanz has sufficient Product to Commercialize in accordance with the Commercialization Plan for the duration of the relevant period: (i) Subject to the provisos set out in Section 7.1, Applied may terminate this Agreement in its entirety, or if otherwise as agreed by the Parties (which may include termination on a Country by Country basis), upon at least ninety (90) days’ written notice to Advanz, if Advanz does not either: 18 (A) (B) (C) Launch the Product for each Licensed Indication in Germany within [***] after the grant of any Marketing Authorization for the Product for such Licensed Indication(s) by EMA; or from Launch the Product for each Licensed Indication in France within [***] securing Price Approval and/or Third Party reimbursement approval (as applicable) whether pursuant to an Early Access Program or otherwise; or Launch the Product for each Licensed Indication in each of Italy, Spain and the United Kingdom within [***] after the grant of a Marketing Authorization for the Product for such Licensed Indication by EMA or the MHRA (whichever is the later); [***]; provided, however, that in each case, that Advanz shall have sixty (60) days from receipt of such notice to Launch the Product for use in such Licensed Indication in such Country(ies). (ii) Termination for failure to achieve Minimum Sales/Quantities: Applied may terminate this Agreement in its entirety, upon ninety (90) days’ written notice to Advanz, if Advanz has not achieved at least [***] in cumulative Net Sales by the later of: (A) [***] (B) the date on which Advanz has [***], provided in (B) that Advanz has submitted the Product for, and used Commercially Reasonable Efforts to prosecute Price Approval in each of the Major Markets for Galactosemia within [***] and provided, however, that Advanz shall have sixty (60) days from receipt of such notice to cure such failure (where any cure may include payment of any shortfall in Royalties on Net Sales below [***]. (f) Gross negligence and willful misconduct. Advanz may terminate this Agreement in the event of Applied’s gross negligence and/or willful misconduct of any of its obligations under this Agreement and such gross negligence and/or willful misconduct is not cured within sixty (60) days after written notice thereof is delivered to Applied. As used in this Section 16.1(f), “gross negligence” means a lack of care that demonstrates reckless disregard for a party’s obligations and a lack of consideration of the consequences or potential damage its actions may cause to the other party; and “willful misconduct” means that a Person intentionally acts or fails to act knowing that their conduct will probably result in harm or damage. 16.2 Continuing and Accrued Obligations. After notice of termination is given and, subject to the further provisions of this Section 16.2, prior to the effective date of termination, this Agreement, including all payment obligations hereunder, shall continue in full force and effect, and the Parties shall continue to carry out and perform their respective Development, Manufacturing, Commercialization and other Exploitation activities in accordance with this Agreement through the effective date of termination. Without limitation of the foregoing, 18 termination of this Agreement for any reason (a) shall be without prejudice to and shall not impair or limit in any manner (i) Applied’s right to receive payment from Advanz of Royalties or Commercial Event Milestone Payments in respect of sales of Product in the Territory occurring prior to the effective date of such termination, whether or not the due date for such payment is after such effective date of termination; (ii) Applied’s right to receive the applicable Event Milestone Payment in respect of any Event Milestone which occurs prior to the effective date of termination, whether or not the due date for such payment is after such effective date of termination, (iii) Applied’s right to receive payment from Advanz in accordance with this Agreement for any Bulk Product ordered by Advanz and delivered pursuant to this Agreement prior to the effective date of such termination, whether or not the due date for such payment is after such effective date of termination, provided that such Bulk Product is Manufactured and delivered in accordance with the terms of this Agreement; and (iv) any remedies that either Party may have and (b) shall not release a Party hereto from any indebtedness, liability, payment or other obligation incurred hereunder (including liability for breach of this Agreement) by such Party prior to the effective date of termination. 16.3 Effects of Termination. (a) Upon termination of this Agreement by Advanz under Section 16.1(f): (i) (ii) (iii) all licenses granted to Advanz by Applied under this Agreement shall be retained by Advanz and shall survive termination of this Agreement on the same terms on which they were granted; provided that such licenses under Applied Technology, Applied Patents and Licensed Trademarks shall be expanded to enable the continuation or commencement by Advanz of any activities either undertaken by Applied or any other Person on Applied’s behalf or required to be undertaken by Applied or any other Person on Applied’s behalf, in each case, relating to or associated with the Exploitation of the Product for use in the Field in the Territory (including in relation to Development and Manufacture of the Product) in accordance with this Agreement; ownership of any Marketing Authorization Application or Marketing Authorization relating to the Compound or the Product which is held by Advanz, its Affiliates or designees, shall continue to be held by such entity; to the extent permitted by such Third Party, (x) all Third Party contract manufacturing/supply agreement(s) and any contract development agreements, to the extent applicable to the Product in the Field in the Territory, shall be assigned to Advanz by Applied (unless Advanz notifies Applied otherwise in writing) and (y) Applied shall ensure that (and shall procure the same to the extent Applied has not entered into such agreements as of the Effective Date) it has adequate arrangements to give full effect to such assignments. Applied shall facilitate the assignment process (including making any introductions) and shall not do anything to prejudice Advanz’s rights under such licenses or agreements without the prior consent 18 (iv) (v) of Advanz (such consent not to be unreasonably withheld, conditioned or delayed); if it has not already done so in accordance with the terms hereunder, Advanz may notify Applied that it wishes to use its Secondary Source Site, or if Step-In is otherwise triggered, in each case, Applied shall provide all reasonable assistance to Advanz to effect the transfer of Manufacturing of Bulk Product; Applied shall provide to Advanz copies of any reports or other materials in its possession or control forming part of the Applied Technology including those required for any Regulatory Filing related to the Product (e.g. Dossiers, Required Existing Studies, Required Post-MA Studies and, subject to Section 4.3(d), Other Post Approval Studies conducted by Applied) to enable Advanz to continue to Develop, Manufacture and Commercialize the Product in the Field in the Territory; (vi) Advanz shall retain all materials in its possession relating to the Product and/or which it requires to continue to Develop, Manufacture and Commercialize the Product in the Field in the Territory, including: (A) (B) (C) (D) all Regulatory Filings, Regulatory Approvals, Price Approvals, contracts and other agreements relating to Pricing and Market Access Activities in Advanz’s possession or control to the extent related to the Product; all reports, records, information (including drug master files, if any), regulatory correspondence, correspondence with respect to Pricing and Market Access Activities, and other materials in Advanz’s possession or control to the extent relating to the Product in the Field in the Territory; all materials bearing any Licensed Trademarks; and all Applied Confidential Information (which shall remain subject to Section 12); (vii) without limiting Section 8.15, Sections 9.2 and 9.3 shall survive notwithstanding references to the duration of the Term, and Advanz shall remain liable to pay any Royalties and any Event Milestone Payments to the extent due and payable; (viii) Applied shall transfer to Advanz all inventory of the Bulk Product which is subject to a Purchase Order and has not yet been provided, and Advanz shall be entitled to sell all of its inventory of the Bulk Product. For the avoidance of doubt, Advanz’s remedies set out in Sections 8.7(b) and (d) shall apply to any such inventory; 18 (ix) (x) (xi) Applied shall, upon request of Advanz, return or destroy all Advanz Confidential Information disclosed to it pursuant to this Agreement, including all copies and extracts of documents, as promptly as practicable following receipt of such request, except that copies may be kept for the purpose of complying with continuing obligations under this Agreement to the extent and for so long as necessary to perform its obligations or exercise its rights under this Section 16.3(a). Notwithstanding the foregoing, Applied also shall be permitted to retain such additional copies of or any computer records or files containing Advanz Confidential Information (A) to the extent necessary to comply with Applicable Laws or (B) that have been created solely by Applied’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with Applied’s standard archiving and back-up procedures, but not for any other use or purpose. For the avoidance of doubt, any Confidential Information of Advanz retained by Applied in accordance with this Section 16.3(a) shall remain Confidential Information of the disclosing Party and subject to Section 12; for clarity, Advanz’s termination of the Agreement under Section 16.1(f) shall trigger its Step-In rights under Section 8.14(a); and the following Sections of this Agreement shall survive such termination under Section 16.1(f): Sections 2.1, 2.2, 2.3, 2.4, 2.6, 2.7, 4.3(c) and (d), 5.4 (as required to comply with Applicable Laws), 7.3, 7.4, 8.14, 8.15 (as required to give effect to this Section 16.3(a)), 9, 10, 11, 12, 13.5(a), 13.6, 16.1(b), 16.1(c), 16.1(d), 16.1(e), 16.2, 16.3(b), 17 (including Section 17.5 notwithstanding references to the duration of the Term therein), 18, 19.2 through 19.16 (inclusive), Exhibit H (to the extent required by the Third Party Licenses) and any other Exhibits to the extent required for interpretation purposes. (b) Upon termination of this Agreement (except by Advanz under Section 16.1(f)): (i) Advanz shall (or, in each case, shall cause its designee, if applicable, to), promptly after such termination, supply to Applied or its designee the following materials; provided that such materials shall be supplied in the form and format in which such materials are maintained by Advanz in the ordinary course of business (provided that Advanz shall use Commercially Reasonable Efforts to provide such materials in a form and format useable by Applied): (A) all Regulatory Filings (including Marketing Authorizations), Regulatory Approvals, Price Approvals, contracts and other agreements in Advanz’s or, if applicable, its designee’s, possession or control to the extent related to a Product; 18 (B) (C) (D) all reports, records, information (including drug master files, if any), regulatory correspondence and data, correspondence with respect to Pricing and Market Access Activities, and other materials in Advanz’s or, if applicable, its designee’s, possession or control to the extent relating to a Product; all materials bearing any Licensed Trademarks; assign to Applied any and all right, title or interest of Advanz in any Trademarks actually used in commerce by Advanz or its Affiliates in connection with a Product (including in any Licensed Trademarks and any goodwill associated therewith), excluding, for clarity, the corporate or trade name or logo of Advanz or its Affiliates. In furtherance of the foregoing Advanz shall execute an assignment of any such Trademarks in favor of Applied or an Applied Affiliate identified by Applied and Applied (or such Applied Affiliate designee) shall be responsible for recording such assignment with the appropriate governmental trademark authorities; provided that in facilitating such assignment and Advanz shall cooperate recordation by timely executing all necessary documents provided to it by Applied. (ii) Advanz hereby does, on behalf of itself and any of its applicable designees, (and shall) assign to Applied, or an Applied Affiliate identified by Applied, all of Advanz’s or its Affiliates’ or designee’s (as applicable) right, title and interest in and to the materials transferred or delivered or deliverable by Advanz pursuant to Section 16.3(b)(i), to the extent Advanz or any of its Affiliates or designees control such materials, which assignment shall include, for the avoidance of doubt, transfer of all physical items relating to Marketing Authorizations and Marketing Authorization Applications for the Product in Advanz’s or any of its Affiliate’s or designee’s name and commencement of the transfer process with the applicable Regulatory Authorities; (iii) Advanz hereby does (and shall) assign to Applied any applicable sublicenses to the extent related to the Product and/or Third Party agreements, with respect to significant services to be performed by Third Parties to the extent related to the Product, unless Applied has advised Advanz that it will not require such assignment. (iv) Without limitation of the generality of the foregoing, upon Applied’s request, the Parties shall use diligent efforts to complete the transition of the Commercialization of the Product, as well as Advanz’s responsibilities hereunder with respect thereto (including pharmacovigilance and Pricing and Market Access Activities) and at Applied’s election and request, and to extent reasonably possible and legally permissible, transfer and sale of some or all Product inventory and Bulk Product then in possession or control of 18 (v) Advanz, its Affiliates or sublicensees at cost to Applied (or its sublicensee or Third Party designee) as soon as is reasonably possible, in a low risk, orderly fashion. Each of Advanz and Applied shall, upon request of the other Party, return or destroy all Applied Confidential Information and Advanz Confidential Information disclosed to it pursuant to this Agreement, including all copies and extracts of documents, as promptly as practicable following receipt of such request, except that one (1) copy may be kept for the purpose of complying with continuing obligations under this Agreement including relating to termination (e.g., under Section 16.1(b)(iv)) to the extent and for so long as necessary to perform its obligations or exercise its rights under this Section 16.3(b). Notwithstanding the foregoing, such other Party also shall be permitted to retain such additional copies of or any computer records or files containing such Confidential Information (A) to the extent necessary to comply with Applicable Laws or (B) that have been created solely by such Party’s automatic archiving and back-up procedures, to the extent created and retained in a manner consistent with such other Party’s standard archiving and back-up procedures, but not for any other use or purpose. For the avoidance of doubt, any Confidential Information of the disclosing Party retained by the receiving Party in accordance with this Section 16.3(b) shall remain Confidential Information of the disclosing Party and subject to Section 12. SECTION 17.INDEMNIFICATION, INSURANCE AND LIABILITY 17.1 Indemnification by Advanz. Subject to Sections 17.3 and 17.4, Advanz shall indemnify, defend and hold Applied, its Affiliates, and their respective directors, officers, employees, consultants, contractors, sublicensees and agents (collectively, the “Applied Indemnitees”) harmless from and against any and all claims, suits, proceedings or causes of action (“Claims”) brought by a Third Party against such Applied Indemnitee, including any damages or other amounts payable to such Third Party and reasonable attorneys’ fees and costs of litigation (collectively, “Damages”), in each case to the extent resulting from or based on: (a) any Taxes for which Advanz is responsible pursuant to this Agreement; b) Advanz’s breach of this Agreement (including its representations, warranties and obligations herein); (c) the determination of Advanz not to initiate an Advanz Recall in the exercise of its discretion under Section 5.5(c); or (d) the gross negligence or willful misconduct of, or violation of Applicable Laws by, Advanz, its Affiliates or its Sublicensees, or their respective employees, contractors or agents in the performance of this Agreement, except to the extent such Damages result from any of Applied’s acts or omissions that are not in accordance with the Agreement. 17.2 Indemnification by Applied. Subject to Sections 17.3 and 17.4, Applied shall indemnify, defend and hold Advanz, its Affiliates, and their respective directors, officers, employees, consultants, contractors, sublicensees and agents (collectively, the “Advanz Indemnitees”) harmless from and against any and all Claims brought by a Third Party against such Advanz Indemnitee, including any Damages, in each case to the extent resulting from or based on: (a) Applied’s breach of this Agreement (including its representations, warranties and obligations 18 herein); (b) the determination of Applied not to initiate an Applied Recall in the exercise of its discretion under Section 5.5(c); or (c) the gross negligence or willful misconduct of, or violation of Applicable Laws by, Applied, its Affiliates or sublicensees, or their respective employees, contractors or agents in the performance of this Agreement, except to the extent such Damages result from any of Advanz’s acts or omissions that are not in accordance with this Agreement. 17.3 Indemnification of Product Liability Claims. (a) Notwithstanding any other provision of this Agreement, this Section 17.3 shall govern the allocation of liability with respect to any Third Party product liability Claim, including Claims of property injury, bodily injury or deaths related to the Product in the Territory (a “Third Party Product Claim”). (b) Subject to Section 17.4, Applied shall indemnify, defend and hold harmless the Advanz Indemnitees from and against any and all Damages which an Advanz Indemnitee may incur or suffer arising out of any Third Party Product Claim to the extent caused by, resulting or arising from its Development activities (whether prior to or during the Term) or Manufacture of the Product (including any defect in the Manufacturing of the Bulk Product supplied by Applied to Advanz hereunder). (c) Subject to Section 17.4 and except to the extent Applied is obligated to indemnify the Advanz Indemnitees in respect of such Damages pursuant to Section 17.3(b) above, Advanz shall indemnify, defend and hold harmless the Applied Indemnitees from and against any and all Damages arising out of any Third Party Product Claims to the extent caused by, resulting or arising from its Development activities, its Secondary Packaging and Release activity and any other Step- In Rights or Secondary Source Site or other Manufacture or Commercialization, in each case of the Product in the Territory. (d) The indemnity in this Section 17.3 shall include defects stipulated in Article 1 of the EU Product Liability Directive [85/374/EEC]. 17.4 Defense Procedures; Procedures for Third Party Claims. (a) For purposes of this Agreement, “Third Party Claim” means a Claim asserted by a Third Party (in no event to include any Affiliate of either Party) against a Party or any of its Affiliates, or any of their respective directors, officers, employees, consultants, contractors, sublicensees and agents. In the event a Third Party Claim is asserted with respect to any matter for which a Party or any of its Affiliates, or any of their respective directors, officers, employees, consultants, contractors, sublicensees and agents (the “Indemnified Party”) is entitled to indemnification hereunder, then the Indemnified Party shall promptly notify in writing the Party obligated to indemnify the Indemnified Party hereunder (the “Indemnifying Party”) thereof; provided, however, that no delay on the part of the Indemnified Party in notifying the Indemnifying Party shall relieve the Indemnifying Party from any obligation hereunder unless (and then only to the extent that) the Indemnifying Party is prejudiced thereby. (b) The Indemnifying Party shall assume direction and control of the defense, litigation, settlement, appeal or other disposition of the Third Party Claim (including the right to settle the Claim solely for monetary consideration) with counsel selected by the Indemnifying 18 Party and reasonably acceptable to the Indemnified Party. The Indemnified Party shall provide reasonable assistance to the Indemnifying Party in relation to such Third Party Claim and shall have the right to join in (including the right to conduct discovery, interview and examine witnesses and participate in all settlement conferences), but not control, at its own expense, the defense of any Third Party Claim that the Indemnifying Party is defending as provided in this Agreement. Notwithstanding anything to the contrary contained herein, an Indemnified Party shall be entitled to assume the defense of any Third Party Claim with respect to the Indemnified Party, upon written notice to the Indemnifying Party, in which case the Indemnifying Party shall be relieved of liability under Section 17.1 or 17.2, as applicable, solely for such Third Party Claim and related Damages. (c) Neither Party will enter into any settlement of any suit involving Products that materially affects the other Party’s rights or obligations with respect to the Product (including any settlement limiting the scope, validity or enforceability of the other Party’s Intellectual Property) without the other Party’s prior written consent (which consent shall not be unreasonably withheld, delayed or conditioned). Without limiting the foregoing, the Indemnifying Party shall not, without the prior written consent of the Indemnified Party (which consent shall not be unreasonably withheld, delayed or conditioned), effect any settlement of any pending or threatened litigation in which the Indemnified Party has sought indemnification hereunder by the Indemnifying Party, unless such settlement involves solely monetary damages and includes an unconditional release of the Indemnified Party from all liability on Claims that are the subject matter of such litigation. 17.5 Insurance. During the Term and for three (3) years thereafter, each Party shall maintain public liability insurance coverage up to Ten Million Euros (€10,000,000). Each Party shall provide a certificate of insurance evidencing such coverage to the other Party upon request and shall reasonably cooperate with the other Party in order to maximize any insurance recoveries. 17.6 Disclaimer of Liability for Consequential Damages. (a) SUBJECT TO SECTION 17.6(b): (i) (ii) EITHER PARTY SHALL BE ENTITLED TO CLAIM DAMAGES FOR DIRECT LOSS OF PROFITS UP TO A LIMIT OF [***] PER CALENDAR YEAR. IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS RESPECTIVE AFFILIATES BE LIABLE UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY LOSS OF REVENUES OR CONTRACTS, BUSINESS INTERRUPTION, INDIRECT LOSS OF PROFITS OR ANY OTHER INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER IN CONTRACT, UNDER A WARRANTY, TORT (INCLUDING NEGLIGENCE), UNDER STATUTE OR OTHERWISE. THE FOREGOING SENTENCE SHALL NOT LIMIT THE OBLIGATIONS OF EITHER PARTY TO INDEMNIFY THE OTHER PARTY FROM AND AGAINST THIRD PARTY CLAIMS UNDER SECTION 17.3 OR LIABILITIES RESULTING FROM A BREACH OF THE CONFIDENTIALITY 18 OBLIGATIONS UNDER SECTION 12 ABOVE, OR ANY LIABILITY ARISING OUT OF ANY INFRINGEMENT OR OTHER VIOLATION OF THE APPLIED PATENT RIGHTS, THE APPLIED TECHNOLOGY OR THE LICENSED TRADEMARKS AS A CONSEQUENCE OF THEIR USE BY ADVANZ OR ITS AFFILIATES OTHER THAN IN ACCORDANCE WITH THIS AGREEMENT. (b) Neither Party excludes nor limits any liability for: (i) death or personal injury to the extent caused by the negligence or willful default of a Party or its employees; (ii) fraud or fraudulent misrepresentation; (iii) (iv) any breach of any obligations implied by section 12 of the Sale of Goods Act 1979 or section 2 of the Supply of Goods and Services Act 1982; any other liability to the extent the same cannot be excluded or limited by Applicable Laws; or (v) its payment obligations under this Agreement. SECTION 18.GOVERNING LAW AND JURISDICTION 18.1 Governing Law. This Agreement and any non-contractual obligations arising out of or in connection with it shall be governed by and construed in accordance with the Laws of England and Wales. The provisions of the U.N. Convention on Contracts for the International Sale of Goods shall not apply to this Agreement. 18.2 U.S. Bankruptcy Matters. Notwithstanding anything else to the contrary herein, this Section 18.2 shall apply in the event of the commencement of a voluntary or involuntary bankruptcy proceeding by or against Applied in the United States (provided that, in the case of an involuntary bankruptcy proceeding, such proceeding has remained undismissed or unstayed for a period of sixty (60) days). (a) All of the Intellectual Property which is subject to any of the licenses contained in this Agreement, including trademarks (in particular the Licensed Trademarks) and all of the Applied rights which Advanz requires to continue to Develop, Manufacture and/or Commercialize the Products in the exercise of any applicable Step-In Rights or as set out in Section 16.3(a) (in particular continued ownership of the Marketing Authorizations and/or Marketing Authorization Applications relating to the Product in the Field in the Territory) (collectively, the “IP Rights”), constitute “intellectual property” pursuant to section 101(35A) of the U.S. Bankruptcy Code, and any rejection of this Agreement, including the license provided hereunder and any associated amendments, amendments and restatements or modifications hereto, by Applied in a U.S. bankruptcy proceeding shall be governed by the U.S. Bankruptcy Code, including section 365(n) thereof. 18 (b) The IP Rights may be exercised by Advanz in accordance with any applicable license terms hereunder notwithstanding the commencement by Applied of any bankruptcy, insolvency or similar proceeding, and notwithstanding the imposition of the automatic stay pursuant to section 362 of the U.S. Bankruptcy Code. To the extent necessary, Applied hereby consents to relief from the automatic stay pursuant to section 362 of the Bankruptcy Code to permit Advanz to exercise the IP Rights in accordance with any applicable license terms hereunder without further order of any court, and agrees to take all acts necessary to seek such consent and the access needed to exercise such rights. (c) To the extent Advanz elects to retain its rights under section 365(n)(1)(B) of the Bankruptcy Code following any rejection of this Agreement, including the license provided hereunder and any associated amendments, amendments and restatements or modifications hereto, Advanz may exercise and shall be entitled to the benefits of the IP Rights in accordance with this Agreement. 18.3 Jurisdiction and Dispute Resolution Process. With the exception of those matters referred for resolution by independent Third Parties under Section 10.8, by independent consultants under Section 8.7(c), which are subject to equitable relief under Section 19.15 or subject to Section 18.3(c)(iv), any dispute, controversy or claim relating to any contractual and non-contractual obligations arising out of or relating to this Agreement, or the interpretation or breach thereof, including disputes regarding the existence, validity or termination of this Agreement or the scope of the agreement to arbitrate herein (each, a “Dispute”), shall be determined in accordance with the provisions of this Section 18.3: (a) If any Dispute arises, either Party may provide written notice of the Dispute to the other Party and request negotiation between the executive officers of each Party (“Dispute Notice”). Within fifteen (15) days after the delivery of a Dispute Notice, the executive officers shall confer in person or by teleconference to attempt to settle the Dispute. All communication between such executive officers shall not be construed as an admission or agreement as to the liability of any Party, nor be admitted in evidence in any related arbitration, litigation, or other adversary proceeding. (b) If, within [***] after the delivery of a Dispute Notice, the Parties are unable to resolve the Dispute in writing, upon written notice by any Party to the other Party, such Dispute shall be determined exclusively by final and binding arbitration administered by the London Court of International Arbitration in accordance with its International Arbitration Rules, except as modified herein. (c) In any arbitration commenced pursuant to this Section 18.3: (i) There shall be three arbitrators, one of which shall be appointed by Applied and another of which shall be appointed by Advanz, in each case, within twenty (20) days of the date of delivery of the notice of arbitration. The third arbitrator, who shall serve as the president of the tribunal, shall be jointly appointed by the two Party-appointed arbitrators within twenty (20) days of the date of appointment of the second arbitrator to be appointed. Any arbitrator not timely appointed as provided herein shall be appointed, 18 (ii) (iii) (iv) at the written request of any Party to the arbitration, by the London Court of International Arbitration. The seat of arbitration shall be London, England. The language of the arbitration shall be English. The Parties agree that the award rendered by the arbitral tribunal shall be final and binding and enforceable against the Parties and their respective assets in any court of competent jurisdiction. Unless determined otherwise by the arbitral tribunal, each Party shall pay its own Costs and Expenses in connection with the arbitration, except that the Parties shall pay an equal share of all Costs and Expenses related to compensation of the arbitral tribunal and site and administrative fees. The arbitral tribunal shall not award any damages excluded by Section 17.6. Any arbitration hereunder shall be confidential, and neither the Parties nor their agents shall disclose to any Third Party not involved in the arbitration the existence or status of the arbitration, any information made known or documents produced in the arbitration not otherwise available to them or in the public domain, or any awards arising from the arbitration, except and to the extent that disclosure is required by Applicable Laws or is required to protect or pursue a legal right. For any proceeding in aid of arbitration or to seek interim relief (such as an injunction) against the other Party to protect its rights and interests, or to enforce the obligations of the other Party, each Party irrevocably and unconditionally consents and submits to the exclusive jurisdiction and venue of the courts of England and Wales located in London, England (“English Courts”), and to the non-exclusive jurisdiction and venue of English Courts for any action to enforce any arbitration award obtained pursuant to this Agreement. In any such action: (i) each Party irrevocably waives, to the fullest extent it may effectively do so, any objection, including any objection to the laying of venue or based on the grounds of forum non conveniens or any right of objection to jurisdiction on account of its place of incorporation or domicile, which it may now or hereafter have to the bringing of any such action or proceeding in the English Courts; (ii) each Party irrevocably consents to service of process in the manner provided for notices in this Agreement or in any other manner permitted by Applicable Laws; and (iii) each Party waives any right to trial by jury in any court. Notwithstanding the foregoing, the arbitral tribunal also shall have full authority to grant provisional remedies and to direct the Parties to request that any court modify or vacate any provisional, temporary or preliminary relief issued by a court hereunder. (v) Each Party shall continue to perform obligations hereunder, when any bona fide Dispute is pending. 18.4 Third Party Licenses. Notwithstanding anything to the contrary herein, with respect to any Dispute arising out of or related to any Third Party License, such Dispute shall be governed 18 by and construed in accordance with the laws of the State of New York, without reference to or reliance upon its rules regarding conflicts of laws and shall be subject to the dispute resolution provisions set forth in the applicable Third Party License. SECTION 19.MISCELLANEOUS 19.1 Force Majeure. Excluding payment obligations, neither Party hereto shall be liable to the other Party for any Damages attributable to a default under or breach of this Agreement to the extent resulting from war (whether declared or undeclared), acts of God, revolution, acts of terror, fire, earthquake, flood, pestilence, riot, enactment or change of Applicable Laws (following the Effective Date), accident(s), labor trouble, global shortage of or inability to obtain material equipment, supplies of the Product or any other cause beyond the reasonable control of such Party and the effect of which could not have been mitigated by reasonable contingency planning (each, a “Force Majeure Event”); provided that if such a cause occurs, then the Party affected will promptly notify the other Party of the nature and likely result and duration (if known) of such cause and use its Commercially Reasonable Efforts to mitigate, avoid and/or remove such causes of nonperformance as soon as is reasonably practicable. Upon termination of the Force Majeure Event, the performance of any suspended obligation or duty shall promptly recommence. If the resulting default or event lasts for a period of longer than three (3) months, the Parties shall meet to implement appropriate remedial measures; provided that, if the resulting default or event lasts for a period of longer than six (6) months, the unaffected Party may terminate this Agreement. Upon the occurrence of a Force Majeure Event that lasts for a period of more than three (3) months, the Parties shall arrange a meeting between Advanz’s CEO and/or CFO (or equivalent role) and Applied’s CEO and/or CFO (or equivalent role) to determine whether a continuity plan is required. In the event that Applied is the affected Party, Applied shall promptly submit to Advanz for its approval (and once approved, implement), a continuity plan to deal with the consequences of the Force Majeure Event as soon as reasonably practicable (the “FM Continuity Plan”). If required by Advanz, the FM Continuity Plan shall include rights for Advanz to exercise some or all of its right to step-in under Section 8.14 following issue of a Step-In Notice to Applied. 19.2 Severability. If and solely to the extent that any provision of this Agreement shall be invalid or unenforceable, or shall render this entire Agreement to be unenforceable or invalid, such offending provision shall be of no effect and shall not affect the enforceability or validity of the remainder of this Agreement or any of its provisions; provided, however, that the unenforceable or invalid provision shall be replaced in a manner that best accomplishes the original intentions of the Parties, by agreement of the Parties or by a court of competent jurisdiction. 19.3 Waivers. Any term or condition of this Agreement may be waived at any time by the Party that is entitled to the benefit thereof, but no such waiver shall be effective unless set forth in a written instrument duly executed by or on behalf of the Party waiving such term or condition. Neither the waiver by any Party of any term or condition of this Agreement nor the failure on the part of any Party, in one or more instances, to enforce any of the provisions of this Agreement or to exercise any right or privilege, shall be deemed or construed to be a waiver of such term or condition for any similar instance in the future or of any subsequent breach hereof. All rights, remedies, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be a limitation of any other remedy, right, undertaking, obligation or agreement. 18 19.4 Entire Agreements; Amendments. (a) This Agreement, the Quality Agreement and the Pharmacovigilance Agreement set forth the entire agreement and understanding between the Parties as to the subject matter hereof and supersedes and replaces any and all agreements, statements, arrangements or understandings, verbal or written, made between Applied and Advanz before the Effective Date with respect to the subject matter hereof, including the Mutual Confidentiality Agreement by and between Advanz Pharma Services (UK) Limited and Applied dated July 5, 2022. All Confidential Information disclosed by either Party to the other Party prior to the Effective Date will be deemed, as of the Effective Date, to have been disclosed pursuant to, and will be subject only to, this Agreement. (b) None of the terms of this Agreement shall be amended, supplemented or modified except in writing signed by the Parties. 19.5 Survival. The provisions of Sections 2.7, 5.4 (as required to comply with Applicable Laws), 7.4(c) and (h), 8.3, 10.8 (for two (2) years), 12 (for the time period set forth therein), 13.6, 16.2, 16.3, 17.1 through 17.4 (inclusive), 17.5 (for three (3) years), 17.6, 18, 19.2 through 19.10 (inclusive), 19.12 and 19.14 through 19.15 (inclusive), and Exhibit H (to the extent required by the Third Party Licenses), as well as (x) any other Sections or defined terms referred to in such Sections or necessary to give them effect and (y) any other provision that by its terms expressly survives termination of this Agreement, shall survive termination of this Agreement and remain in force until discharged in full. Furthermore, any other provisions required to interpret and enforce the Parties’ rights and obligations or to wind up their outstanding obligations under this Agreement shall survive to the extent required. For clarity, if Section 16.3(a) is triggered, survival shall be governed by Section 16.3(a)(xi). 19.6 Assignment; Binding Effect. (a) Neither this Agreement nor any rights or obligations of either Party to this Agreement may be assigned or otherwise transferred by either Party without the consent of the other Party; provided, however either Party may, without such consent, assign this Agreement, in whole or in part to any of its respective Affiliates, but for only so long as such assignee remains an Affiliate of such Party; provided that such assigning Party shall remain jointly and severally liable with such Affiliate in respect of all obligations so assigned; (b) Advanz may assign this Agreement to a Third Party acquiror to all or substantially all of the assets of Advanz, whether by merger or sale of all or substantially all of Advanz’s assets, so long as such Third Party agrees in writing to be bound by the terms of this Agreement; and (c) Applied may assign this Agreement to a Third Party acquiror to all or substantially all of the assets of Applied to which this Agreement relates, whether by merger or sale of line of business or of all or substantially all of Applied’s assets to which this Agreement relates, so long as such Third Party agrees in writing to be bound by the terms of this Agreement and the relevant Intellectual Property to which the licenses granted to Advanz under this Agreement relates, are transferred to such assignee (or arrangements shall be put in place to ensure that such licenses granted are not adversely affected in any way). 18 (d) Notwithstanding anything to the contrary herein, nothing herein shall prevent Applied or its Affiliates from engaging in any merger, consolidation, reorganization, sale or purchase of stock, or sale or purchase of assets, or undergoing any change of control, including in each case with respect to any line of business, or prevent Applied or its Affiliates with respect to any royalty or milestone sale, collateralized loan or other financing. For clarity, a change of control of an entity does not constitute an assignment or transfer. (e) Any purported assignment in violation of this Section 19.6 shall be void. Any permitted assignee shall assume all obligations of its assignor under this Agreement. 19.7 Independent Contractor. The relationship between Applied and Advanz is that of independent contractors. Applied and Advanz are not joint venturers, partners, principal and agent, employer and employee, and have no other relationship other than independent contracting parties. 19.8 Notices. Each communication and document made or delivered by one Party to another under this Agreement shall be made in the English language. Subject to Section 3.1 and Section 6, notices, consents, approvals, and requests required hereunder given by one Party to the other hereunder shall be in writing and made by registered or certified air mail, express overnight courier or delivered personally to the following addresses of the respective Parties: If to Applied: 545 5th Avenue, Suite 1400 New York, NY 10017 Attn: Shoshana Shendelman, Chief Executive Officer with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP One Manhattan West New York, NY 10001 Attn: Michael Schwartz If to Advanz: Capital House 1st Floor 85 King William Street London EC4N 7BL Attn: Chief Corporate Development Officer 18 with a copy to: Capital House 1st Floor 85 King William Street London EC4N 7BL and by email to: legalteam@advanzpharma.com Attn: General Counsel Notices hereunder shall be deemed to be effective (a) upon receipt if personally delivered; (b) on the tenth (10th) Business Day following the date of mailing if sent by registered or certified air mail; (c) on the second (2nd) Business Day following the date of transmission or delivery to the overnight courier if sent by facsimile or overnight courier; and (d) subject to Section 3.1, if sent by email on the earliest of a receipt of a delivery or read receipt email from the correct address, on receipt of confirmation of receipt from the recipient or twenty-four (24) hours from delivery if sent to the correct email address and no notice of delivery failure is received. A Party may change its address listed above by sending notice to the other Party in accordance with this Section 19.8. 19.9 Third-Party Beneficiaries. None of the provisions of this Agreement shall be for the benefit of or enforceable by any Third Party, including any creditor of either Party, (whether under the Contracts (Rights of Third Parties) Act 1999 or otherwise); provided that [***] shall be a third party beneficiary of this Agreement to the extent permitted under Applicable Laws, solely to enforce the Applied Patent Rights and/or Applied Technology (in each case, which are owned by [***]). Subject to the foregoing and the indemnification obligations set forth in Sections 17.1 17.2, and 17.3 which shall be enforced by each Party with respect to any of their respective indemnified parties, no Third Party shall obtain any right under any provision of this Agreement or shall by reason of any such provision make any claim in respect of any debt, liability or obligation (or otherwise) against either Party. 19.10 Binding Effect. This Agreement shall be binding upon and inure to the benefit of the Parties hereto and their respective heirs, successors and permitted assigns. 19.11 Performance by Affiliates. To the extent that this Agreement imposes obligations on Affiliates of a Party, such Party agrees to cause its Affiliates to perform such obligations, and any breaches of this Agreement by any such Affiliate shall be deemed a breach by and enforceable against such Party hereunder. Advanz may use one or more of its Affiliates to exercise its rights or perform its obligations and duties hereunder; provided that Advanz shall remain liable hereunder for the prompt payment and performance of all of its obligations hereunder, including, for the avoidance of doubt, in respect of any Net Sales of Products attributable to the Commercialization activities of any of Advanz’s Affiliates or Sublicensees. 19.12 Further Assurance. Each Party shall (at its own cost) do, execute or procure to be done and executed all acts, deeds, documents and things as are reasonably necessary or desirable to give full effect to this Agreement. 18 19.13 Counterparts. This Agreement may be executed in any counterparts, each of which, when executed, shall be deemed to be an original and which together shall constitute one and the same document. Signatures provided by facsimile transmission or in Adobe™ Portable Document Format (PDF) sent by electronic mail shall be deemed to be original signatures. 19.14 Order of Precedence. In the event of any conflict between: (a) the Quality Agreement and this Agreement, the Quality Agreement shall take precedence with regard to matters affecting the quality of the Products; (b) the Pharmacovigilance Agreement and this Agreement, the Pharmacovigilance Agreement shall take precedence with regard to matters to any safety data matters relating to the Products; (c) the Sections and the Exhibits in this Agreement, the Sections in this Agreement shall take precedence over the Exhibits. 19.15 Equitable Remedies. The Parties agree that irreparable harm, or damage for which monetary damages would not be an adequate remedy, may occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that, without limitation of other remedies which may be available to a Party for breach of this Agreement by the other Party, the Parties shall be entitled to seek equitable relief, including an injunction or injunctions to prevent or mitigate breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement. 19.16 Data Protection. The Parties acknowledge that, to the extent that any personal data is processed under the terms of this Agreement, each Party is a separate controller in respect of that personal data and shall comply with all Applicable Laws in respect of data protection in relation to the processing of that personal data. 19.17 Financial Stability. Applied covenants and agrees that, so long as this Agreement shall remain in effect, it will furnish to Advanz (a) within ninety (90) days after the end of each fiscal year of Applied, a consolidated balance sheet and related statements of operations of Applied and its controlled Affiliates (provided that “controlled” shall have the meaning assigned to it in Section 1.10), if any, as of the close of such fiscal year and the consolidated results of its operations during such year (it being understood that the filing by Applied of annual reports on Form 10-K of Applied and its consolidated Subsidiaries with the Securities and Exchange Commission shall satisfy the requirements of this Section 19.17 to the extent such annual reports include the information specified herein) and (b) within forty-five (45) days after the end of the first three (3) quarterly periods of each fiscal year of Applied, a consolidated balance sheet and related statements of operations of Applied and its Subsidiaries, if any, as of the close of such fiscal quarter and the consolidated results of its operations during such fiscal quarter and the then- elapsed portion of the fiscal year (it being understood that the filing by Applied of quarterly reports on Form 10-Q of Applied and its consolidated Subsidiaries with the Securities and Exchange Commission shall satisfy the requirements of this Section 19.17 to the extent such quarterly reports include the information specified herein). In this Section 19.17, financial circumstances, which Advanz 18 reasonably believes will materially prejudice Applied’s ability to perform its obligations, shall constitute a “Financial Stability Event.” Without prejudice to any other rights or remedies of Advanz, upon the occurrence of a Financial Stability Event, Advanz shall have the right to require Applied to: (i) provide to Advanz such relevant financial information (given the nature of the Financial Stability Event) relating to Applied as Advanz may reasonably require (which Applied shall promptly provide); and/or (ii) arrange a meeting between Advanz’s CEO and/or CFO (or equivalent role) and Applied’s CEO and/or CFO (or equivalent role) whom Applied shall make available for this purpose, as soon as reasonably practicable, to determine whether a continuity plan is required. At such meeting, discussions between the Parties shall take into consideration how to avoid placing Applied’s assets including the Product in jeopardy and delaying access of the Product to patients. Following such meeting, if Advanz determines that a continuity plan is required, Applied shall promptly submit to Advanz for its approval (and once approved, implement), a continuity plan to deal with the consequences of the Financial Stability Event as soon as reasonably practicable (the “Continuity Plan”). If mutually agreed by both Parties, the Continuity Plan shall include rights for Advanz to exercise some or all of its Step-In Rights under Section 8.14(a) following issue of a Step-In Notice to Applied. [Signature Page Follows] 18 IN WITNESS WHEREOF the Parties hereto have caused this Agreement to be executed by their duly authorized officers upon the date set out below. APPLIED THERAPEUTICS, INC. MERCURY PHARMA GROUP LIMITED By: ___________________________ By:____________________________ Name: Title: Name: Title: Exhibit A Compound Exhibit A-1 [***] Exhibit B Applied Patent Rights Exhibit B-1 [***] Exhibit C Licensed Trademarks Exhibit C-1 Exhibit D Territory Austria, Belgium, Bulgaria, Croatia, Republic of Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden, Switzerland and the United Kingdom Exhibit D-1 1. 2. Columbia License Miami License Exhibit E Third Party Licenses Exhibit E-1 Exhibit F Press Release For immediate release ADVANZ PHARMA to receive exclusive rights from Applied Therapeutics to commercialise AT-007 (govorestat) in Europe ● ADVANZ PHARMA secures exclusive rights to register and commercialise AT-007, a Phase 3 development compound for the treatment of several rare neurological diseases, including Galactosemia and SORD Deficiency, in the European Economic Area, the UK, and Switzerland ● ADVANZ PHARMA will leverage its existing specialty, hospital, and rare disease expertise and infrastructure to ensure successful commercialisation and patient access London, UK – January 4, 2023: ADVANZ PHARMA Corp. (“ADVANZ” or “the Company”), a UK headquartered global pharmaceutical company with a strategic focus on specialty, hospital, and rare disease medicines in Europe, today announced that it has entered into an exclusive agreement with Applied Therapeutics, a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates against validated molecular targets in indications of high unmet medical need. Under the terms of the agreement, Applied Therapeutics will be responsible for the clinical development and supply of AT-007, while ADVANZ will manage the registration and commercialisation in the European Economic Area, the UK, and Switzerland. Steffen Wagner, CEO of ADVANZ, commented: “We are very excited to announce this partnership with Applied Therapeutics, which is fully aligned with ADVANZ’s strategy to be a partner of choice for commercialisation of specialty, hospital, and rare disease medicines in Europe.” Exhibit F-1 “We believe ADVANZ PHARMA is an ideal partner for commercialisation of AT-007 in Europe,” said Shoshana Shendelman, PhD, Founder and CEO of Applied Therapeutics. “ADVANZ PHARMA’s commitment to improving the lives of patients alongside their critical infrastructure and expertise in rare diseases positions them well for commercial success. This partnership brings us one step closer to making AT-007 available to patients with Galactosemia and SORD Deficiency – both debilitating rare diseases with no other therapies currently available.” Susanna El-Armale, Chief Corporate Development Officer of ADVANZ, stated: “This partnership with Applied Therapeutics delivers on our commitment to bring innovative products to market that serve an unmet medical need and it supports our ambition to build a strong product pipeline to drive ADVANZ’s mid- and long-term growth.” Ends About AT-007 AT-007 is a central nervous system (CNS) penetrant Aldose Reductase inhibitor (ARI) in development for the treatment of several rare neurological diseases, including Galactosemia, SORD Deficiency, and PMM2- CDG. In clinical trials, AT-007 significantly reduced plasma galactitol levels vs. placebo in adults and children with Galactosemia. AT-007 is currently being studied in a Phase 3 clinical outcomes trial (ACTION- Galactosemia Kids) in children ages 2-17 with Galactosemia, as well as a long-term open-label study in adults with Galactosemia. In a pilot study in adults with SORD Deficiency, AT-007 significantly reduced blood sorbitol levels. AT-007 is currently being studied in a Phase 3 trial (INSPIRE) investigating biomarker efficacy and clinical outcomes in adults and children 16 years and older with SORD Deficiency. The drug has been generally safe and well tolerated in all clinical studies to date. About ADVANZ PHARMA ADVANZ PHARMA is a global pharmaceutical company with a strategic focus on specialty, hospital, and rare disease medicines in Europe. The company has commercial affiliates in Europe, North America and Australia, and a Centre of Excellence in Mumbai, India, as well as an established global network of commercial partners throughout the rest of the world. With an agile and experienced team, including direct sales, marketing, and medical capabilities across Europe’s major markets, Canada, and Australia, ADVANZ PHARMA is committed to improving lives of patients by providing and enhancing the specialty, hospital, and rare disease medicines they depend on. The company has a broad expertise in several therapeutic areas including hepatology, gastroenterology, critical care, anti-infectives, endocrinology, oncology, and more broadly rare disease medicines, making ADVANZ PHARMA a partner of choice for the commercialisation of specialty, hospital, and rare disease medicines. For more information, please visit our Website or Linkedin. For media inquiries, please contact: Exhibit F-2 Courtney Baines ADVANZ PHARMA Corp. Tel: +44 77641 7246 Email: courtney.baines@advanzpharma.com Exhibit F-3 Applied Therapeutics Announces Partnership with Advanz Pharma for Commercialization of AT-007 (Govorestat) in Europe ● Advanz Pharma will leverage its specialty, hospital, and rare disease expertise and infrastructure to commercialize AT-007 in Europe for both Galactosemia and SORD Deficiency Applied Therapeutics will receive milestone payments of over €130 million and 20% royalty payments on net sales in Europe Deal strengthens Applied Therapeutics’ capital position and extends cash runway through key ● ● milestones NEW YORK, January 4, 2023– Applied Therapeutics, Inc. (Nasdaq: APLT), a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates against validated molecular targets in indications of high unmet medical need, today announced a partnership with Advanz Pharma, a pharmaceutical company with a strategic focus on commercialization of specialty, hospital, and rare disease medicines, for commercialization of AT-007 (govorestat) in Europe. “We believe Advanz Pharma is an ideal partner for commercialization of AT-007 in Europe,” said Shoshana Shendelman, PhD, Founder and CEO of Applied Therapeutics. “Advanz Pharma’s commitment to improving the lives of patients alongside their critical infrastructure and expertise in rare diseases positions them well for commercial success. This partnership brings us one step closer to making AT-007 available to patients with Galactosemia and SORD Deficiency – both debilitating rare diseases with no other therapies currently available – and strengthens Applied Therapeutics’ capital position.” “We are pleased to partner with Applied Therapeutics,” said Susanna El-Armale, Chief Corporate Development Officer of Advanz. “We believe that AT-007 represents a compelling scientific opportunity to treat rare diseases, including Galactosemia and SORD Deficiency. This partnership delivers on our commitment to bring innovative products to market that serve an unmet medical need and to build a strong product pipeline to drive Advanz’s mid- and long-term growth.” Under the terms of the agreement: ● Applied Therapeutics will receive certain near-term development milestones upon clinical trial completion and marketing authorization in Europe as well as commercial sales milestones, which in the aggregate amount to over €130 million, including €10 million upfront due upon signing. ● Applied Therapeutics will receive royalties on any future net sales of AT-007 in Europe of 20%. ● Applied Therapeutics will continue to be responsible for the development, manufacturing and supply of AT-007, and Advanz Pharma will be responsible for packaging, distribution and commercialization in Europe. ● Advanz Pharma receives exclusive commercial rights in the European Economic Area, Switzerland, and the UK for AT-007 in Galactosemia and SORD Deficiency, with certain rights to future indications for AT-007 in Europe. About AT-007 AT-007 is a central nervous system (CNS) penetrant Aldose Reductase inhibitor (ARI) in development for the treatment of several rare neurological diseases, including Galactosemia, SORD Deficiency, and PMM2- CDG. In clinical trials, AT-007 significantly reduced plasma galactitol levels vs. placebo in adults and children with Galactosemia. AT-007 is currently being studied in a Phase 3 clinical outcomes trial (ACTION-Galactosemia Kids) in children ages 2-17 with Galactosemia, as well as a long-term open-label study in adults with Galactosemia. In a pilot study in adults with SORD Deficiency, AT-007 significantly reduced blood sorbitol levels. AT-007 is currently being studied in a Phase 3 trial (INSPIRE) investigating Exhibit F-4 biomarker efficacy and clinical outcomes in adults and children 16 years and older with SORD Deficiency. The drug has been generally safe and well tolerated in all clinical studies to date. About Applied Therapeutics Applied Therapeutics is a clinical-stage biopharmaceutical company developing a pipeline of novel drug candidates against validated molecular targets in indications of high unmet medical need. The Company’s lead drug candidate, AT-007, is a novel central nervous system penetrant Aldose Reductase Inhibitor (ARI) for the treatment of CNS rare metabolic diseases, including Galactosemia, SORD Deficiency, and PMM2- CDG. The Company is also developing AT-001, a novel potent ARI, for the treatment of Diabetic Cardiomyopathy, or DbCM, a fatal fibrosis of the heart. The preclinical pipeline also includes AT-003, an ARI designed to cross through the back of the eye when dosed orally, for the treatment of Diabetic retinopathy. learn more, please visit www.appliedtherapeutics.com and follow To @Applied_Tx. the company on Twitter About Advanz Pharma ADVANZ PHARMA is a global pharmaceutical company with a strategic focus on specialty, hospital, and rare disease medicines in Europe and Canada. The company has commercial affiliates in Europe, North America and Australia, and a Centre of Excellence in Mumbai, India, as well as an established global network of commercial partners throughout the rest of the world. With an agile and experienced team, including direct sales, marketing, and medical capabilities across Europe’s major markets, Canada, and Australia, ADVANZ PHARMA is committed to improving lives of patients by providing and enhancing the specialty, hospital, and rare disease medicines they depend on. The company has a broad expertise in several therapeutic areas including hepatology, gastroenterology, CNS, critical care, anti-infectives, endocrinology, oncology, and more broadly rare disease medicines, making ADVANZ PHARMA a partner of choice for the commercialization of specialty, hospital, and rare disease medicines. Forward-Looking Statements This press release contains “forward-looking statements” that involve substantial risks and uncertainties for purposes of the safe harbor provided by the Private Securities Litigation Reform Act of 1995. Any statements, other than statements of historical fact, included in this press release regarding the strategy, future operations, prospects, plans and objectives of management, including words such as “may,” “will,” “expect,” “anticipate,” “plan,” “intend,” and similar expressions (as well as other words or expressions referencing future events, conditions or circumstances) are forward-looking statements. These include, without limitation, statements regarding (i) the anticipated benefits of the Company’s partnership with Advanz Pharma and (ii) the expected development milestone payments. Forward-looking statements in this release involve substantial risks and uncertainties that could cause actual results to differ materially from those expressed or implied by the forward-looking statements, and we, therefore cannot assure you that our plans, intentions, expectations or strategies will be attained or achieved. Such risks and uncertainties include, without limitation, (i) our plans to develop, market and commercialize our product candidates, (ii) the initiation, timing, progress and results of our current and future preclinical studies and clinical trials and our research and development programs, (iii) our ability to take advantage of expedited regulatory pathways for any of our product candidates, (iv) our estimates regarding expenses, future revenue, capital requirements and needs for additional financing, (v) our ability to successfully acquire or license additional product candidates on reasonable terms and advance product candidates into, and successfully complete, clinical studies, (vi) our ability to maintain and establish collaborations or obtain Exhibit F-5 additional funding, (vii) our ability to obtain and timing of regulatory approval of our current and future product candidates, (viii) the anticipated indications for our product candidates, if approved, (ix) our expectations regarding the potential market size and the rate and degree of market acceptance of such product candidates, (x) our ability to fund our working capital requirements and expectations regarding the sufficiency of our capital resources, (xi) the implementation of our business model and strategic plans for our business and product candidates, (xii) our intellectual property position and the duration of our patent rights, (xiii) developments or disputes concerning our intellectual property or other proprietary rights, (xiv) our expectations regarding government and third-party payor coverage and reimbursement, (xv) our ability to compete in the markets we serve, (xvi) the impact of government laws and regulations and liabilities thereunder, (xvii) developments relating to our competitors and our industry, (xvii) the impact of the COVID-19 pandemic on the timing and progress of our ongoing clinical trials and our business in general and (xiv) other factors that may impact our financial results. In light of the significant uncertainties in these forward-looking statements, you should not rely upon forward-looking statements as predictions of future events. Although we believe that we have a reasonable basis for each forward-looking statement contained in this press release, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur at all. Factors that may cause actual results to differ from those expressed or implied in the forward-looking statements in this press release are discussed in our filings with the U.S. Securities and Exchange Commission, including the “Risk Factors” contained therein. Except as otherwise required by law, we disclaim any intention or obligation to update or revise any forward-looking statements, which speak only as of the date they were made, whether as a result of new information, future events or circumstances or otherwise. Contacts Investors: Maghan Meyers (212) 600-1902 appliedtherapeutics@argotpartners.com Media: media@appliedtherapeutics.com Applied Therapeutics, Inc. Exhibit F-6 [***] Exhibit G COGs Components Exhibit G-1 Exhibit H Third Party License Flow-Down Provisions [***] Exhibit H-1 [***] Exhibit I Cost of Goods Analysis Exhibit I-1 Exhibit J Affiliate Sublicensees as at Effective Date [***] Exhibit J-1 Exhibit 23.1 Consent of Independent Registered Public Accounting Firm We consent to the incorporation by reference in the following Registration Statements: ● Registration Statement (Form S-8 No. 333-231618) of Applied Therapeutics, Inc., ● Registration Statement (Form S-8 No. 333-255018) of Applied Therapeutics, Inc, and ● Registration Statement (Form S-3 No. 333-238948) of Applied Therapeutics, Inc. of our report dated March 23, 2023, with respect to the financial statements of Applied Therapeutics, Inc. included in this Annual Report (Form 10-K) of Applied Therapeutics for the year ended December 31, 2022. /s/ Ernst & Young LLP New York, New York March 23, 2023 Exhibit 31.1 CERTIFICATIONS The undersigned certifies that: 1. I have reviewed this Form 10-K of Applied Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 23, 2023 By: /s/ Shoshana Shendelman Name: Shoshana Shendelman, Title: Ph.D. Chief Executive Officer (Principal Executive Officer) Exhibit 31.2 CERTIFICATIONS The undersigned certifies that: 1. I have reviewed this Form 10-K of Applied Therapeutics, Inc.; 2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; 3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; 4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: (a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; (b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; (c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and (d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and 5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): (a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and (b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. Date: March 23, 2023 /s/Steven Ortega By: Name:Steven Ortega Title: Chief Accounting Officer (Principal Accounting Officer and Interim Principal Financial Officer) CERTIFICATION Exhibit 32.1 Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), the undersigned hereby certifies that, to the best of their knowledge: 1. 2. The Annual Report on Form 10-K of Applied Therapeutics, Inc. (the “Company”) for the fiscal year ended December 31, 2022, to which this Certification is attached as Exhibit 32.1 (the “Annual Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 23, 2023 By: /s/ Shoshana Shendelman Name: Shoshana Shendelman, Title: Ph.D. Chief Executive Officer (Principal Executive Officer) CERTIFICATION Exhibit 32.2 Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), the undersigned hereby certifies that, to the best of their knowledge: 1. 2. The Annual Report on Form 10-K of Applied Therapeutics, Inc. (the “Company”) for the fiscal year ended December 31, 2022, to which this Certification is attached as Exhibit 32.2 (the “Annual Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and The information contained in the Annual Report fairly presents, in all material respects, the financial condition and results of operations of the Company. Dated: March 23, 2023 /s/ Steven Ortega By: Name: Steven Ortega Title: Chief Accounting Officer (Principal Accounting Officer and Interim Principal Financial Officer) 

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