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, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
OR
FOR THE TRANSITION PERIOD FROM TO
Commission File Number 001-38096
G1 THERAPEUTICS, INC.
(Exact name of Registrant as specified in its Charter)
Delaware
( State or other jurisdiction of
incorporation or organization)
26-3648180
(I.R.S. Employer
Identification No.)
700 Park Offices Drive, Suite 200
Research Triangle Park, NC 27709
(Address of principal executive offices including zip code)
Registrant’s telephone number, including area code: (919) 213-9835
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Common Stock $.0001 par value
Trading Symbol
GTHX
Name of each exchange on which registered
The Nasdaq Stock 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 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
Non-accelerated filer
Emerging growth company
☒
☐
☐
Accelerated filer
Smaller reporting 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. ☒
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the voting and non-voting common equity held by non-affiliates of the Registrant as of June 30, 2021, the last business day of the Registrant’s most
recently completed second fiscal quarter, was $844.7 million based on the closing price of the shares of common stock on The Nasdaq Stock Market on that date.
The number of shares of the Registrant’s Common Stock outstanding as of February 21, 2022 was 42,705,532.
Auditor Firm Id:
Auditor Location:New York, NY, United States
Auditor Name:PricewaterhouseCoopers LLP
238
Documents Incorporated by Reference
Portions of the Registrant’s Definitive Proxy Statement relating to the Annual Meeting of Stockholders, scheduled to be held on June 23, 2022, are incorporated by reference into
Part III of this report. Such proxy statement will be filed with the Securities and Exchange Commission within 120 days of the Registrant’s fiscal year ended December 31, 2021.
PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.
PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.
PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.
PART IV
Item 15.
Item 16.
Table of Contents
Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures About Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services
Exhibits, Financial Statement Schedules
Form 10-K Summary
Signatures
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Special note regarding forward-looking statements
This Annual Report on Form 10-K (this “Annual Report”) contains forward-looking statements that involve risks and uncertainties. All statements other
than statements of historical facts contained in this Annual Report are forward-looking statements. In some cases, you can identify forward-looking
statements by words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,”
“predict,” “project,” “seek,” “should,” “target,” “will,” “would,” or the negative of these words or other comparable terminology.
These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in the “Risk Factors” section
and elsewhere in this Annual Report. Moreover, we operate in a very competitive and rapidly changing environment, and new risks emerge from time to
time. It is not possible for our management to predict all risks, 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 any forward-looking statements we may make. In light of
these risks, uncertainties and assumptions, the forward-looking events and circumstances discussed in this Annual Report may not occur and actual results
could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-
looking statements are reasonable, 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. Such forward looking statements speak only as of the date of this Annual Report. Except as may be
required by law, we undertake no obligation to update any forward-looking statements to reflect events or circumstances after the date of such statements.
You should read this Annual Report and the documents that we have filed as exhibits to this Annual Report with the understanding that our actual future
results, levels of activity, performance, and events and circumstances may be materially different from what we expect.
This Annual Report includes statistical and other industry and market data that we obtained from industry publications and research, surveys and studies
conducted by third parties. Industry publications and third-party research, surveys and studies generally indicate that their information has been obtained
from sources believed to be reliable, although they do not guarantee the accuracy or completeness of such information.
1
PART I
Item 1. Business.
Overview
We are a commercial-stage biopharmaceutical company focused on the development and commercialization of novel small molecule therapeutics for the
treatment of patients with cancer. Our first FDA-approved product, COSELA™ (trilaciclib) is the first and only therapy indicated to proactively help
protect bone marrow from the damage of chemotherapy (myeloprotection) and is the first innovation in managing myelosuppression in decades. Trilaciclib
was developed from a technology platform that targets key cellular pathways including transient arrest of the cell cycle at the G1 phase, prior to the
beginning of DNA replication. Controlled administration and clean G1 arrest reduce hematologic adverse events (AEs) caused by cytotoxic therapy and
may increase the ability to receive longer treatment durations. Transient CDK4/6 inhibition also modulates multiple immune functions while allowing
beneficial T cell proliferation which may improve patients’ anti-tumor immune responses. We are exploring the use of trilaciclib in a variety of trials across
multiple tumor types and treatment combinations to optimize these dual benefits of myeloprotection and improved anti-tumor efficacy for patients globally.
We were incorporated under the laws of the State of Delaware in May 2008 under the name “G-Zero Therapeutics, Inc.” In September 2012, we changed
our name to “G1 Therapeutics, Inc.” Our principal executive offices are located at 700 Park Offices Drive, Suite 200, Research Triangle Park, NC 27709,
and our telephone number is (919) 213-9835.
We manage our operations as a single segment for the purposes of assessing performance and making operating decisions. All of our assets are held in the
United States.
“G1 Therapeutics,” “COSELA” and our logo are our trademarks. All other service marks, trademarks and trade names appearing in this Annual Report are
the property of their respective owners. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a
relationship with, or endorsement or sponsorship of us by, these other companies. We shall use “COSELA” when we are referring to our FDA approved
drug and “trilaciclib” when we are referring to our development of COSELA for additional indications. “Myeloprotection” is synonymous with the term
“myelopreservation.” We used “myelopreservation” in our communications and disclosures prior to the FDA’s approval of trilaciclib (COSELA) and we
now use the term “myeloprotection” following FDA’s approval in order to align more closely with the FDA’s terminology.
Product Portfolio
Our lead compound trilaciclib is a first-in-class therapy designed to help protect against chemotherapy-induced myelosuppression. Trilaciclib helps protect
hematopoietic stem and progenitor cells (“HSPCs”) in the bone marrow by transiently inhibiting CDK4/6 leading to a temporary arrest of susceptible host
cells during chemotherapy in patients. This reduces the duration and severity of neutropenia and other myelosuppressive consequences of chemotherapy. In
addition, trilaciclib may improve anti-tumor efficacy when administered as combination treatment in patients by increasing their ability to receive more
cytotoxic therapy, protecting their immune systems from damage caused by cytotoxic therapy, and improving their immune responses by modulating
multiple immune functions while also allowing beneficial T cell proliferation. On February 12, 2021, trilaciclib (COSELA™) was approved by the U.S.
Food and Drug Administration (“FDA”) to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior to
a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive small cell lung cancer (“ES-SCLC”). We continue to explore these
dual benefits of myeloprotection and anti-tumor efficacy across multiple clinical trials.
In 2020, we out-licensed global rights to lerociclib, an internally discovered and differentiated oral CDK4/6 inhibitor designed to enable more effective
treatment combination strategies across multiple oncology indications. We also have intellectual property focused on cyclin-dependent kinase targets.
Rintodestrant is an oral selective estrogen receptor degrader (“SERD”) for the treatment of ER+ breast cancer. We are in the process of evaluating
partnering options for this program.
In 2020, we entered into a global license agreement with ARC Therapeutics, Inc. (“ARC”) for the development and commercialization of an internally
discovered CDK2 inhibitor for all human and veterinary uses. ARC is currently granted an exclusive, royalty-bearing, license with the right to grant
sublicenses to one of our solely-owned patent families.
2
COSELA is a prescription medicine used to help reduce the occurrence of low blood cell counts caused by damage to bone marrow from chemotherapy.
COSELA is used to treat adults taking certain chemotherapies (platinum/etoposide or topotecan) for extensive-stage small cell lung cancer.
COSELA is an injection for intravenous (IV) use given within 4 hours before chemotherapy.
Commercial Product
On February 12, 2021, COSELA™ was approved by the U.S. Food and Drug Administration (“FDA”) to decrease the incidence of chemotherapy-induced
myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive
small cell lung cancer (“ES-SCLC”). COSELA became commercially available through our specialty distributor network on March 2, 2021. COSELA is a
first-in-class therapy designed to help protect against chemotherapy-induced myelosuppression. COSELA helps protect hematopoietic stem and progenitor
cells (“HSPCs”) in bone marrow by transiently inhibiting CDK4/6 leading to a temporary arrest of susceptible host cells during chemotherapy in patients
with ES-SCLC. This reduces the duration and severity of neutropenia and other myelosuppressive consequences of chemotherapy.
COSELA is administered intravenously as a 30-minute infusion completed within four (4) hours prior to the start of chemotherapy and is the first and only
FDA-approved therapy that helps proactively deliver multilineage myeloprotection to patients with ES-SCLC being treated with chemotherapy. The
approval of COSELA is based on data from three (3) randomized, placebo-controlled trials that showed patients receiving COSELA prior to chemotherapy
had clinically meaningful and statistically significant reduction in the duration and severity of neutropenia, reduction of red blood cell transfusions, as well
as improvements in other myeloprotection measures, compared to patients receiving chemotherapy without COSELA.
We announced on March 25, 2021, that COSELA had been included in two updated National Comprehensive Cancer Network® (“NCCN”) Clinical
Practice Guidelines in Oncology (NCCN Guidelines®): The Treatment Guidelines for Small Cell Lung Cancer and the Supportive Care Guidelines for
Hematopoietic Growth Factors. These guidelines document evidence-based, consensus-driven management to ensure that all patients receive preventive,
diagnostic, treatment, and supportive services that are most likely to lead to optimal outcomes. On October 1, 2021, we announced that the permanent J-
code for COSELA that was issued in July 2021 by the Centers for Medicare & Medicaid Services (CMS) is now effective for provider billing for all sites
of care. All hospital outpatient departments, ambulatory surgery centers and physician offices in the United States have one consistent Healthcare Common
Procedure Coding System (HCPCS) code to standardize the submission and payment of COSELA insurance claims across Medicare, Medicare Advantage,
Medicaid and commercial plans. Our new technology add-on payment (NTAP) for COSELA, which provides additional payment to inpatient hospitals
above the standard Medicare Severity Diagnosis-Related Group (MS-DRG) payment amount, also became effective for provider billing on October 1,
2021.
In June 2020, we entered into a three-year co-promotion agreement for COSELA in the United States and Puerto Rico with Boehringer Ingelheim
Pharmaceuticals, Inc (“BI”). In December 2021, G1 and BI announced that the parties mutually agreed to end the co-promotion agreement for COSELA,
effective March 2022. At that time, we announced that we would hire and deploy a total of 34 oncology sales representatives to accelerate sales activities
and help maximize the adoption of COSELA. As of February 21, 2022, all 34 sales representatives have been hired, trained and deployed.
Trilaciclib Development Pipeline
We are also executing on our tumor-agnostic strategy to evaluate the potential benefits of trilaciclib to patients with other tumors and to generate new data
for trilaciclib in a variety of cytotoxic settings and treatment combinations to maximize its potential for patients in existing and future treatment paradigms.
We currently have five on-going clinical trials: a pivotal trial in 1L colorectal cancer (“CRC”), a pivotal trial in 1L mTNBC, a Phase 2 trial in 1L bladder
cancer with chemotherapy induction and checkpoint inhibitor maintenance, a Phase 2 trial in combination with an antibody-drug conjugate (“ADC”) in
2L/3L mTNBC, and a Phase 2 trial in neoadjuvant TNBC designed to validate trilaciclib’s immune-based mechanism of action (“MOA”). These studies
will evaluate trilaciclib’s dual benefits of proactive multi-lineage myeloprotection and anti-tumor efficacy across tumor types and treatment combinations
and will help inform the design of future additional pivotal studies. We are also conducting extensive preclinical work to assess the additive/synergistic
potential of trilaciclib with a variety of new and emerging therapeutic agents that may be pursued as combination treatments in future clinical trials.
3
Candidate
Indication
Current Status
Timing
of
Initial
Results
Endpoints
Development &
Commercialization Rights
(all indications)
1L metastatic
Colorectal cancer
(CRC)
1L metastatic Triple
negative breast cancer
(mTNBC)
Registrational
trial (enrolling)
1Q 2023
Registrational
trial (enrolling)
2H 2023
trilaciclib
1L Bladder cancer
(mUC)
Phase 2 trial
(enrolling)
4Q 2022
Primary: myeloprotection
Secondary: ORR, PFS/OS,
PRO
Primary: OS
Secondary: PRO,
myeloprotection, PFS/ORR
Primary: PFS
Secondary: ORR*, OS,
myeloprotection*, others
Antibody-drug
conjugate (ADC)
combination trial in
mTNBC
Mechanism of action
trial in early stage
neoadjuvant TNBC
Phase 2 trial
(enrolling)
4Q 2022
Primary: PFS
Secondary: ORR*, OS,
myeloprotection*, others
Phase 2 trial
(enrolling)
4Q 2022
Primary: Immune-based MOA*
Secondary: pCR, immune
response, others
G1 Therapeutics owns all global
development and commercial rights
across all indications, with the
exception of Greater China
(Simcere)
PFS=progression-free survival; OS=overall survival; PRO=patient reported outcome; ORR=overall response rate; pCR=pathological complete response;
MOA=mechanism of action. *=initial results for Phase 2 trials expected in 4Q 2022
Mechanism of Action - Trilaciclib
Trilaciclib, a novel transient IV CDK4/6 inhibitor has unique attributes including rapid onset from IV administration, potent and selective CDK4 and
CDK6 inhibition and a short half-life. Controlled administration and clean G1 arrest reduce hematologic adverse events (“AEs”) caused by cytotoxic
therapy and may increase patients’ abilities to receive longer treatment durations. Transient CDK4/6 inhibition also modulates multiple immune functions
while allowing beneficial T cell proliferation which may improve patients’ anti-tumor immune responses.
Trilaciclib transiently blocks progression through the cell cycle. This provides benefits which manifest depending on the tumor type and therapeutic
backbone, including: (1) proactive multi-lineage myeloprotection, and (2) potentially improved anti-tumor efficacy.
First, trilaciclib provides proactive multi-lineage myeloprotection by transiently arresting hematopoietic stem and progenitor cells (“HSPCs”), helping to
protect them from damage caused by cytotoxic therapy thereby minimizing cytopenias across neutrophils, erythrocytes, and platelets. These proactive
multi-lineage myeloprotection benefits were seen in our three double-blind, placebo-controlled clinical trials in ES-SCLC, where highly myelosuppressive
chemotherapy regimens are administered multiple days in a row. This myeloprotection benefit is being explored as the primary endpoint in our ongoing
PRESERVE 1 trial in 1L colorectal cancer.
Second, trilaciclib may have the ability to improve anti-tumor efficacy through a combination of potential factors, including increasing patients’ ability to
receive more cytotoxic therapy, protecting the immune system from damage caused by cytotoxic therapy, and favorably modulating multiple immune
functions while also allowing beneficial T cell proliferation. In particular, these immune function improvements may include: (1) enhancing T cell
activation (via increased antigen presentation and secretion of IL-2 and IFNγ), (2) favorably altering the tumor microenvironment (via increased
chemokines responsible for trafficking T cells to tumors and reducing the number and function of immunosuppressive cell populations), and (3) improving
long-term immune surveillance (via increased generation of memory CD8+ T cells). A meaningful anti-tumor efficacy benefit was observed in our Phase 2
mTNBC study in which trilaciclib led to a significant improvement in overall survival when administered in combination with chemotherapy compared to
chemotherapy alone. We are exploring these dual benefits of myeloprotection and anti-tumor efficacy across a variety of ongoing Phase 2 and Phase 3
clinical trials.
4
Description of Ongoing Clinical Trials - Trilaciclib
Pivotal 1L Colorectal Cancer (CRC)
We are enrolling patients in PRESERVE 1, a randomized, placebo-controlled registrational trial of trilaciclib in colorectal cancer (“CRC”). CRC is a large
indication commonly treated with 5-FU-based chemotherapy. We have extensive preclinical research demonstrating myeloprotection and potential efficacy
in 5-FU-based regimens with trilaciclib. Our ongoing 1L CRC trial is evaluating trilaciclib administered in combination with FOLFOXIRI, which is the
most efficacious chemotherapy regimen in this tumor type but highly myelosuppressive compared with FOLFOX or FOLFIRI. By reducing the toxicity of
FOLFOXIRI, we believe trilaciclib will significantly expand use of FOLFOXIRI in patients living with CRC and potentially improve anti-tumor efficacy.
1L Metastatic Triple-Negative Breast Cancer (mTNBC)
Building upon the robust OS benefit observed in the prior Phase 2 study, we are enrolling patients in PRESERVE 2, a pivotal Phase 3 trial of trilaciclib in
patients receiving first-line gemcitabine and carboplatin for locally advanced unresectable or mTNBC. This study is evaluating trilaciclib in PD-L1 positive
and negative patients and largely replicates the design of the positive Phase 2 trial which demonstrated improved anti-tumor efficacy across patients. Anti-
tumor efficacy and myeloprotection endpoints are being assessed in this study. G1 has discontinued the 2L cohort of this trial given anticipated enrollment
concerns and limited commercial potential with the initial rapid uptake for Trodelvy® (sacituzumab govitecan-hziy) following its recent U.S. approval. G1
will broaden enrollment of the 1L cohort in this study to also include patients who received checkpoint inhibitors in the neo/adjuvant setting to ensure that
we develop clinical experience for trilaciclib in this increasingly relevant patient population.
1L Bladder Cancer
We are enrolling patients in PRESERVE 3, a randomized, open-label Phase 2 study of trilaciclib administered with first-line platinum-based chemotherapy
and the immune checkpoint inhibitor avelumab maintenance therapy in patients with untreated, locally advanced or metastatic urothelial carcinoma
(“mUC”). Myeloprotection and anti-tumor efficacy endpoints are being assessed in this study. There is a strong rationale to evaluate trilaciclib in 1L
bladder cancer: (1) bladder is a known immunogenic tumor proven to be responsive to chemotherapy and immune checkpoint inhibitors; (2) the most
common chemotherapy regimen used in 1L bladder cancer is gemcitabine and platinum, which is similar to the chemotherapy regimen in our mTNBC
study (gemcitabine and carboplatin) where we showed significant OS benefits; and (3) preclinical data suggests meaningful potential synergistic benefits
by combining trilaciclib with checkpoint inhibitors. We anticipate that the Phase 2 study will provide important data for trilaciclib in a known immunogenic
setting and is expected to help define future combination studies.
Phase 2 Study of Trilaciclib in Combination with an Antibody-Drug Conjugate (ADC)
Triple negative breast cancer (“TNBC”) is an area where trilaciclib, in our Phase 2 study, and ADCs – medicines that deliver targeted chemotherapy agents
to cancer cells – have both shown clinically meaningful and substantial improvements in overall survival. We believe that trilaciclib and ADCs could act
synergistically to improve patient outcomes with fewer myelosuppressive side effects. We are enrolling patients in a Phase 2 single arm study of trilaciclib
administered prior to the ADC Trodelvy® (sacituzumab govitecan-hziy) in patients with unresectable locally advanced or mTNBC who received at least
two prior treatments, at least one in the metastatic setting. We anticipate that data generated from this trial will be instructive in evaluating future ADC
combination possibilities.
Phase 2 Study to Confirm the Immune-Based Mechanism of Action (MOA) of Trilaciclib
We are enrolling patients in a Phase 2 study of trilaciclib and chemotherapy in patients with early-stage TNBC receiving neoadjuvant treatment, to evaluate
and confirm the immune-based mechanism of action (“MOA”) of trilaciclib. This trial in neoadjuvant TNBC replaced the I-SPY2 neoadjuvant breast trial
in G1’s pipeline given a treatment landscape shift in neoadjuvant TNBC from chemotherapy only to chemotherapy plus I/O (checkpoint inhibitors). This
MOA study will build upon earlier observations from the Phase 2 TNBC trial and preclinical data and evaluate the potential for developing rational
combinations with novel targeted therapies. The study will evaluate immune endpoints, including the change in the ratio of CD8+ tumor-infiltrating
lymphocytes (TILs) to regulatory T cells (Treg) in the tumor microenvironment following a single dose of trilaciclib, and impacts on immunomodulation.
We anticipate that data generated from the MOA study will inform the design of future pivotal studies across multiple tumor types and treatment
combinations.
5
Investigator Sponsored Studies (ISS) Program
The Company has a robust Investigator Sponsored Studies (“ISS”) program. An ISS is a study that is developed and conducted by a qualified physician
investigator external to G1 who assumes full responsibility for the conduct of the study. An ISS can take a variety of forms including clinical and
nonclinical studies that may be interventional or observational. Our ISS program supports studies that align with our areas of scientific interest. We
anticipate that the first ISS to be supported by G1 will be in 1L non-small cell lung cancer and expect it to be initiated in the second quarter of 2022.
Market opportunities for trilaciclib
Cancer is the second leading cause of death in the United States with an estimated 1.9 million new cases and 609,000 deaths projected to occur in 2022,
according to the American Cancer Society. Cytotoxic therapies (chemotherapies, antibody-drug conjugates, others) are the standard of care treatment for
multiple cancers.
Myelosuppression is a common serious adverse event related to cytotoxic therapies. These treatments have significant clinical utility and continue to be the
most effective treatment for many cancers. However, cytotoxic therapies also damage HSPCs (myelosuppression) and the immune system
(immunosuppression), leading to severe adverse effects and limiting anti-tumor activity. Myelosuppression causes abnormally low numbers of red blood
cells, or anemia, abnormally low numbers of neutrophils, or neutropenia, and/or abnormally low numbers of platelets, or thrombocytopenia. Treating or
preventing the myelosuppressive side effects of cytotoxic therapy presents a large market opportunity, with chemotherapy utilized in more than one million
patients in North America annually, and newer cytotoxic agents such as ADCs continuing to demonstrate benefits in expanding patient populations. The
only current treatments for chemotherapy-induced myelosuppression are rescue interventions like growth factors and/or transfusions given after
myelosuppression occurs. COSELA is the only product approved to proactively prevent chemotherapy-induced myelosuppression and we continue to
evaluate the utility of trilaciclib to prevent myelosuppression in clinical trials with existing and newer cytotoxic therapies.
Additionally, significant unmet medical need continues to exist for products that can meaningfully improve the antitumor efficacy of existing and emerging
standard of care therapies. Despite continued advancements of new treatment modalities, additional novel therapies are needed to further improve anti-
tumor efficacy, including in combination with newer agents. Trilaciclib is a novel compound with the potential to meaningfully improve anti-tumor efficacy
across tumor types when administered in treatment combinations. We are studying trilaciclib broadly in multiple Phase 2 and Phase 3 clinical trials to
evaluate its potential to improve anti-tumor efficacy and reduce adverse events commonly associated with cytotoxic therapies
•
•
•
Extensive-stage small cell lung cancer (ES-SCLC). According to the American Cancer Society, SCLC accounts for approximately 10-15% of
all lung cancers. Approximately 30,000 people are treated annually in the United States for ES-SCLC across first line through third line.
First-line treatment of ES-SCLC in the United States is typically a chemotherapy regimen of carboplatin and etoposide, which has significant
myelosuppressive side effects. Combination treatment with chemotherapy and immunotherapy has emerged as the standard of care in the
United States. While these patients often respond to first-line therapy, approximately 90% progress within one year and die within two years.
Five-year survival rates are less than 5% for patients with ES-SCLC. Topotecan, approved for SCLC in 2007, is a standard treatment used in
the second/third line setting and is highly myelosuppressive. Based on market research we have completed to date, many physicians see
proactive myeloprotection as a better approach for patients and would incorporate trilaciclib into their SCLC treatment regimen. We believe
the total market value of the trilaciclib opportunity for all eligible ES-SCLC patients in the U.S. exceeds $700 million.
Colorectal cancer (CRC). We are evaluating the use of trilaciclib in colorectal cancer in a Phase 3 trial that initiated in the fourth quarter of
2020 and enrolled the first patient in the first quarter of 2021. Colorectal cancer is the third most common cancer in men and women,
excluding certain skin cancers. Globally, it is the second leading cause of cancer death, with more than 1.8 million people newly diagnosed
each year. In the United States, there are approximately 150,000 new cases diagnosed each year. Chemotherapy is the standard of care for
colorectal cancer, and the majority of patients in the United States, Europe and Japan receive chemotherapy as part of their treatment
regimen.
Breast cancer. We are evaluating the use of trilaciclib in a variety of breast cancers, including metastatic triple negative breast cancer
(mTNBC) and other high-risk, early-stage breast cancer subtypes. According to the World Health Organization, an estimated 2.3 million
cases of breast cancer are diagnosed annually worldwide. Triple negative breast cancer makes up approximately 15-20% of such diagnosed
breast cancers. Because mTNBC cells lack key growth-signaling receptors, patients do not respond well to medications that block estrogen,
progesterone, or HER2 receptors. Instead, treating mTNBC typically involves chemotherapy, radiation, and surgery. In general, survival rates
tend to be lower with mTNBC compared to other forms of breast cancer, and mTNBC is also more likely to return after it has been treated,
especially in the first few years after treatment.
6
•
Bladder cancer. We are evaluating the use of trilaciclib in bladder cancer in a Phase 2 study that initiated in the second quarter of 2021. There
have been multiple positive registrational studies and approvals of checkpoint inhibitors in combination with chemotherapy, and these
combination regimens are emerging as a standard of care in multiple tumor types. Data from our trial of trilaciclib in combination with the
checkpoint inhibitor Tecentriq in patients with ES-SCLC showed myeloprotection benefits without impairing anti-tumor efficacy. This Phase
2 trial in bladder cancer will explore the use of trilaciclib in combination with chemotherapy for induction therapy and in combination with a
checkpoint inhibitor for maintenance therapy. We believe trilaciclib may improve outcomes for these patients based on potentially synergistic
benefits with both chemotherapy and immunotherapy. According to the American Cancer Society, there are over 81,000 new cases of bladder
cancer diagnosed in the United States each year, and over 17,000 reported annual deaths. Globally, there are nearly 575,000 new bladder
cancer diagnoses each year.
Advantages of trilaciclib
Trilaciclib is a novel transient IV CDK4/6 inhibitor with unique attributes including rapid onset from IV administration, potent and selective CDK4 and
CDK6 inhibition and a short half-life. We believe that treating patients with trilaciclib prior to the administration of cytotoxic therapy or immunotherapy
regimens may have the following benefits and advantages:
•
•
•
•
•
•
•
•
Potential to decrease the incidence of chemotherapy-induced myelosuppression. Trilaciclib has been rationally designed and optimized to
preserve HSPCs from damage by cytotoxic therapy, thereby minimizing cytopenias across neutrophils, red cells, and platelets. Trilaciclib has
the potential to decrease the clinically relevant consequences of these cytopenias and improve patient outcomes.
Potential to reduce cytotoxic therapy dose-delays and dose reductions. Chemotherapy-induced myelosuppression is the major dose limiting
toxicity of chemotherapy and can lead to dose reductions and schedule delays that can limit therapeutic benefit. Trilaciclib has been designed
specifically to minimize myelosuppression and has the potential to enable maintenance of the indicated and planned chemotherapeutic dose
and schedule.
Potential to improve the patient experience as measured by validated Patient Reported Outcomes (PRO) instruments. PRO data from our
randomized trials demonstrate that patients receiving trilaciclib prior to chemotherapy report less fatigue and improved physical and
functional well-being.
Potential for use with cytotoxic therapy / immune checkpoint inhibitors combinations. Immune checkpoint inhibitors are often combined with
cytotoxic therapy. We have demonstrated that trilaciclib mitigates myelosuppression in ES-SCLC patients treated with chemotherapy in
combination with the immune checkpoint inhibitor Tecentriq. Additionally, our preclinical data suggests there may be meaningful potential
synergistic benefits in terms of anti-tumor efficacy when combining trilaciclib with checkpoint inhibitors in the appropriate treatment
settings.
Convenience of administration. Trilaciclib is designed to be administered via an IV infusion prior to chemotherapy treatment. This dosing
regimen fits with standard clinical practice for chemotherapy administration with or without checkpoint inhibitors.
Potential to reduce the cost of rescue interventions. Chemotherapy-induced myelosuppression leads to severe adverse side effects, such as
fatigue due to anemia, infections due to neutropenia, and bleeding due to thrombocytopenia. These adverse side effects often require costly
rescue interventions such as hospitalizations, transfusions, antibiotic usage and/or treatment with growth factor support. Because trilaciclib
has been designed specifically to minimize myelosuppression, we believe that it has the potential to reduce these costs. The positive
multilineage myeloprotection data we have reported to date and our market research with payers supports the value proposition of trilaciclib
to reduce these costs.
Potential broad applicability. We believe trilaciclib has the potential to benefit patients treated with multiple myelosuppressive cytotoxic
regimens, including targeted chemotherapy (ADCs), across a wide range of tumor types.
Potential to improve anti-tumor efficacy and prolong overall survival in treatment combinations. Trilaciclib has demonstrated the ability to
improve anti-tumor efficacy and increase overall survival in our Phase 2 mTNBC study. Trilaciclib may increase patients’ ability to receive
more cytotoxic therapy, protect their immune systems from damage by cytotoxic therapy, and improve their immune responses by modulating
multiple immune functions while also allowing beneficial T cell proliferation. We are evaluating trilaciclib’s ability to improve anti-tumor
efficacy across multiple tumor types and in various treatment combinations in ongoing clinical studies.
7
Trilaciclib: preclinical and clinical development
Preclinical development
We have published extensive biochemical, cellular and in vivo data on trilaciclib. Our preclinical data show that trilaciclib can induce transient and
reversible cell-cycle arrest of HSPCs; helps protect HSPCs from damage caused by chemotherapy; preserves bone marrow and immune system function;
improves complete blood count (CBC) recovery; helps protect from bone marrow exhaustion; prevents myeloid skewing and consequent lymphopenia;
activates T-cells in the tumor microenvironment; and enhances chemotherapy and checkpoint inhibitor anti-tumor activity.
We are currently conducting extensive preclinical development work to assess the synergistic potential of trilaciclib with a variety of novel and emerging
therapeutic agents to identify synergies to evaluate in future clinical trials.
Completed Phase 1 clinical trial
In 2015, we completed a Phase 1 clinical trial of trilaciclib in 45 healthy volunteers in the Netherlands. In this trial, subjects in seven cohorts were
administered a single ascending dose of trilaciclib between 6 mg/m² and 192 mg/m². The purpose of this trial was to evaluate the safety including dose
limiting toxicities, or DLTs, serious adverse events, or SAEs, adverse events, or AEs, and pharmacokinetics, or PK, and identify a biologically effective
dose of trilaciclib. Published data from this trial demonstrated that trilaciclib was well tolerated, with no DLTs or SAEs reported. These data demonstrated
that the administration of trilaciclib resulted in the robust cell-cycle arrest of HSPCs for at least 32 hours and supported a starting dose of 200 mg/m 2 for
the initial studies in patients.
Completed randomized clinical trials
Trilaciclib (IV CDK4/6 inhibitor):
Regimen
+Tecentriq/
carboplatin/
etoposide
+ etoposide/
carboplatin
+ topotecan
Indications
1st-line
Small Cell Lung Cancer
(study 1
in package
insert)
1st -line
Small Cell Lung Cancer
(study 2
in package
insert)
2nd /3rd –line
Small Cell Lung Cancer
(study 3
in package
insert)
metastatic Triple
Negative Breast Cancer
Status
COSELA™ (trilaciclib) approved to
decrease the incidence of chemotherapy-
induced myelosuppression in adult
patients when administered prior to a
platinum/etoposide-containing regimen or
topotecan-containing regimen for ES-
SCLC.
Phase
2
Publications
International Journal of Cancer (Daniel
et al.), December 2020
1b/2
1b/2
2
Annals of Oncology (Weiss et al.)
August 2019
Advances in Therapy (Hart et al.),
November 2020
Lancet Oncology (Tan et al.), September
2019
+gemcitabine/carboplatin Phase 2 complete; Currently enrolling
Phase 3
Phase 2 clinical program in SCLC (study 1 in package insert)
Based on the encouraging preliminary data, we advanced both SCLC trials into the randomized, placebo-controlled, double-blind Phase 2 segment.
Enrollment in the first-line SCLC Phase 2 trial was completed in the second quarter of 2017 and positive multilineage myeloprotection results were
reported in March 2018, with additional data reported at the European Society for Medical Oncology (ESMO) 2018 Congress and published in Annals of
Oncology (Weiss et al.) in 2019. Enrollment in the second/third-line SCLC Phase 2 trial was completed in the second quarter of 2018, with positive
multilineage myeloprotection data reported in the fourth quarter of 2018 and full data presented at an oral session at the American Society of Clinical
Oncology (ASCO) 2019 Annual Meeting. These data were also published in the International Journal of Cancer (Daniel et al.; 2020).
In December 2016, we entered into a non-exclusive agreement with Genentech to evaluate the combination of Genentech's immune checkpoint, anti-PD-L1
antibody Tecentriq with trilaciclib. Our first trial under the agreement is in first-line treatment for patients with ES-SCLC receiving carboplatin and
etoposide. We initiated enrollment in this randomized, double-blinded, placebo-controlled Phase 2 trial in the second quarter of 2017. The goals of the
clinical trial are to evaluate the safety, OS, myeloprotection, PK, and anti-tumor activity of trilaciclib in combination with Tecentriq and chemotherapy. We
completed enrollment in the first quarter of 2018. We reported positive multilineage myeloprotection data and preliminary progression free survival (PFS)
in November 2018, and presented updated safety and anti-tumor efficacy data at the 2019 ESMO Congress.
8
Phase 1b/2 clinical trial in first-line treatment of SCLC (study 2 in package insert)
In 2015, we initiated a Phase 1b/2 clinical trial in first-line ES-SCLC patients across multiple sites in the United States and Europe. The Phase 1b segment
of the trial was designed to confirm the trilaciclib dose to be used in the randomized, placebo-controlled Phase 2 segment. The goals of the trial are to
evaluate the safety, myeloprotection, pharmacokinetics, and anti-tumor activity of trilaciclib in combination with the existing first-line chemotherapy
standard of care regimen of etoposide and carboplatin and to confirm the dose to be used in future trials. All patients in the Phase 1b segment were
administered three-week cycles of trilaciclib plus etoposide/carboplatin, with an estimated four to six cycles administered in total per patient based on
historical practice. Trilaciclib was administered as an IV infusion prior to every dose of etoposide/carboplatin.
In the Phase 1b section of this trial, as reported at the American Society of Clinical Oncology meeting in June 2017, we treated 19 patients with multiple
cycles of trilaciclib and chemotherapy and did not have a single episode of febrile neutropenia – one of the most common adverse consequences of these
chemotherapy regimens. We also observed a dose dependent reduction in grade 3/4 hematologic adverse events. The results from the Phase 1b study
support the hypothesis that trilaciclib could ameliorate the significant acute and long-term consequences of chemotherapy-induced myelosuppression by
preserving hematopoietic and immune system function. Based on these results, we initiated the randomized, placebo-controlled Phase 2 segment of the trial
in fourth-quarter of 2016 with a trilaciclib dose of 240 mg/m2 and completed enrollment of a total of 77 patients in the second quarter of 2017. We
reported positive multilineage myeloprotection data from the Phase 2 segment of the trial in March 2018, with additional data from the trial presented at the
2018 ESMO Congress and final data published in Annals of Oncology (Weiss et al.; 2019).
Phase 1b/2 clinical trial in second/third-line treatment of SCLC (study 3 in package insert)
In 2015, we initiated a Phase 1b/2 clinical trial in second/third-line SCLC patients across multiple sites in the United States and Europe. The Phase 1b
segment of the trial was designed to confirm the trilaciclib dose to be used in the randomized, placebo-controlled Phase 2 segment of the trial. The goals of
the trial are to evaluate the safety, myeloprotection, PK, and anti-tumor activity of trilaciclib in combination with the existing second/third-line
chemotherapy standard of care regimen of topotecan and to confirm the dose to be used in future trials. All patients in the Phase 1b segment were
administered three-week cycles of trilaciclib plus topotecan until the progression of disease. Trilaciclib was administered as an IV infusion prior to every
dose of topotecan. Trilaciclib doses of 200 to 280 mg/m2 and topotecan doses of 0.75 to 1.5 mg/m2 were tested across 7 cohorts in the completed Phase 1b
open-label segment of the trial. The doses chosen for the randomized, placebo-controlled Phase 2 segment of this trial were trilaciclib 240 mg/m2 +
topotecan 0.75 mg/m2 and trilaciclib 240 mg/m2 + topotecan 1.5 mg/m2.
In the Phase 1b segment we treated 32 patients with trilaciclib and topotecan without any episodes of febrile neutropenia or treatment related SAEs.
Preliminary results from Phase 1b were reported at the IASCLC World Conference on Lung Cancer in December 2016. Based on these results, the Phase 2
segment was initiated in the first quarter of 2017 and consists of a double blind-design with 91 patients randomized on a 2:1 basis to receive trilaciclib plus
topotecan, or placebo plus topotecan. We completed enrollment in this trial in the second quarter of 2018 and reported multilineage myeloprotection data in
the fourth quarter of 2018. Safety and anti-tumor efficacy data were presented at the 2019 ASCO Annual Meeting. These data were published in the 2019
Advanced in Therapy (Hart et al.; 2020).
Our double-blind placebo controlled trials of trilaciclib in SCLC trials demonstrated that, when added to standard of care chemotherapy or
chemotherapy/checkpoint inhibitor regimens, trilaciclib mitigates clinically significant chemotherapy-induced myelosuppression. The U.S. Food and Drug
Administration (“FDA”) granted Breakthrough Therapy Designation for trilaciclib based on myeloprotection data from our three randomized, double-blind,
placebo-controlled SCLC clinical trials, as well as safety data collected across all completed and ongoing clinical trials. The Breakthrough Therapy
program is designed to expedite development and review of drugs intended for serious or life-threatening conditions. In August 2020, the FDA accepted
our New Drug Application (NDA) for trilaciclib in SCLC, granting Priority Review with a Prescription Drug User Fee Act (PDUFA) action date of
February 15, 2021. COSELA™ (trilaciclib) was approved by the FDA on February 12, 2021 to decrease the incidence of chemotherapy-induced
myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for ES-SCLC.
Discussions with European regulatory authorities have indicated existing data is sufficient to support a Marketing Authorization Application (MAA) to the
European Medicines Agency (EMA) for trilaciclib for myeloprotection in SCLC, which we plan to pursue in collaboration with a partner.
Phase 2 clinical trial in metastatic Triple Negative Breast Cancer (mTNBC)
In January 2017, we initiated an open label, randomized, Phase 2 trial that enrolled 102 patients with first, second or third-line mTNBC across multiple
sites in the United States and Europe. The goals of the clinical trial are to evaluate the safety, myeloprotection, PK, and anti-tumor activity of trilaciclib in
combination with the existing chemotherapy standard of care regimen of gemcitabine and carboplatin (GC). We completed enrollment in the second quarter
of 2018. At the December 2018 SABCS, we presented preliminary data demonstrating improvement in progression-free survival (PFS). We presented
additional safety and anti-tumor efficacy data at the 2019 ESMO Congress. The results of the trial demonstrated significant improvement in overall survival
(OS) (preliminary). Though the trial did not meet the primary myeloprotection endpoint, patients receiving trilaciclib were able to receive ~50% more
cycles of chemo, without additional hematological toxicity. These data were presented at the 2019 ESMO
9
Congress and concurrently published in The Lancet Oncology (Tan et al.; 2019). Updated safety and efficacy data from this trial were presented at the 2020
SABCS. Data included that compared to GC alone (Group 1), OS was improved in both trilaciclib arms (Groups 2 and 3) (Group 2: HR=0.31, p=0.0016;
Group 3: HR=0.40, p=0.0004). Median OS was 12.6 months in Group 1, not reached for Group 2, and 17.8 months in Group 3. The median OS for Groups
2 and 3 combined was 19.8 months (HR=0.37, p<0.0001). OS findings in patients receiving trilaciclib were consistent with previously reported data from
this trial. The median OS for GC alone (Group 1, 12.6 months) was consistent with the previous trial findings and historical data. Patients with both PD-
L1-positive and PD-L1-negative tumors treated with trilaciclib and GC demonstrated improvement in OS compared to patients receiving GC alone, with
the PD-L1-positive subset achieving statistically significant improvement. Further, data from T cell clonality analyses suggest that administering trilaciclib
prior to chemotherapy enhanced immune system function.
Five ongoing clinical trials
Trilaciclib (IV CDK4/6 inhibitor)
Phase 3 clinical trial in first line Colorectal Cancer (PRESERVE 1)
We initiated PRESERVE 1 in first line colorectal cancer (CRC) in the fourth quarter of 2020, and in January of 2021 we enrolled the first patient. CRC is a
large indication commonly treated with 5-FU-based chemotherapy. We have extensive preclinical research demonstrating myeloprotection and potential
efficacy in 5-FU-based regimens with trilaciclib. The Phase 3 trial is being conducted across multiple sites in the United States and Europe. The study is
evaluating the safety, myeloprotection and antitumor efficacy of trilaciclib in combination with FOLFOXIRI, the most efficacious chemotherapy regimen
in CRC, but also highly myelosuppressive. The primary endpoint is myeloprotection; secondary endpoints include progression-free survival (PFS), overall
survival (OS), and patient reported outcomes (PRO). We expect to enroll approximately 300 participants. Initial results of this study including
myeloprotection and Objective Response Rate (ORR) endpoints are expected in the first quarter of 2023.
Phase 3 clinical trial in first line Triple Negative Breast Cancer (PRESERVE 2)
Building upon the robust OS benefit observed in the prior Phase 2 study, in April 2021, we initiated PRESERVE 2, a pivotal Phase 3 trial of trilaciclib in
patients receiving first- or second-line gemcitabine and carboplatin chemotherapy (“GC”) for locally advanced unresectable or mTNBC. Anti-tumor
efficacy and myeloprotection endpoints are being assessed in this study. The Phase 3 trial is being conducted across multiple sites in the United States and
Europe. We made the strategic decision to discontinue the 2L arm of this trial due to a shift in the treatment paradigm for 2L mTNBC caused by the rapid
uptake of Trodelvy in this setting. This shift has created significant barriers to enrollment in the 2L cohort of this clinical study, and to the commercial
potential of trilaciclib in 2L mTNBC. Given this, we will enroll patients who previously received checkpoint inhibitors in the neo/adjuvant setting into the
1L arm of the trial, to ensure that we develop clinical experience in this patient population. We will continue to enroll and focus on 1L mTNBC patients, an
area of high unmet medical need. The primary endpoint is to evaluate the effect of trilaciclib on overall survival (OS) compared with placebo in patients
receiving first-line GC. Key secondary endpoints include assessment of the effect of trilaciclib on patients’ quality of life compared with placebo. We
expect to enroll approximately 170 1L patients. Initial results of this study including interim Overall Survival (OS) are expected in the second half of 2023.
Phase 2 clinical trial in first line Bladder Cancer (PRESERVE 3)
We initiated PRESERVE 3, a Phase 2, randomized, open-label study of trilaciclib administered with first-line platinum-based chemotherapy and the
immune checkpoint inhibitor avelumab maintenance therapy in patients with untreated, locally advanced or metastatic urothelial carcinoma (“mUC”), in
the second quarter of 2021. Myeloprotection and anti-tumor efficacy endpoints are being assessed in this study. The primary endpoint is to evaluate the
anti-tumor efficacy of trilaciclib when combined with platinum-based chemotherapy and the checkpoint inhibitor avelumab maintenance therapy as
measured by progression-free survival (PFS) during the overall study. Secondary endpoints include evaluation of the anti-tumor efficacy of trilaciclib as
measured by the objective response rate (ORR), duration of objective response (DOR), PFS in the maintenance period, overall survival (OS) and
probability of survival (POS) at Month 16, and evaluation of the myeloprotective effects of trilaciclib on chemotherapy-induced myelosuppression. We
have entered into a clinical trial collaboration with the alliance between Merck KGaA, Darmstadt, Germany and Pfizer whereby the alliance will contribute
clinical supply of avelumab to this G1-sponsored and funded trial in mUC. We expect to enroll approximately 90 patients. Initial results of this study for
ORR and myeloprotection are expected in the fourth quarter of 2022.
Phase 2 clinical trial in combination with the antibody-drug conjugate, Trodelvy® (Sacituzumab Govitecan-Hziy)
We initiated this Phase 2, single arm, open-label study of trilaciclib administered prior to the antibody-drug conjugate (ADC), Trodelvy® (sacituzumab
govitecan-hziy) in patients with unresectable locally advanced or mTNBC in the fourth quarter of 2021. ADCs are medicines that deliver targeted
chemotherapy agents to cancer cells. Antitumor efficacy and myeloprotective endpoints are being assessed. The primary objective is to evaluate the anti-
tumor efficacy of trilaciclib when administered prior to sacituzumab govitecan-hziy as measured by progression-free survival (PFS). Secondary endpoints
include evaluation of the anti-tumor efficacy as
10
measured by the objective response rate (ORR), duration of objective response (DOR), clinical benefit rate (CBR), overall survival (OS); and evaluation of
the myeloprotective effects of trilaciclib. We expect to enroll approximately 45 patients. We anticipate that data generated from this trial will be instructive
in evaluating future ADC combination possibilities. Initial results of this study for ORR and myeloprotection are expected in the fourth quarter of 2022.
Phase 2 clinical trial to confirm the antitumor mechanism of action (MOA) in the tumor microenvironment
We initiated this trial in the fourth quarter of 2021. This trial in neoadjuvant triple negative breast cancer (“TNBC”) replaced the I-SPY2 neoadjuvant breast
trial in G1’s pipeline given a treatment landscape shift in neoadjuvant TNBC from chemotherapy only to chemotherapy plus I/O (checkpoint inhibitors).
The trial is a Phase 2, single arm, open-label study of trilaciclib in patients with early-stage neoadjuvant TNBC designed to further investigate the role of
trilaciclib in modulating the anti-tumor immune response. Pathologic complete response endpoints are also being evaluated in this trial. The primary
objective is to evaluate the immune-based mechanism of action (“MOA”) of trilaciclib after a single-dose as measured by the change in the ratio of CD8+
tumor-infiltrating lymphocytes (TILs) to regulatory T cells (Tregs) in the tumor microenvironment. Secondary and exploratory endpoints include the
assessment of pathologic complete response (pCR) at the time of definitive surgery, immune response and profiling measures. We anticipate that data
generated from this MOA study will inform design of future additional pivotal studies across multiple tumor types and treatment combinations. We expect
to enroll approximately 30 patients. Initial results of this study including results for immune endpoints (e.g., CD8+ / Treg ratio) are expected in the fourth
quarter of 2022.
Investigator Sponsored Studies (“ISS”) Program
Trilaciclib (IV CDK4/6 inhibitor)
An Investigator Sponsored Study (“ISS”) is a study that is developed and conducted by a qualified physician external to G1 Therapeutics who assumes full
responsibility for the conduct of the study. An ISS can take a variety of forms including clinical and nonclinical studies that may be interventional or
observational. We support studies that align with our areas of scientific interest.
We anticipate that the first ISS to be supported by G1 will be in 1L non small cell lung cancer. This ISS is expected to be initiated by the physician in the
second quarter of 2022.
Trilaciclib: regulatory status
COSELA for injection was approved by the FDA in February 2021 to decrease the incidence of chemotherapy-induced myelosuppression in adult patients
when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-stage small cell lung cancer (ES-
SCLC). The approval was based on three small cell lung cancer (“SCLC”) trials demonstrating that trilaciclib, when added to standard of care
chemotherapy or chemotherapy/checkpoint inhibitor regimens, mitigates clinically significant chemotherapy-induced myelosuppression. Discussions with
European regulatory authorities have indicated existing data is sufficient to support an MAA to the EMA for trilaciclib for myeloprotection in ES-SCLC.
We received Breakthrough Therapy Designation from the FDA in 2019 based on positive myeloprotection data in small cell lung cancer patients from three
randomized Phase 2 clinical trials. As is common with Breakthrough-designated products that receive priority review, we will conduct certain post-
marketing activities, including in vitro drug-drug interaction and metabolism studies, and a clinical trial to assess the impact of trilaciclib on disease
progression or survival in patients with ES-SCLC with chemotherapy-induced myelosuppression treated with a platinum/etoposide-containing or
topotecan-containing regimen with at least a two year follow up. We intend to initiate the post-approval clinical trial in 2022.
In 2021, the FDA granted Fast Track designation to trilaciclib for use in combination with chemotherapy for the treatment of locally advanced or mTNBC.
Fast track is a process designed to facilitate the development and expedite the review of drugs to treat serious conditions and fill unmet medical needs. The
purpose is to get important new drugs to the patient earlier. A drug that receives Fast Track designation may be eligible for more frequent engagements
with the FDA to discuss a drug’s clinical development plan, eligibility for Accelerated Approval and Priority Review, and Rolling Review in which
completed sections of a New Drug Application (NDA) can be submitted for FDA review on a rolling basis rather than waiting until all sections of the NDA
are completed before the entire application can be reviewed.
We continue to engage in research and clinical development of trilaciclib in order seek regulatory approval to market additional indications in multiple
tumor types and treatment combinations, including colorectal cancer, breast cancer, bladder cancer.
11
Lerociclib
Lerociclib is a differentiated oral CDK4/6 inhibitor being developed for use in combination with other targeted therapies in multiple oncology indications.
In 2020, we entered into separate, exclusive agreements with EQRx, Inc. (rights for U.S., Europe, Japan and all markets outside Asia-Pacific) and Genor
Biopharma Co. Inc. (rights for Asia-Pacific, excluding Japan) for the development and commercialization of lerociclib in all indications. Combined, these
agreements provided $26.0 million in upfront payments, along with sales-based royalties and up to $330.0 million in potential milestone payments. EQRx,
Inc. and Genor Biopharma Co. Inc. are responsible for all costs related to the development and commercialization of lerociclib in their respective
territories.
Rintodestrant
Rintodestrant is a clinical-stage oral SERD, for use as a monotherapy and in combination with CDK4/6 inhibitors, initially Ibrance® (palbociclib), for the
treatment of ER+, HER2- breast cancer. We are in the process of evaluating partnering options for rintodestrant.
CDK2 Inhibitor
In 2020, we entered into a global license agreement with ARC Therapeutics, LLC for the development and commercialization of an internally discovered
CDK2 inhibitor for all human and veterinary uses. ARC is currently granted an exclusive, royalty-bearing, license with the right to grant sublicenses to one
of our solely owned patent families.
Our Business Strategy
Our goal is to improve the lives of those impacted by cancer through the ongoing development and expansion of trilaciclib. Our strategy includes the
following key components:
•
•
•
Establish COSELA (trilaciclib) as the standard of care for ES-SCLC in the United States. COSELA (trilaciclib) for Injection was approved
by the FDA in February 2021 to decrease the incidence of chemotherapy-induced myelosuppression in adult patients when administered prior
to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-stage small cell lung cancer (ES-SCLC).
Maximize long-term value of trilaciclib by executing our robust tumor agnostic development plan across multiple indications and
treatment settings. We believe that, because of its mechanism of action and unique attributes, including rapid onset from IV administration,
potent and selective CDK4 and CDK6 inhibition, and short half life trilaciclib has the potential to be used to treat patients receiving
myelosuppressive cytotoxic therapies like chemotherapy and to meaningfully improve anti-tumor efficacy across multiple tumor types and
when administered in various treatment combinations.
Manage capital efficiently to fully fund operations. We intend to efficiently execute our capital management strategies to ensure our ability
to fund our operations, including the commercialization of COSELA in ES-SCLC, and our ongoing and future clinical programs to develop
trilaciclib in additional cancer indications.
Commercialization
In February 2021, the U.S. Food and Drug Administration (FDA) approved COSELA (trilaciclib) to decrease the incidence of chemotherapy-induced
myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing regimen for extensive-
stage small cell lung cancer (ES-SCLC). In June 2020, we entered into a three-year co-promotion agreement for COSELA in the United States and Puerto
Rico with Boehringer Ingelheim Pharmaceuticals, Inc. (“BI”). In December 2021, G1 and BI mutually agreed to end the co-promotion agreement for
COSELA, effective March 2022. At that time, we announced that we would hire and deploy a total of 34 oncology sales representatives to accelerate sales
activities and help maximize the adoption of COSELA. As of February 21, 2022, all 34 sales representatives have been hired, trained and deployed. We are
now managing and executing all commercial activities in-house, including sales, marketing, market access and clinical nurse educator functions, as well as
product distribution. The G1 to One program serves as a patient hub and provides patient and healthcare provider services.
We plan to globally commercialize our product candidates through the establishment of collaboration agreements with global and/or regional
pharmaceutical companies to leverage our and their development and commercialization infrastructures and capabilities, enabling us to cost-effectively
maximize the global commercial opportunities of our product candidates.
12
Manufacturing
We do not own or operate, and currently have no plans to establish, any manufacturing facilities. We rely, and expect to continue to rely, on third parties
(contract manufacturing organizations, or CMOs) for the manufacture of our product candidates. To date, we have obtained drug substances and drug
products for our preclinical studies, clinical trials and commercial product from multiple third-party manufacturers. Redundant suppliers are in place for
some of our drug substances and drug products. As development proceeds for our products, we will evaluate qualifying additional redundant
manufacturers for drug substances and drug products.
Although we are reliant on third parties to manufacture our products, we have personnel with extensive manufacturing experience to oversee the
relationships with our CMOs. CMOs are subject to extensive governmental regulations and we depend on them to manufacture our products in accordance
with current good manufacturing practices, or cGMP. We have an established quality assurance program to ensure that the CMOs involved in the
manufacture of products do so in accordance with cGMP and other applicable U.S. and foreign regulations. We believe that our current CMO network
complies with such regulations.
Competition
The development and commercialization of new drug therapies is highly competitive. We will face competition with respect to all therapeutics we may
develop or commercialize in the future from pharmaceutical and biotechnology companies worldwide. Any drug candidates we successfully develop and
commercialize will compete with currently marketed drugs and therapies used for treatment of the same indications, and potentially with products currently
in development for the same indications. Many of the entities marketing or developing potentially competing products have significantly greater financial
resources and expertise than we do in research and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory
approvals and marketing. We believe the key competitive factors affecting the success of any approved product will be its efficacy, safety profile, price,
convenience of administration, and level of promotional activity. Accordingly, our commercial opportunity will be reduced or eliminated if our competitors
develop and commercialize products that are more effective, have fewer side effects, are more convenient or are less expensive than any products that we
may develop.
COSELA is the first approved therapy designed and optimized to help protect HSPCs and immune system function from damage by chemotherapy. We
believe administering trilaciclib with the current standard of care may minimize chemotherapy-induced myelosuppression, including the following adverse
side effects: fatigue due to anemia; infections due to neutropenia; and bleeding due to thrombocytopenia. Currently, these adverse side effects often require
costly rescue interventions such as hospitalizations, transfusions, antibiotic usage and/or treatment with growth factor support. Trilaciclib may reduce the
need to administer the existing rescue growth factor support treatments, including Neulasta® (pegfigrastim), Neupogen® (filgrastim), Procrit® (epoeitin
alpha), and Aranesp® (darbepoetin alfa) as well as biosimilars of these products. In addition, trilaciclib may compete with multiple approved drugs or
drugs that may be approved in the future, such as plinabulin which is in development for chemotherapy induced-neutropenia and ALRN-6924 which is in
development for chemotherapy-induced myelosuppression.
Intellectual property
Our commercial success depends in part on our ability to obtain and maintain proprietary protection in jurisdictions where we seek to commercialize our
FDA approved CDK4/6 inhibitor trilaciclib (COSELA). Our commercial success also depends in part on our ability to obtain and maintain proprietary
protection in the jurisdictions where our licensees seek to commercialize our proprietary CDK inhibitors, including clinical candidates trilaciclib and
lerociclib. We have secured patent protection to the composition of matter for trilaciclib and lerociclib in a number of jurisdictions, including for example,
the United States, Europe, China, Hong Kong, Macau, Japan, Korea, Singapore, Australia, Canada, Mexico, India, Israel, Russia, and Brazil. We have
secured patent protection to the use of trilaciclib or lerociclib for the treatment of certain cancers, including in the United States, Europe, China, Hong
Kong, Macau, and Japan. We have secured patent protection to the composition of matter for rintodestrant in the Unites States, Japan, Australia, Mexico,
Russia, and the Eurasian Patent Organization (EAPO). We also, where we believe appropriate, seek protection on processes for the production of our
CDK4/6 inhibitors and in-licensed SERD compound, formulations, additional compositions, combinations of our product candidates with other active
agents and dosing schedules and regimens. Our success also depends on our ability to operate without infringing on the proprietary rights of others and to
prevent others from infringing our proprietary rights. Our policy is to seek to protect our proprietary position by, among other methods, filing U.S. and
foreign patent applications covering our proprietary technology, inventions, and improvements that are important to the development and implementation
of our business. In addition, we plan to seek patent term adjustments, restorations, and/or patent term extensions where applicable in the United States and
other jurisdictions. We also rely on trade secrets, know-how, continuing technological innovation and potential in-licensing opportunities to develop and
maintain our proprietary position. Additionally, we expect to benefit, where appropriate, from statutory frameworks in the United States, Europe, and other
countries that provide a period of clinical data exclusivity to compensate for the time required for regulatory approval of our drug products. See also the
“Government Regulation and Product Approval” section below.
We are the sole owner or exclusive licensee of all of our patents and currently filed patent applications that cover trilaciclib, lerociclib, and rintodestrant.
We have the exclusive right to prosecute these patent families in our sole discretion, and, where we have out-licensed patents and patent applications, our
licensees have the right to review and comment on all material patent filings, and their
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review and comments will be considered by us in good faith. Our intellectual property strategy includes patenting our CDK4/6 inhibitors, their uses, and
methods of manufacturing as well as our in-licensed applications directed to selective estrogen receptor degraders and their uses, manufacture, and
combination with our and other CDK4/6 inhibitors. We have obtained more than twenty composition-of-matter patents in the United States on a number of
our CDK4/6 inhibitors, including claims that cover trilaciclib and lerociclib, and we continue to seek composition-of-matter patents on additional CDK
inhibitors both in the United States and throughout the world. In addition, we have obtained more than twelve patents in the United States on methods of
treatment using a number of our CDK4/6 inhibitors, including claims that cover methods of using trilaciclib and lerociclib. We continue to seek additional
patents for our key CDK4/6 inhibitors and their uses in key therapeutic areas.
As of December 31, 2021, we have listed 10 U.S. granted patents in the U.S. FDA’s Orange Book for our U.S. Food and Drug Administration approved
drug trilaciclib (COSELA). In addition, on April 8, 2021, we filed a request for patent term extension pursuant to 35 U.S.C. § 156 on two of these listed
patents (U.S. 8,598,186 and U.S. 9,487,530). We ultimately intend to elect one patent for extension. To the extent U.S. 8,598,186 is elected, the term is
expected to be extended to December 30, 2034. To the extent U.S. 9,487,530 is elected, the term is expected to be extended to February 12, 2035.
We have also obtained two composition-of-matter patents, and two method of treatment patents, in the United States on the SERD compounds that we have
exclusively in-licensed, including rintodestrant. We also seek patent protection on methods of treatment that incorporate in-licensed SERD compounds in
combination with other therapeutic agents to treat specific clinical indications and targeted patient populations.
We continually assess and refine our intellectual property strategies as we develop new technologies and product candidates. We plan to file additional
patent applications based on our intellectual property strategies where appropriate, including where we seek to adapt to competition or to improve business
opportunities. Further, we plan to file patent applications, as we consider appropriate under the circumstances, to protect new technologies that we develop.
Our patent filing strategy typically includes seeking patent protection in the United States, the European Union, and in additional countries where we
believe such protection is likely to be useful, including one or more of Australia, Brazil, Canada, China, Hong Kong, India, Israel, Japan, Mexico, Macau,
Russia, Singapore, and South Korea.
We are party to four license agreements relating to our CDK inhibitor technology. On May 22, 2020, we entered into a license agreement with ARC
Therapeutics, LLC, (“ARC”) where we out-licensed to ARC a portfolio of CDK2 inhibitors for development and commercialization. On June 15, 2020, we
entered into a license agreement with Genor Biopharma Co. Inc.(“Genor”) for the development and commercialization of our CDK4/6 inhibitor lerociclib
in the Genor Territory. On July 22, 2020, we entered into a license agreement with EQRx, Inc. (“EQRx”) for the development and commercialization of
lerociclib in the EQRx Territory. On August 3, 2020, we entered into a license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., Ltd,
(“Simcere”) for the development and commercialization of our CDK4/6 inhibitor trilaciclib in the Simcere Territory. Each of these license agreements is
described below.
Our owned and in-licensed patent estate as of December 31, 2021, on a worldwide basis, includes over 375 granted or pending patent applications in more
than 30 patent families with more than 40 granted U.S. patents. The term of individual patents depends upon the laws of the countries in which they are
obtained. In the countries in which we currently file, the patent term is 20 years from the earliest date of filing of a non-provisional patent application which
serves as a priority application. However, the term of a U.S. patent may be extended to compensate for the time required to obtain regulatory approval to
sell a drug (a patent term extension) or by delays encountered during patent prosecution that are caused by the United States Patent and Trademark Office
(USPTO) (referred to as patent term adjustment). For example, the Hatch-Waxman Act permits a patent term extension for FDA-approved drugs of up to
five years beyond the expiration of the patent. The length of the patent term extension is related to the length of time the drug is under regulatory review
and diligence during the review process. Patent term extensions cannot extend the remaining term of a patent beyond a total of 14 years from the date of
product approval, and only one patent covering an approved drug or its method of use may be extended. A similar kind of patent extension, referred to as a
Supplementary Protection Certificate, is available in Europe. Legal frameworks are also available in certain other jurisdictions to extend the term of a
patent. We currently intend to seek patent term extensions on any of our issued patents in any jurisdiction where we have a qualifying patent and the
extension is available; however, there is no guarantee that the applicable regulatory authorities, including the FDA and the USPTO in the United States,
will agree with our assessment of whether such extensions should be granted, and even if granted, the length of such extensions. Further, even if our patent
is extended, the patent, including the extended portion of the patent, may be held invalid or unenforceable by a court of final jurisdiction in the United
States or a foreign country.
Our current issued patents covering the composition-of-matter for trilaciclib and lerociclib will expire in 2031, exclusive of any patent term extension. As
described above, we have filed a request for patent term extension under 35 U.S.C. § 156 for a term extension of U.S. 8,598,186, which claims the
composition of matter of trilaciclib, which, if granted, would extend the term of this patent to December 30, 2034. Our current issued patents covering
methods of use of trilaciclib and lerociclib will expire in 2034 to 2035. As described above, we have filed a request for patent term extension under 35
U.S.C. § 156 for a term extension of U.S. 9,487,530,
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which claims the use of trilaciclib to reduce the effect of chemotherapy on healthy cells in a subject being treated for, among other things, small cell lung
cancer, which, if granted, would extend the term of this patent to February 12, 2035. Our pending applications on additional methods of use of trilaciclib
and lerociclib, should they issue, will expire on dates ranging from 2034 to 2042. We plan to file additional applications on aspects of our innovations that
may have patent terms that extend beyond these dates.
Our in-licensed patent covering the composition-of-matter of our clinical candidate rintodestrant will expire in 2036, exclusive of any patent term
extension. Our pending applications on additional methods and combinations relating to rintodestrant, should they issue, will expire in 2038.
Any of our patents, including patents that we may rely on to protect our market for approved drugs, may be held invalid or unenforceable by a court of final
jurisdiction. Alternatively, we may decide that it is in our interest to settle a litigation in a manner that affects the term or enforceability of our patent.
Changes in either the patent laws or in interpretations of patent laws in the United States and other countries may diminish our ability to protect our
inventions and enforce our intellectual property rights. Accordingly, we cannot predict the breadth or enforceability of claims that have been or may be
granted in our patents or in third-party patents. The biotechnology and pharmaceutical industries are characterized by extensive litigation regarding patents
and other intellectual property rights. Our ability to obtain and maintain our proprietary position for our CDK4/6 inhibitors or our in-licensed SERD
compound will depend on our success in enforcing the claims that have been granted or may grant. We do not know whether any of the pending patent
applications that we have filed or may file or license from third parties will result in the issuance of any additional patents. The issued patents that we own
or may receive in the future may be challenged, invalidated, or circumvented, and the rights granted under any issued patents may not provide us with
sufficient protection or competitive advantages against competitors with similar technology. Furthermore, our competitors may be able to independently
develop and commercialize drugs with similar mechanisms of action and duplicate our methods of treatments or strategies without infringing our patents.
Because of the extensive time required for clinical development and regulatory review of a drug we may develop, it is possible that, before any of our drugs
can be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby reducing any
advantage of any such patent.
Trilaciclib and lerociclib patent coverage
We own seven issued U.S. Patents (U.S. 8,598,186; U.S. 8,598,197; U.S. 9,957,276; U.S. 10,189,849; U.S. 10,189,850; U.S. 10,927,120; and U.S.
11,040,042) covering the trilaciclib compositions-of-matter and its pharmaceutical composition. We have listed each of these patents in the Orange Book
listing for COSELA. We also own six issued U.S. Patents (U.S. 8,598,186; U.S. 8,598,197; U.S. 9,481,691; U.S. 9,957,276; U.S. 10,189,851; and U.S.
10,696,682) covering the lerociclib composition-of-matter and pharmaceutical composition. We own corresponding issued patents covering trilaciclib and
lerociclib and their pharmaceutical compositions in Europe, Canada, Japan, Mexico, China, Macau, Australia, Russia, South Korea, India, Israel, Hong
Kong, Brazil, and Singapore. The expected year of expiration for these composition-of-matter patents, where issued, valid and enforceable, is 2031,
without regard to any extensions, adjustments, or restorations of term that may be available under national law.
In addition, we own three issued U.S. Patents (U.S. 9,487,530; U.S. 10,085,992; and 10,966,984) covering the use of trilaciclib to reduce the effect of
chemotherapy on healthy cells in a subject being treated for cancer, each of which has been listed in the Orange Book listing for COSELA. This patent
family covers, for example, SCLC treatment protocols involving chemotherapeutic agents carboplatin, etoposide, and/or topotecan along with trilaciclib for
protection of healthy replicating cells like hematopoietic stem and progenitor cells, and the use of trilaciclib to treat cancer in combination with a
chemotherapeutic agent. The patent filing also covers chemoprotection of healthy replicating cells with trilaciclib during the treatment of CDK4/6
independent cancer including triple negative breast cancer. Patents from this family have issued in Europe, China, Hong Kong, Macau, and Japan. A patent
application from this family is pending in Canada, Europe, and the United States. The expected year of expiration for this patent family, where issued, valid
and enforceable, is 2034, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
We have filed applications in the United States, in the European Patent Office (EPO), Canada, China, Hong Kong, Australia, Brazil, Israel, Japan, South
Korea, Mexico, New Zealand, Russia, and the regional patent office of the Eurasian Patent Organization (EAPO) and the African Regional Intellectual
Property Organization (ARIPO) that cover the administration of trilaciclib in combination with a checkpoint inhibitor. The expected year of expiration for
this patent family, where issued, valid and enforceable, is 2037, without regard to any extensions, adjustments, or restorations of term that may be available
under national law.
We own a patent family that is directed to the use of our CDK4/6 inhibitors to treat RB-positive tumors. The family includes four issued U.S. Patents (U.S.
9,527,857; U.S. 10,076,523; U.S. 10,434,104; and U.S. 10,925,878) and one pending US patent application. The ‘857 patent covers the use of lerociclib, to
treat RB-positive breast cancer, colon cancer, ovarian cancer, NSCL cancer, prostate cancer, and glioblastoma, the ‘523 patent covers the use of lerociclib
to treat Rb-positive breast cancer continuously for 28 days or more, and the ‘104 patent covers the use of lerociclib to treat Rb-positive breast cancer in
combination with goserelin. The ‘978 patent is directed to the use of trilaciclib in combination with a chemotherapeutic agent to treat RB-positive tumors.
Patents in this family
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have also issued in China, Hong Kong, Macau, and Japan, a patent application has been allowed in the EPO, and a patent application is pending in Canada.
The expected year of expiration for this patent family, where issued, valid and enforceable, is 2034, without regard to any extensions, adjustments, or
restorations of term that may be available under national law.
We own a patent family directed to the use of trilaciclib or lerociclib as an anti-neoplastic agent against certain hematological cancers. This family includes
one issued U.S. Patent (10,709,711) and one pending US patent application. This patent filing is pending in Europe, allowed in Canada, and has issued in
Japan and China. The expected year of expiration for this patent family, where issued, valid and enforceable, is 2034, without regard to any extensions,
adjustments, or restorations of term that may be available under national law.
We have filed patent applications in the United States, Europe, and China that covers the administration of lerociclib in combination with an EGFR
inhibitor, for example osimertinib, for the treatment of EGFR-mutant cancers, most notably NSCLC. The expected year of expiration for this patent family,
where issued, valid and enforceable, is 2038, without regard to any extensions, adjustments, or restorations of term that may be available under national
law.
We own a patent family directed to the use of lerociclib in combination with a Bruton’s tyrosine kinase inhibitor or other selected active agents to treat RB-
positive tumors. The family includes a granted U.S. patent (U.S. 10,231,969), a pending U.S. patent application and a pending European patent application.
The expected year of expiration for this patent family, where issued, valid and enforceable, is 2035, without regard to any extensions, adjustments, or
restorations of term that may be available under national law.
We have filed patent applications in the United States, European Patent Office (EPO), Canada, China, Hong Kong, Australia, Brazil, Israel, Japan, South
Korea, Mexico, New Zealand, Russia, and the regional patent office of the Eurasian Patent Organization (EAPO) and the African Regional Intellectual
Property Organization (ARIPO) that cover morphic forms of lerociclib. The expected year of expiration for this patent family, where issued, valid and
enforceable, is 2038, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
We have filed patent applications in the United States, European Patent Office (EPO), Brazil, Canada, China, Colombia, Hong Kong, Egypt, Australia,
Brazil, Israel, Japan, South Korea, Mexico, New Zealand, Russia, Indonesia, Sri Lanka, Malaysia, Nigeria, Peru, Philippines, Singapore, Thailand,
Vietnam, South Africa, and the regional patent office of the Eurasian Patent Organization (EAPO) and the African Regional Intellectual Property
Organization (ARIPO) that cover dosage regimes of lerociclib. The expected year of expiration for this patent family, where issued, valid and enforceable,
is 2039, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
We own a patent family directed to certain compositions of trilaciclib. This family has issued in the United States (10,988,479) and has a pending PCT and
United States application. The expected year of expiration for this patent family, where issued, valid and enforceable, is 2040, without regard to any
extensions, adjustments, or restorations of term that may be available under national law.
We own a patent family directed to the use of our CDK4/6 inhibitors in combination with the inhibitor of microtubule function eribulin for the treatment of
cancers. This family is pending in the United States, Europe, and China. The expected year of expiration for this patent family, where issued, valid and
enforceable, is 2039, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
We own a patent family directed to the selection of patients for administration of trilaciclib based on tumor type, chemotherapeutic regimen, and immune
factors. This family has a pending PCT application and has been filed in the United States, China, Taiwan, Japan, the EPO, and Argentina. The expected
year of expiration for this patent family, where issued, valid and enforceable, is 2040, without regard to any extensions, adjustments, or restorations of term
that may be available under national law.
We also own additional patent families directed to the use of our CDK4/6 inhibitors in combination with various other therapeutic agents for the treatment
of cancers harboring specific mutations. The expected year of expiration for these patent families, where issued, valid, and enforceable, is between 2039
and 2040, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
We own three U.S. patent families directed to the use of our CDK4/6 inhibitors in particular clinical applications. The expected year of expiration for these
patent families, where issued, valid, and enforceable, is between 2041 and 2042, without regard to any extensions, adjustments, or restorations of term that
may be available under national law.
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Rintodestrant Patent Coverage
We have exclusively licensed from University of Illinois, or the University, two patent families that cover rintodestrant and related compounds and their
pharmaceutical compositions and use as selective estrogen receptor down-regulators. Selected applications from these families are pending in ARIPO,
Australia, Brazil, Canada, China, Eurasia, Europe, Israel, India, Japan, Korea, Mexico, New Zealand, Russia, United States, and South Africa. Four U.S.
Patents (U.S. 10,118,910, U.S. 10,377,735, 10,807,964, and 11,072,595) have issued from this family. We have also received issued patents in Australia,
Eurasia, Japan, Russia, Mexico and South Africa. The expected year of expiration for these patent families, where issued, valid and enforceable, is 2036,
without regard to any extensions, adjustments, or restorations of term that may be available under national law. Under the Exclusive License Agreement
with the University, we have the right to prosecute the licensed applications, subject to review by the University.
We co-own, along with the University, patent applications filed in the United States, Europe, Australia, Brazil, Canada, China, Israel, India, Japan, South
Korea, Mexico, Russia, New Zealand, and the regional patent offices of ARIPO and the EAPO directed to the combination of rintodestrant and related
compounds with lerociclib and related compounds for the treatment of estrogen-modulated disorders such as RB-positive breast cancer. We have
exclusively licensed the University’s rights in this co-owned application. The expected year of expiration for this patent family, where issued, valid and
enforceable, is 2038, without regard to any extensions, adjustments, or restorations of term that may be available under national law.
A number of our pending patent applications covering certain aspects of using trilaciclib, lerociclib, or rintodestrant have not yet issued. As with other
biotechnology and pharmaceutical companies, our ability to obtain and maintain a proprietary position on our drug candidates and technologies will depend
on our success in obtaining effective patent claims on these pending patents and enforcing those claims if granted. However, our pending patent
applications, and any patent applications that we may in the future file or license from third parties, may not result in the issuance of patents. We also
cannot predict the breadth of claims that may be allowed or enforced in our patents.
Any issued patents that we have received or may receive in the future may be challenged, invalidated or circumvented. In addition, because of the extensive
time required for clinical development and regulatory review of a drug candidate we may develop, it is possible that, before any of our drug candidates can
be commercialized, any related patent may expire or remain in force for only a short period following commercialization, thereby limiting protection such
patent would afford the respective product and any competitive advantage such patent may provide. Moreover, even our issued patents do not guarantee us
the right to practice our technology in relation to the commercialization of our clinical candidates. The area of patent and other intellectual property rights
in pharmaceuticals is an evolving one with many risks and uncertainties, and third parties may have blocking patents that could be used to prevent us from
commercializing our clinical candidates.
Exclusive license to Nanjing Simcere Dongyuan Pharmaceutical Co., LTD. (“Simcere”) for trilaciclib
On August 3, 2020, we entered into a license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., LTD. (“Simcere License”) for the
development and commercialization of trilaciclib for any indication in humans through parenteral delivery, including intravenous delivery, in China, Hong
Kong, Macau, and Taiwan (“Simcere Territory”). Pursuant to the Simcere License, Simcere has been granted an exclusive, royalty-bearing, non-
transferable license, with the right to grant sublicenses to thirteen of our solely-owned patent families in the Simcere Territory. We maintain the exclusive
right to prosecute these patent families with consideration of Simcere’s comments and suggestions. Where patent applications in the Simcere Territory
cover both trilaciclib and lerociclib they are licensed to both Simcere and Genor.
Under the Simcere License, G1 and Simcere share all patent prosecution costs incurred in the Simcere Territory, except that we are solely responsible for
costs associated with any adversarial patent prosecution proceeding in the Simcere Territory, including oppositions, reexaminations, invalidations,
revocations, nullifications, or cancellation proceedings related to our licensed patent.
Under the Simcere License, we have the sole right in its sole discretion to bring and control any legal action to enforce our licensed patent families against
any infringement action in the Simcere Territory, except in the case of infringement relating to i) a G1 patent containing a claim to the composition-of-
matter of trilaciclib or ii) a G1 patent that contains claims covering only trilaciclib that arises as a result of making, using, offering to sell, selling or
importing of trilaciclib by a third party, in which case we have the first right, but not the obligation, to bring and control any infringement action at our own
expense, subject to the consideration of Simcere’s reasonable and timely comments. To the extent we decline to bring an action against an infringer under
the above described conditions, Simcere has the right, but not the obligation, to bring an infringement action at its own expense.
Exclusive license to EQRx, Inc. for lerociclib
On July 22, 2020, we entered into a license agreement with EQRx, Inc. (the “EQRx License”) for the development and commercialization of lerociclib
using an oral dosage form to treat any indication in humans. The EQRx, licensed territories are all of the countries and regions of the world, and their
territories and possessions, excluding the Genor territory (the “EQRx Territory”). Pursuant to the EQRx License, EQRx has been granted an exclusive,
royalty-bearing, non-transferable license, with the right to grant sublicenses, to twelve of our solely-owned patent families in the EQRx Territory. We
maintain the exclusive right to prosecute these
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patent families in the EQRx Territory, and EQRx has the right to review and comment on all material patent filings, with the review and comment to be
considered by us in good faith.
Under the EQRx License, G1 and EQRx share all patent prosecution costs incurred in the EQRx Territory, except that we are solely responsible for costs
associated with any adversarial patent prosecution proceeding in the EQRx Territory, including oppositions, reexaminations, invalidations, revocations,
nullifications, interferences, or cancellation proceedings related to our licensed patent families by a third party. We have the sole right in our sole discretion
to bring and control any legal action to enforce our licensed patent families against any infringement action in the EQRx Territory, except in the case of
infringement relating to a G1 patent that contains claims covering only lerociclib that arises as a result of making, using, offering to sell, selling or
importing of lerociclib by a third party, in which case we have the first right, but not the obligation, to bring and control any infringement action at our own
expense, subject to the consideration of EQRX’s reasonable and timely comments. To the extent we decline to bring an action against an infringer under the
above-described conditions, EQRx has the right, but not the obligation, to bring an infringement action at its own expense.
Exclusive license to Genor Biopharma Co. Inc. (“Genor”) for lerociclib
On June 15, 2020, we entered into a license agreement with Genor Biopharma Co. Inc. (“Genor License”) for the development and commercialization of
lerociclib using an oral dosage form to treat any indication in humans. The Genor licensed territories are in Australia, Bangladesh, China, Hong Kong,
India, Indonesia, Macau, Malaysia, Myanmar, New Zealand, Pakistan, Philippines, Singapore, South Korea, Sri Lanka, Taiwan, Thailand, and Vietnam (the
“Genor Territory”). Pursuant to the Genor License, Genor has been granted an exclusive, royalty-bearing, non-transferable license, with the right to grant
sublicenses, to ten of our solely-owned patent families in the Genor Territory. We maintain the exclusive right to prosecute these patent families in the
Genor Territory, and Genor has the right to review and comment on all material patent filings, such review and comment to be considered by us in good
faith.
Under the Genor License, G1 and Genor share all patent prosecution costs incurred in the Genor Territory. We are solely responsible for costs associated
with any adversarial patent prosecution proceeding in the Genor Territory, including oppositions, reexaminations, invalidations, revocations, nullifications,
or cancellation proceedings related to our licensed patent families.
Under the Genor License, we have the sole right in our discretion to bring and control any legal action to enforce our licensed patent families against any
infringement action in the Genor Territory, except in the case of i) a G1 patent containing a claim to the composition-of-matter of lerociclib or ii) a G1
patent that contains claims covering only lerociclib that arises as a result of making, using, offering to sell, selling or importing of lerociclib by a third
party, in which case we have the first right, but not the obligation, to bring and control any infringement action at our own expense, subject to the
consideration of Genor’s reasonable and timely comments. To the extent we decline to bring an action against an infringer under the above-described
conditions, Genor has the right, but not the obligation, to bring an infringement action at its own expense.
Exclusive license to ARC Therapeutics
On May 22, 2020, we entered into a global license agreement with ARC Therapeutics, LLC for the development and commercialization of a CDK2
inhibitor for all human and veterinary uses. Pursuant to the ARC License, ARC is currently granted an exclusive, royalty-bearing, license with the right to
grant sublicenses to one of our solely-owned patent families. In 2021, ARC returned three of the four licensed patent families. Under the ARC License,
ARC received the exclusive right to prosecute these patent families in its sole discretion, and we have the right to review and comment on all material
patent filings, and our review and comments will be considered by ARC in good faith.
Under the ARC License, ARC is solely responsible for all patent prosecution costs. ARC has the first right, but not the obligation, to bring and control any
infringement action at its own expense, subject to ARC keeping us reasonably informed. ARC also has the right to name and join us in any infringement
action relating to our patents. In the case of a patent certification in connection with an Abbreviated New Drug Application under the U.S. Hatch Waxman
Act, or the substantial equivalent in a foreign country, if ARC declines to file a lawsuit, we have the right to bring an infringement action at our own
expense.
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Exclusive license for rintodestrant
In November 2016, we entered into a license agreement with the University of Illinois, the University, pursuant to which we obtained an exclusive,
worldwide license to make, use, import, sell and offer for sale certain SERDs, including rintodestrant, covered by patent rights owned by the
University. The rights licensed to us are for all fields of use. The November 2016 license agreement was amended in March 2017.
Under the terms of the agreement we paid a one-time only, non-refundable upfront fee of $0.5 million, and we are required to pay the University low
single-digit royalties on all net sales of products and a share of any sublicensing revenues. We are also obligated to pay annual maintenance fees, which are
fully creditable against any royalty payments made by us. We will also be required to pay the University milestone payments of up to an aggregate of
$2.6 million related to the initiation and execution of clinical trials and first commercial sale of a product in multiple countries. Under the terms of the
agreement, we control prosecution, and are required to consider the input of the University with regard to certain patent filings. We are also responsible for
any future patent prosecution costs that may arise.
The term of the license agreement will continue on a country-by-country basis until the later of (i) the expiration of the last valid claim within the patent
rights covering the product in such country, (ii) the expiration of market exclusivity in such country and (iii) the 10th anniversary of the first commercial
sale in such country. The University may terminate the agreement in the event (i) we fail to pay any amount or make any report when required to be made
and fail to cure such failure within 30 days after receipt of notice, (ii) we are in breach of any provision of the agreement and fail to remedy such breach
within 45 days after receipt of notice, (iii) we make a report to the University under the agreement that is determined to be materially false, (iv) we declare
insolvency or bankruptcy or (v) we take any action that causes patent rights or technical information to be subject to any lien or encumbrance and fail to
remedy within 45 days of receipt of notice. We may terminate the agreement at any time upon at least 90 days’ written notice. Upon expiration or
termination of the agreement, all rights revert to the University.
Trade secrets
In addition to patents, we rely upon unpatented trade secrets and know-how and continuing technological innovation to develop and maintain our
competitive position. We seek to protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators,
employees, and consultants, and invention assignment agreements with our employees. 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 through a relationship with a
third party. 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 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.
Government regulation and product approval
FDA approval process
In the United States, pharmaceutical products are subject to extensive regulation by the U.S. Food and Drug Administration, or FDA. The Federal Food,
Drug, and Cosmetic Act, or the FDC Act, and other federal and state statutes and regulations, govern, among other things, the research, development,
testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling,
and import and export of pharmaceutical products. Failure to comply with applicable U.S. requirements may subject a company to a variety of
administrative or judicial sanctions, such as FDA refusal to approve pending new drug applications, or NDAs, warning letters, voluntary product recalls,
product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
Preclinical tests include laboratory evaluation of product chemistry, formulation, and toxicity, as well as animal studies to assess the pharmacokinetic and
pharmacodynamic characteristics and potential safety and effectiveness of the product. The conduct of the preclinical tests must comply with certain
federal regulations and requirements, including good laboratory practices, or GLP, for any safety testing. The results of preclinical testing are submitted to
the FDA as part of an IND along with other information, including information about product chemistry, manufacturing and controls, and a proposed
clinical trial protocol. Long-term nonclinical tests, such as animal tests of reproductive toxicity and carcinogenicity, may continue after the IND is
submitted.
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Clinical trials involve the administration of the investigational new drug to healthy volunteers or patients under the supervision of qualified investigators.
Clinical trials must be conducted: (i) under the supervision of one or more qualified investigators and in compliance with federal regulations, including
those encompassing good clinical practice, or GCP, requirements that are meant to protect the rights and welfare of study subjects and to define the roles of
clinical trial sponsors, investigators, and monitors, and (ii) under protocols detailing the objectives of the clinical trial, the parameters to be used in
monitoring safety and the effectiveness criteria to be evaluated.
The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time by imposing a clinical hold or impose other sanctions if it
believes that the clinical trial either is not being conducted in accordance with FDA requirements or presents an unacceptable risk to the clinical trial
subjects. The clinical trial protocol and informed consent information for subjects in clinical trials must also be submitted for review and approval by an
institutional review board, or IRB, on behalf of each participating in the clinical trial before the trial commences at that site. An IRB also monitors the trial
until completion and may require the clinical trial at the site to be halted, either temporarily or permanently, for failure to comply with the IRB’s
requirements or for safety issues or it may impose other conditions on the clinical investigators or the sponsor of the clinical trial.
After completion of the required clinical testing, an NDA is prepared and submitted to the FDA. FDA approval of the NDA is required before marketing of
the product may begin in the United States. The NDA must include the results of all nonclinical, clinical, and other testing and a compilation of data
relating to the product’s chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. Under federal law, the
submission of most NDAs is additionally subject to a substantial application user fee, currently over $2.8 million for an NDA with clinical information, and
the manufacturer and/or sponsor under an approved NDA is also subject to an annual program fee, currently over $330,000. These fees are typically
increased annually. Fee waivers or reductions are available in certain circumstances.
The FDA has 60 days from its receipt of an NDA to determine whether the application will be accepted for filing based on the agency’s threshold
determination that it is sufficiently complete to permit substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review.
The FDA has agreed to certain performance goals in the review of NDAs. The FDA seeks to review applications for standard review drug products within
ten months, and applications for priority review drugs within six months. Priority review can be applied to drugs intended to treat a serious condition and
that the FDA determines offer major advances in treatment, or provide a treatment where no adequate therapy exists. The review process for both standard
and priority reviews may be extended by FDA for three additional months to consider additional, late-submitted information, or information intended to
clarify information already provided in the submission in response to FDA review questions.
The FDA may also refer applications for novel drug products, or drug products that present difficult questions of safety or efficacy, to an external advisory
committee, which is typically a panel that includes clinicians and other experts, for review, evaluation, and a recommendation as to whether the application
should be approved. The FDA is not bound by the recommendation of an advisory committee, but it generally follows such recommendations. Before
approving an NDA, the FDA will typically inspect one or more clinical sites to assure compliance with GCP. Additionally, the FDA will typically inspect
the facility or the facilities at which the drug is manufactured, unless the facility has recently had an FDA inspection. The FDA also typically inspects the
application sponsor. The FDA will not approve the product unless compliance with current good manufacturing practice, or cGMP, requirements is
satisfactory and the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication studied.
After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or a complete response letter. A complete response
letter generally outlines the deficiencies in the submission and may require substantial additional testing, or additional nonclinical or clinical study
information, in order for the FDA to reconsider the application. If a complete response letter is issued, the applicant may either resubmit the NDA,
addressing all of the deficiencies identified in the letter, or withdraw the application. If, or when, those deficiencies have been addressed to the FDA’s
satisfaction in a resubmission of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions in two or six
months depending on the type of information included.
An approval letter authorizes commercial marketing of the drug with the accompanying approved prescribing information for specific indications. As a
condition of NDA approval, the FDA may require a risk evaluation and mitigation strategy, or REMS, in addition to the approved labeling, to help ensure
that the benefits of the drug outweigh its risks. A REMS could include communication plans for health care professionals, medication guides for patients,
and/or elements to assure safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing or dispensing,
restricted distribution requirements, dispensing only under certain circumstances, special monitoring, and the use of patient registries. The FDA determines
the requirement for a REMS, as well as the specific REMS provisions, on a case-by-case basis. If the FDA concludes a REMS plan is needed, the sponsor
of the NDA must submit a proposed REMS plan. The requirement for a REMS can materially affect the potential market and profitability of the drug.
Moreover, product approval may require substantial post-approval testing and surveillance to monitor the drug’s safety or efficacy as described as
postmarketing commitments or requirements included in the approval letter. Once granted, product approvals may be
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withdrawn if compliance with regulatory requirements and commitments is not maintained or problems are identified following initial marketing.
Disclosure of clinical trial information
Sponsors of clinical trials of certain FDA-regulated products, including prescription drugs, are required to register and disclose certain clinical trial
information on a public registry maintained by the U.S. National Institutes of Health (NIH). Information related to the product, patient population, phase of
investigation, clinical trial sites and investigator, and other aspects of the clinical trial is made public as part of the registration of the clinical trial. Although
sponsors are also obligated to disclose the results of their clinical trials after completion, disclosure of the results may be delayed in some cases for up to
two years after the date of completion of the trial. Competitors may use this publicly-available information to gain knowledge regarding the design and
progress of our development programs. Failure to timely register a covered clinical study or to submit study results as provided for in the law can give rise
to civil monetary penalties and also prevent the non-compliant party from receiving future grant funds from the federal government. The NIH’s Final Rule
on ClinicalTrials.gov registration and reporting requirements became effective in 2017, and both NIH and FDA have signaled the government’s willingness
to begin enforcing those requirements against non-compliant clinical trial sponsors.
Data privacy and the protection of personal information
We are subject to laws and regulations governing data privacy and the protection of personal information including health information. The legislative and
regulatory landscape for privacy and data protection continues to evolve, and there has been an increasing focus on privacy and data protection issues
which will continue to affect our business. In the United States, we may be subject to state security breach notification laws, state laws protecting the
privacy of health and personal information and federal and state consumer protections laws which regulate the collection, use, disclosure and transmission
of personal information. These laws overlap and often conflict and each of these laws is subject to varying interpretations by courts and government
agencies, creating complex compliance issues for us. If we fail to comply with applicable laws and regulations we could be subject to penalties or
sanctions, including criminal penalties. Our customers and research partners must comply with laws governing the privacy and security of health
information, including the Health Insurance Portability and Accountability Act of 1996 as amended (“HIPAA”) and state health information privacy laws.
If we knowingly obtain health information that is protected under HIPAA, called “protected health information”, our customers or research collaborators
may be subject to enforcement and we may have direct liability for the unlawful receipt of protected health information or for aiding and abetting a HIPAA
violation.
State laws protecting health and personal information are becoming increasingly stringent. For example, California has implemented the California
Confidentiality of Medical Information Act that imposes restrictive requirements regulating the use and disclosure of health information and other
personally identifiable information, and California has recently adopted the California Consumer Privacy Act of 2018 (the CCPA). The CCPA mirrors a
number of the key provisions of the EU General Data Protection Regulation (GDPR) described below. The CCPA establishes a new privacy framework for
covered businesses by creating an expanded definition of personal information, establishing new data privacy rights for consumers in the State of
California, imposing special rules on the collection of consumer data from minors, and creating a new and potentially severe statutory damages framework
for violations of the CCPA and for businesses that fail to implement reasonable security procedures and practices to prevent data breaches. Additionally, a
new privacy law, the California Privacy Rights Act (CPRA), was approved by California voters in the election on November 3, 2020, and certain
provisions are effective as of January 1, 2022, with full effectiveness as of January 1, 2023. The CPRA modifies the CCPA significantly, potentially
resulting in further uncertainty, additional costs and expenses in an effort to comply and additional potential for harm and liability for failure to comply.
Among other things the CPRA established a new regulatory authority, the California Privacy Protection Agency, with will be enacting new regulations and
will have expanded enforcement authority. Virginia and Colorado enacted similar data protection laws in 2021, and other U.S. states have proposals under
consideration, increasing the regulatory compliance risk.
The Hatch-Waxman Act and marketing applications for follow-on drugs
In 1984, with passage of the Hatch-Waxman Amendments to the FDC Act, Congress authorized the FDA to approve generic drugs that are the same as
drugs previously approved by the FDA under the NDA provisions of the statute and also enacted Section 505(b)(2) of the FDC Act. To obtain approval of a
generic drug, an applicant must submit an abbreviated new drug application, or ANDA, to the agency. In support of such applications, a generic
manufacturer may rely on the preclinical and clinical testing conducted for a drug product previously approved under an NDA, known as the reference
listed drug, or RLD. Specifically, in order for an ANDA to be approved, the FDA must find that the generic version is identical to the RLD with respect to
the active ingredients, the route of administration, the dosage form, and the strength of the drug. At the same time, the FDA must also determine that the
generic drug is “bioequivalent” to the innovator drug.
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Orange book listing
In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent that has claims that cover the applicant’s product
or method of therapeutic use. Upon approval of a drug, each of the patents listed in the application for the drug is then published in the FDA’s Approved
Drug Products with Therapeutic Equivalence Evaluations, commonly known as the Orange Book. Drugs listed in the Orange Book can, in turn, be cited by
potential generic competitors in support of approval of an ANDA. The ANDA requests permission to market a drug product that has the same active
ingredients in the same strengths and dosage form as the RLD and has been shown through bioequivalence testing to be therapeutically equivalent to the
RLD. Other than the requirement for bioequivalence testing, ANDA applicants are not required to conduct, or submit results of, nonclinical or clinical tests
to prove the safety or effectiveness of their drug product. Drugs approved in this way are commonly referred to as “generic equivalents” to the innovator
drug, and can often be substituted by pharmacists under prescriptions written for the original listed drug referenced by the ANDA applicant if the FDA’s
listing for the generic drug in the Orange Book indicates that it is “therapeutically equivalent” to the RLD.
In contrast, Section 505(b)(2) permits the filing of an NDA where at least some of the information required for approval comes from studies not conducted
by or for the applicant and for which the applicant has not obtained a right of reference. A Section 505(b)(2) applicant may eliminate the need to conduct
certain preclinical or clinical studies, if it can establish that reliance on studies conducted for a previously-approved product is scientifically appropriate.
Unlike the ANDA pathway used by developers of bioequivalent versions of innovator drugs, which does not allow applicants to submit new clinical data
other than bioavailability or bioequivalence data, the 505(b)(2) regulatory pathway does not preclude the possibility that a follow-on applicant would need
to conduct additional clinical trials or nonclinical studies; for example, it may be seeking approval to market a previously approved drug for new
indications or for a new patient population that would require new clinical data to demonstrate safety or effectiveness.
When an ANDA applicant submits its application to the FDA, it is required to certify to the FDA concerning any patents listed for the approved product in
the FDA’s Orange Book. Specifically, the applicant must certify that: (i) the required patent information has not been filed; (ii) the listed patent has expired;
(iii) the listed patent has not expired, but will expire on a particular date and approval is sought after patent expiration; or (iv) the listed patent is invalid or
will not be infringed by the new product. The ANDA applicant may also elect to submit a section viii statement, certifying that its proposed ANDA label
does not contain or carve out any language regarding the patented method-of-use, rather than certify to a listed method-of-use patent. Moreover, to the
extent that the Section 505(b)(2) NDA applicant is relying on studies conducted for an already approved product, the applicant also is required to certify to
the FDA concerning any patents listed for the approved product in the Orange Book to the same extent that an ANDA applicant would.
If the applicant does not challenge the innovator’s listed patents, FDA will not approve the ANDA or 505(b)(2) application until all the listed patents
claiming the referenced product have expired. A certification that the new product will not infringe the already approved product’s listed patents, or that
such patents are invalid, is called a Paragraph IV certification. If the ANDA applicant has provided a Paragraph IV certification to the FDA, the applicant
must also send notice of the Paragraph IV certification to the NDA and patent holders once the ANDA has been accepted for filing by the FDA. The NDA
and patent holders may then initiate a patent infringement lawsuit in response to the notice of the Paragraph IV certification. The filing of a patent
infringement lawsuit within 45 days of the receipt of a Paragraph IV certification automatically prevents the FDA from approving the ANDA until the
earlier of 30 months, expiration of the patent, settlement of the lawsuit, or a decision in the infringement case that is favorable to the ANDA applicant.
An ANDA or 505(b)(2) application also will not be approved until any applicable non-patent exclusivity listed in the Orange Book for the referenced
product has expired.
Non-Patent Exclusivity
Upon NDA approval of a new chemical entity or NCE, which is a drug that contains no active moiety that has been approved by the FDA in any other
NDA, that drug receives five years of marketing exclusivity during which time the FDA cannot receive any ANDA seeking approval of a generic version
of that drug. Certain changes to a drug, such as the addition of a new indication to the package insert or a different formulation, are associated with a three-
year period of exclusivity. During the exclusivity period, the FDA cannot accept for review any ANDA or 505(b)(2) NDA submitted by another company
for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However, an
application may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is filed on an NCE patent and any time after approval
if the application is filed based on a new indication or a new formulation.
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The Hatch-Waxman Act also provides three years of data exclusivity for a NDA, 505(b)(2) NDA or supplement to an existing NDA if new clinical
investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the approval
of the application, for example, new indications, dosages or strengths of an existing drug. This three-year exclusivity covers only the conditions of use
associated with the new clinical investigations and does not prohibit the FDA from approving follow-on applications for drugs containing the original
active agent. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and, thus, no ANDA or 505(b)(2) NDA may be
filed before the expiration of the exclusivity period. Five-year and three-year exclusivity also will not delay the submission or approval of a traditional
NDA filed under Section 505(b)(1) of the FDC Act. However, an applicant submitting a traditional NDA would be required to either conduct or obtain a
right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Patent term extension
After NDA approval, owners of relevant drug patents may apply for up to a five-year patent term extension. The allowable patent term extension is
calculated as half of the drug’s testing phase—the time between when the IND becomes effective and NDA submission—and all of the review phase—the
time between NDA submission and approval, up to a maximum of five years. The time can be shortened if FDA determines that the applicant did not
pursue approval with due diligence. The total patent term after the extension may not exceed 14 years.
For patents that might expire during the application phase, the patent owner may request an interim patent extension. An interim patent extension increases
the patent term by one year and may be renewed up to four times. For each interim patent extension granted, the post-approval patent extension is reduced
by one year. The director of the Patent and Trademark Office (PTO) must determine that approval of the drug covered by the patent for which a patent
extension is being sought is likely. Interim patent extensions are not available for a drug for which an NDA has not been submitted.
Pediatric clinical trials and exclusivity
Under the Pediatric Research Equity Act, or PREA, NDAs or certain types of supplements to NDAs must contain data 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 drug is safe and effective. The sponsor must submit an initial Pediatric Study Plan, or PSP, within 60 days of an end-of-phase 2 meeting or as
may be agreed between the sponsor and the FDA. The initial PSP must include an outline of the pediatric study or studies that the sponsor plans to conduct,
including study objectives and design, age groups, relevant endpoints and statistical approach, or a justification for not including such detailed information,
and any request for a deferral of pediatric assessments or a full or partial waiver of the requirement to provide data from pediatric studies along with
supporting information. The FDA and the sponsor must reach agreement on the PSP. A sponsor can submit amendments to an agreed-upon initial PSP at
any time if changes to the pediatric plan need to be considered based on data collected from nonclinical studies, early phase clinical trials, and/or other
clinical development programs. The FDA may grant full or partial waivers, or deferrals, for submission of pediatric assessment data.
The Best Pharmaceuticals for Children Act, or BPCA, provides NDA holders a six-month extension of any exclusivity—patent or non-patent—for a drug if
certain conditions are met, including satisfaction of a pediatric trial(s) agreed with FDA as a Pediatric Written Request. Conditions for pediatric exclusivity
include the FDA’s determination that information relating to the use of a new drug in the pediatric population may produce health benefits in that
population, the FDA making a written request for pediatric clinical trials, and the applicant agreeing to perform, and reporting on, the requested clinical
trials within the statutory timeframe. Applications under the BPCA are treated as priority applications, with all of the benefits that designation confers. This
six-month exclusivity may be granted if an NDA sponsor submits pediatric data that fairly respond to the written request from the FDA for such data.
Those data do not need to show the product to be effective in the pediatric population studied; rather, if the clinical trial is deemed to fairly respond to the
FDA’s request, the additional protection is granted. Although this is not a patent term extension, it effectively extends the regulatory period during which
the FDA cannot approve another application.
Fast track, breakthrough therapy, and priority review designations
The FDA is authorized to designate certain products for expedited development or review if they are intended to address an unmet medical need in the
treatment of a serious or life-threatening disease or condition. These programs include fast track designation, breakthrough therapy designation, and priority
review designation. Even if a drug qualifies for one or more of these programs, the FDA may later decide that the drug no longer meets the conditions for
qualification or that the time period for FDA review or approval will not be shortened. Generally, drugs that may be eligible for these programs are those
for serious or life-threatening conditions, those with the potential to address unmet medical needs, and those that offer meaningful benefits over existing
treatments. For example, fast track designation is a process designed to facilitate the development, and expedite the review, of drugs to treat serious or life-
threatening diseases and fill an unmet medical need. The designation request may be made at the time of IND submission and generally no later than the
pre-NDA meeting. The FDA will respond within 60 calendar days of receipt of the request. Priority review, which is requested at the time of NDA
submission, is designed to give drugs that offer major advances in treatment or
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provide a treatment where no adequate therapy exists, an initial review within six months after filing as compared to a standard review time of ten months.
Although fast track designation and priority review do not affect the standards for approval, the FDA will attempt to facilitate early and frequent meetings
with a sponsor of a fast track designated drug and expedite review of the application for a drug designated for priority review. Accelerated approval
provides an earlier approval of drugs to treat serious diseases, and that fill an unmet medical need based on a surrogate endpoint, which is a laboratory
measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome. Discussions with the FDA about
the feasibility of an accelerated approval typically begin early in the development of the drug in order to identify, among other things, an appropriate
endpoint. As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials to
confirm the appropriateness of the surrogate marker clinical trial.
Another expedited program is that for breakthrough therapy designation, which is designed to expedite the development and review of drugs that are
intended to treat a serious condition where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over available
therapy on a clinically significant endpoint(s). A sponsor may request breakthrough therapy designation at the time that the IND is submitted, or no later
than at the end-of-Phase 2 meeting. The FDA will respond to a breakthrough therapy designation request within sixty days of receipt of the request. A drug
that receives breakthrough therapy designation is eligible for all fast track designation features, intensive guidance on an efficient drug development
program, beginning as early as Phase 1, and commitment from the FDA involving senior managers. Products that are designated as Breakthrough therapies
with priority review are often given preclinical or clinical post-marketing requirements or post marketing commitments by the FDA.
Accelerated approval pathway
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 receive accelerated approval from the FDA and may be approved on the basis of adequate and well-controlled clinical
trials establishing that the drug product has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit. A surrogate endpoint is a
laboratory measurement or physical sign used as an indirect or substitute measurement representing a clinically meaningful outcome. Surrogate endpoints
can often be measured more easily or more rapidly than clinical endpoints. The FDA may also grant accelerated approval for such a drug when the product
has an effect on an intermediate clinical endpoint that can be measured earlier than an effect on irreversible morbidity or mortality, or IMM, and that is
reasonably likely to predict an effect on IMM or other clinical benefit, taking into account the severity, rarity, or prevalence of the condition and the
availability or lack of alternative treatments. The FDA has limited experience with accelerated approvals based on intermediate clinical endpoints, but has
indicated that such endpoints generally may support accelerated approval when the therapeutic effect measured by the endpoint is not itself a clinical
benefit and basis for traditional approval, if there is a basis for concluding that the therapeutic effect is reasonably likely to predict the ultimate long-term
clinical benefit of a drug.
Discussions with the FDA about the feasibility of an accelerated approval typically begin early in the development of the drug in order to identify, among
other things, an appropriate endpoint. The accelerated approval pathway is most often used in settings in which the course of a disease is long and an
extended period of time is required to measure the intended clinical benefit of a drug, even if the effect on the surrogate or intermediate clinical endpoint
occurs rapidly. For example, accelerated approval has been used extensively in the development and approval of drugs for treatment of a variety of cancers
in which the goal of therapy is generally to improve survival or decrease morbidity and the duration of the typical disease course requires lengthy and
sometimes large clinical trials to demonstrate a clinical or survival benefit.
As a condition of approval, the FDA may require that a sponsor of a drug receiving accelerated approval perform post-marketing clinical trials to verify and
describe the predicted effect on IMM or other clinical endpoint. Drugs granted accelerated approval must meet the same statutory standards for safety and
effectiveness as those granted traditional approval. Because the accelerated approval pathway is usually contingent on a sponsor’s agreement to conduct, in
a diligent manner, additional post-approval confirmatory studies to verify and describe the drug’s clinical benefit, a product candidate approved on this
basis is subject to rigorous post-marketing compliance requirements, including the completion of Phase 4 or post-approval clinical trials to confirm the
effect on the clinical endpoint. Failure to conduct required post-approval studies, or to confirm the predicted clinical benefit of the product during post-
marketing studies, would allow the FDA to withdraw approval of the drug. In addition, all promotional materials for product candidates being considered
and approved under the accelerated approval program are subject to prior review by the FDA.
Regulation of companion diagnostic devices
If we decide that a diagnostic test would provide useful information for patient selection or if the FDA requires us to develop such a test, we may work with
a collaborator to develop an in vitro diagnostic, or companion test. The FDA regulates in vitro diagnostic tests as medical devices, and the type of
regulation to which such a test will be subjected will depend, in part, on a risk assessment by the FDA as well as a determination of whether the test is
intended to yield results that would be helpful to know versus one that the FDA or we believe is necessary to know for the safe and effective use of our
drugs under development.
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The FDA has issued several guidance documents on in vitro companion diagnostic devices in August 2014, which are intended to assist companies
developing in vitro companion diagnostic devices and companies developing therapeutic products that depend on the use of a specific in vitro companion
diagnostic for the safe and effective use of the product. The FDA defines an in vitro companion diagnostic device, or IVD companion diagnostic device, as
a device that provides information that is essential for the safe and effective use of a corresponding therapeutic product, such as when the use of a product
is limited to a specific patient subpopulation that can be identified by using the test. The use of an IVD companion diagnostic device with a therapeutic
product will be stipulated in the instructions for use in the labeling of both the diagnostic device and the corresponding therapeutic product, including the
labeling of any generic equivalents of the therapeutic product. The FDA expects that the therapeutic product sponsor will address the need for an approved
or cleared IVD companion diagnostic device in its therapeutic product development plan and that, in most cases, the therapeutic product and its
corresponding companion diagnostic will be developed contemporaneously. However, the FDA may decide that it is appropriate to approve such a product
without an approved or cleared in vitro companion diagnostic device when the drug or therapeutic biologic is intended to treat a serious or life-threatening
condition for which no satisfactory alternative treatment exists and the FDA determines that the benefits from the use of a product with an unapproved or
uncleared in vitro companion diagnostic device are so pronounced as to outweigh the risks from the lack of an approved or cleared in vitro companion
diagnostic device. The FDA encourages sponsors considering developing a therapeutic product that requires a companion diagnostic to request a meeting
with both relevant device and therapeutic product review divisions to ensure that the product development plan will produce sufficient data to establish the
safety and effectiveness of both the therapeutic product and the companion diagnostic. Because the FDA’s policies on companion diagnostics is set forth
only in guidance, this policy is subject to change and is not legally binding.
Post-approval requirements
Following FDA marketing approval of a new prescription drug product, the manufacturer and the approved drug are subject to pervasive and continuing
regulation by the FDA, including, among other things, monitoring and recordkeeping activities, reporting of adverse experiences with the product, product
sampling and distribution restrictions, complying with promotion and advertising requirements, which include restrictions on promoting drugs for
unapproved uses or patient populations (i.e., “off-label use”) and limitations on industry-sponsored scientific and educational activities. Although
physicians may prescribe legally available products for off-label uses, manufacturers may not market or promote such uses. 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 liability. If there are any modifications to the product, including changes in indications, labeling or manufacturing
processes or facilities, the applicant may be required to submit and obtain FDA approval of a new NDA or an NDA supplement, which may require the
applicant to develop additional data or conduct additional preclinical studies and clinical trials.
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 drug product reaches the market. Later discovery of previously unknown problems with a product, including adverse events of
unanticipated severity or frequency, may result in in mandatory revisions to the approved labeling to add new safety information; imposition of post-market
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:
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restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;
fines, warning letters or other enforcement-related letters or clinical 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;
injunctions or the imposition of civil or criminal penalties; and
consent decrees, corporate integrity agreements, debarment, or exclusion from federal health care programs; or mandated modification of
promotional materials and labeling and the issuance of corrective information.
Accordingly, COSELA and any future therapeutic candidate manufactured or distributed by us pursuant to FDA approvals are subject to continuing
regulation by the FDA, including, among other things:
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record-keeping requirements;
reporting of adverse experiences with the therapeutic candidate;
providing the FDA with updated safety and efficacy information;
therapeutic sampling and distribution requirements;
notifying the FDA and gaining its approval of specified manufacturing or labeling changes; and
complying with FDA promotion and advertising requirements, which include, among other things, standards for direct-to-consumer advertising,
restrictions on promoting products for uses or in-patient populations that are not described in the product’s approved labeling, limitations on
industry-sponsored scientific and educational activities and requirements for promotional activities involving the internet.
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FDA regulations require that products be manufactured in specific approved facilities and in accordance with cGMPs. The cGMP regulations include
requirements relating to organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures,
production and process controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or
salvaged products. Drug manufacturers and other entities involved in the manufacture and distribution of approved drug products are required to register
their establishments with the FDA and certain state agencies and are subject to periodic unannounced inspections by the FDA and some state agencies for
compliance with cGMPs and other laws. The FDA periodically inspects manufacturing facilities to assess compliance with cGMP requirements. In
addition, changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require 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 NDA applicant and any third-party manufacturers involved in producing the approved drug product. Accordingly, manufacturers
must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMP and other aspects of
quality control and quality assurance.
In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or the 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. Most recently, the Drug Supply Chain Security Act, or the DSCSA, was enacted with the aim of building an electronic system to identify and
trace certain prescription drugs distributed in the United States, including most biological products. The DSCSA mandates phased-in and resource-
intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a 10‑year period that is expected to culminate in
November 2023. From time to time, new legislation and regulations may be implemented that could significantly change the statutory provisions governing
the approval, manufacturing and marketing of products regulated by the FDA. It is impossible to predict whether further legislative or regulatory changes
will be enacted, or FDA regulations, guidance or interpretations changed or what the impact of such changes, if any, may be.
Europe/Rest of world government regulation
In addition to regulations in the United States, we are and will be subject, either directly or through our distribution partners, to a variety of regulations in
other jurisdictions governing, among other things, clinical trials, the privacy of personal data and commercial sales and distribution of our products, if
approved.
Whether or not we obtain FDA approval for a product, we must obtain the requisite approvals from regulatory authorities in non-U.S. countries prior to the
commencement of clinical trials or marketing of the product in those countries. Certain countries outside of the United States have a process that requires
the submission of a clinical trial application much like an IND prior to the commencement of human clinical trials. In Europe, for example, a clinical trial
application, or CTA, must be submitted to the competent national health authority and to independent ethics committees in each country in which a
company plans to conduct clinical trials. Once the CTA is approved in accordance with a country’s requirements, clinical trials may proceed in that country.
The requirements and process governing the conduct of clinical trials, product licensing, pricing and reimbursement vary from country to country, even
though there is already some degree of legal harmonization in the European Union member states resulting from the national implementation of underlying
E.U. legislation. In all cases, the clinical trials are conducted in accordance with GCP and other applicable regulatory requirements.
To obtain a marketing license for a new drug, or medicinal product in the European Union, the sponsor must obtain approval of a marketing authorization
application, or MAA. The way in which a medicinal product can be approved in the European Union depends on the nature of the medicinal product.
The centralized procedure results in a single marketing authorization granted by the European Commission that is valid across the European Union, as well
as in Iceland, Liechtenstein, and Norway. The centralized procedure is compulsory for human drugs that are: (i) derived from biotechnology processes,
such as genetic engineering, (ii) contain a new active substance indicated for the treatment of certain diseases, such as HIV/AIDS, cancer, diabetes,
neurodegenerative diseases, autoimmune and other immune dysfunctions and viral diseases, (iii) officially designated “orphan drugs” (drugs used for rare
human diseases) and (iv) advanced-therapy medicines, such as gene-therapy, somatic cell-therapy or tissue-engineered medicines. The centralized
procedure may at the request of the applicant also be used for human drugs which do not fall within the above mentioned categories if the human drug
(a) contains a new active substance which was not authorized in the European Community; or (b) the applicant shows that the medicinal product constitutes
a significant therapeutic, scientific or technical innovation or that the granting of authorization in the centralized procedure is in the interests of patients or
animal health at the European Community level.
Under the centralized procedure in the European Union, the maximum timeframe for the evaluation of a marketing authorization application by the
European Medicines Agency, or EMA, is 210 days (excluding clock stops, when additional written or oral information is to be provided by the applicant in
response to questions asked by the Committee for Medicinal Products for Human Use, or CHMP), with adoption of the actual marketing authorization by
the European Commission thereafter. Accelerated evaluation
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might be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public health interest from the point of view of
therapeutic innovation, defined by three cumulative criteria: the seriousness of the disease to be treated; the absence of an appropriate alternative
therapeutic approach, and anticipation of exceptional high therapeutic benefit. In this circumstance, EMA ensures that the evaluation for the opinion of the
CHMP is completed within 150 days and the opinion issued thereafter.
The mutual recognition procedure, or MRP, for the approval of human drugs is an alternative approach to facilitate individual national marketing
authorizations within the European Union. Basically, the MRP may be applied for all human drugs for which the centralized procedure is not obligatory.
The MRP is applicable to the majority of conventional medicinal products, and is based on the principle of recognition of an already existing national
marketing authorization by one or more member states. In the MRP, a marketing authorization for a drug already exists in one or more member states of the
E.U. and subsequently marketing authorization applications are made in other European Union member states by referring to the initial marketing
authorization. The member state in which the marketing authorization was first granted will then act as the reference member state. The member states
where the marketing authorization is subsequently applied for act as concerned member states. After a product assessment is completed by the reference
member state, copies of the report are sent to all member states, together with the approved summary of product characteristics, labeling and package
leaflet. The concerned member states then have 90 days to recognize the decision of the reference member state and the summary of product
characteristics, labeling and package leaflet. National marketing authorizations within individual member states shall be granted within 30 days after
acknowledgement of the agreement
Should any member state refuse to recognize the marketing authorization by the reference member state, on the grounds of potential serious risk to public
health, the issue will be referred to a coordination group. Within a timeframe of 60 days, member states shall, within the coordination group, make all
efforts to reach a consensus. If this fails, the procedure is submitted to an EMA scientific committee for arbitration. The opinion of this EMA committee is
then forwarded to the Commission, for the start of the decision-making process. As in the centralized procedure, this process entails consulting various
European Commission Directorates General and the Standing Committee on Human Medicinal Products or Veterinary Medicinal Products, as appropriate.
For countries outside of the European Union, such as countries in Eastern Europe, Latin America or Asia, the requirements governing the conduct of
clinical trials, product licensing, pricing and reimbursement vary from country to country. In all cases, again, the clinical trials are conducted in accordance
with GCP and the other applicable regulatory requirements.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among other things, fines, suspension of clinical trials,
suspension or withdrawal of regulatory approvals, product recalls, seizure of products, operating restrictions, and criminal prosecution.
Europe - Data Privacy
On May 25, 2018, the European General Data Protection Regulation, or GDPR, went into effect, implementing a broad data protection framework that
expanded the scope of EU data protection law, including to non-EU entities that process, or control the processing of, personal data relating to individuals
located in the EU, including clinical trial data. The GDPR sets out a number of requirements that must be complied with when handling the personal data
of European Union-based data subjects including: providing expanded disclosures about how their personal data will be used; higher standards for
organizations to demonstrate that they have obtained valid consent or have another legal basis in place to justify their data processing activities; the
obligation to appoint data protection officers in certain circumstances; new rights for individuals to be “forgotten” and rights to data portability, as well as
enhanced current rights (e.g. access requests); the principal of accountability and demonstrating compliance through policies, procedures, training and
audit; and a new mandatory data breach regime. In particular, medical or health data, genetic data and biometric data where the latter is used to uniquely
identify an individual are all classified as “special category” data under the GDPR and afforded greater protection and require additional compliance
obligations. Further, EU member states have a broad right to impose additional conditions—including restrictions—on these data categories. This is
because the GDPR allows EU member states to derogate from the requirements of the GDPR mainly in regard to specific processing situations (including
special category data and processing for scientific or statistical purposes). As the EU states continue to reframe their national legislation to harmonize with
the GDPR, we will need to monitor compliance with all relevant EU member states’ laws and regulations, including where permitted derogations from the
GDPR are introduced.
We will also be subject to evolving EU laws on data export, if we transfer data outside the EU to ourselves or third parties outside of the EU. The GDPR
only permits exports of data outside the EU where there is a suitable data transfer solution in place to safeguard personal data (e.g. the European Union
Commission approved Standard Contractual Clauses). On July 16, 2020, the Court of Justice of the European Union or the CJEU, issued a landmark
opinion in the case Maximilian Schrems vs. Facebook (Case C-311/18), called Schrems II. This decision calls into question certain data transfer
mechanisms as between the EU member states and the US. The CJEU is the highest court in Europe and the Schrems II decision heightens the burden on
data importers to assess U.S. national security laws on their business and future actions of EU data protection authorities are difficult to predict.
Consequently, there is some risk of any data transfers from the European Union being halted. If we have to rely on third parties to carry out services for
us,
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including processing personal data on our behalf, we are required under GDPR to enter into contractual arrangements to help ensure that these third parties
only process such data according to our instructions and have sufficient security measures in place. Any security breach or non-compliance with our
contractual terms or breach of applicable law by such third parties could result in enforcement actions, litigation, fines and penalties or adverse publicity
and could cause customers to lose trust in us, which would have an adverse impact on our reputation and business. Any contractual arrangements requiring
the transfer of personal data from the EU to us in the United States will require greater scrutiny and assessments as required under Schrems II and may have
an adverse impact on cross-border transfers of personal data, or increase costs of compliance. The GDPR provides an enforcement authority to impose
large penalties for noncompliance, including the potential for fines of up to €20 million or 4% of the annual global revenues of the noncompliant company,
whichever is greater. We will be subject to the GDPR when we have a European Union presence or “establishment” (e.g., EU based subsidiary or
operations), when conducting clinical trials with EU based data subjects, whether the trials are conducted directly by us or through a vendor or partner, or
offering approved products or services to EU-based data subjects, regardless of whether involving a EU based subsidiary or operations.
Pharmaceutical Coverage, Pricing, and Reimbursement
Sales of our products that are approved by the FDA will depend, in part, on the extent to which the products will be covered by third-party payors,
including government health programs in the United States such as Medicare and Medicaid, commercial health insurers, and managed care organizations.
The process for determining whether a payor will provide coverage for a product may be separate from the process for setting the price or reimbursement
rate that the payor will pay for the product once coverage is approved, and it is time consuming and expensive to seek reimbursement from third-party
payors. Third-party payors may limit coverage to specific products on an approved list, or formulary, which might not include all of the approved products
for a particular indication. Coverage may be more limited than the purposes for which the product is approved by the FDA or regulatory authorities in other
countries.
In order to secure coverage and reimbursement for any product that might be approved for sale, a company may need to conduct expensive
pharmacoeconomic studies in order to demonstrate the medical necessity and cost-effectiveness of the product, in addition to the costs required to obtain
FDA or other comparable regulatory approvals. A payor’s decision to provide coverage for a drug product does not imply that an adequate reimbursement
rate will be approved. Moreover, eligibility for reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs,
including research, development, manufacture, sale and distribution. Interim payments for new products, if applicable, may also not be sufficient to cover
our costs and may not be made permanent. Payment rates may vary according to the use of the product and the clinical setting in which it is used, may be
based on payments allowed for lower cost products that are already reimbursed and may be incorporated into existing payments for other services. Net
prices for products may be reduced by mandatory discounts or rebates required by third-party payors and by any future relaxation of laws that presently
restrict imports of products from countries where they may be sold at lower prices than in the United States. In the U.S., third-party payors often rely upon
Medicare coverage policy and payment limitations in setting their own reimbursement policies, but they also have their own methods and approval process
apart from Medicare coverage and reimbursement determinations. Accordingly, one third-party payor’s determination to provide coverage for a product
does not assure that other payors will also provide coverage for the product.
In addition, the containment of healthcare costs has become a priority of federal and state governments and the prices of therapeutics have been a focus in
this effort. The United States government, state legislatures and foreign governments have shown significant interest in implementing cost-containment
programs, including price controls, restrictions on reimbursement and requirements for substitution of generic products. Adoption of price controls and
cost-containment measures, and adoption of more restrictive policies in jurisdictions with existing controls and measures, could further limit our net
revenue and results. If these third-party payors do not consider our products to be cost-effective compared to other therapies, they may not cover our
products after approval as a benefit under their plans or, if they do, the level of payment may not be sufficient to allow us to sell our products on a
profitable basis. Moreover, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and reimbursement for
their companion pharmaceutical products. Similar challenges to obtaining coverage and reimbursement for the pharmaceutical products apply to
companion diagnostics.
In the European Union, pricing and reimbursement schemes vary widely from country to country. Some countries provide that drug products may be
marketed only after a reimbursement price has been agreed. Some countries may require the completion of additional studies that compare the cost-
effectiveness of our product candidate to currently available therapies (so called health technology assessment, or HTA) in order to obtain reimbursement
or pricing approval. For example, the European Union provides options for its member states to restrict the range of drug products for which their national
health insurance systems provide reimbursement and to control the prices of medicinal products for human use. E.U. member states may approve a specific
price for a drug product or it may instead adopt a system of direct or indirect controls on the profitability of the company placing the drug product on the
market. Other member states allow companies to fix their own prices for drug products but monitor and control prescription volumes and issue guidance to
physicians to limit prescriptions. The downward pressure on health care costs in general, particularly prescription drugs, has become intense. As a result,
increasingly high barriers are being erected to the entry of new products. In addition, there can be considerable pressure by governments and other
stakeholders on prices and reimbursement levels, including as part of cost
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containment measures. Political, economic and regulatory developments may further complicate pricing negotiations, and pricing negotiations may
continue after reimbursement has been obtained. Reference pricing used by various E.U. member states, and parallel distribution (arbitrage between low-
priced and high-priced member states), can further reduce prices. Any country that has price controls or reimbursement limitations for drug products may
not allow favorable reimbursement and pricing arrangements. There can be no assurance that any country that has price controls or reimbursement
limitations for pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our product candidates that are approved
for commercial marketing and distribution. Historically, therapeutic candidates launched in the European Union do not follow price structures of the United
States and generally tend to be significantly lower.
Other Healthcare Laws and Regulations
As we are commercializing COSELA and may commercialize other product candidates, we are subject to additional healthcare statutory and regulatory
requirements and enforcement by federal government and the states and foreign governments in the jurisdictions in which we conduct our business.
Healthcare providers, physicians and third-party payors play a primary role in the recommendation and prescription of COSELA and any other product
candidates for which we obtain marketing approval. Our arrangements with third-party payors and customers expose us to broadly applicable fraud and
abuse and other healthcare laws and regulations that constrain the business or financial arrangements and relationships through which we market, sell and
distribute any products for which we obtain marketing approval.
Restrictions under applicable federal and state healthcare laws and regulations include the following:
• The federal Anti-Kickback Statute prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or
providing remuneration, directly or indirectly, to induce either the referral of an individual, for an item or service or the purchasing or
ordering of a good or service, for which payment may be made under federal healthcare programs such as the Medicare and Medicaid
programs. The federal Anti-Kickback Statute is subject to evolving interpretations. In the past, the government has enforced the federal Anti-
Kickback Statute to reach large settlements with healthcare companies based on sham consulting and other financial arrangements with
physicians. A person or entity does not need to have actual knowledge of the 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 civil False Claims Act;
• The federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary penalty laws, prohibit, among other
things, knowingly presenting or causing the presentation of a false, fictitious or fraudulent claim for payment to the U.S. government,
knowingly making, using, or causing to be made or used a false record or statement material to a false or fraudulent claim to the U.S.
government, or from knowingly making a false statement to avoid, decrease or conceal an obligation to pay money to the U.S. government.
Actions under these laws may be brought by the Attorney General or as a qui tam action by a private individual in the name of the
government. The federal government uses these laws, and the accompanying threat of significant liability, in its investigation and prosecution
of pharmaceutical and biotechnology companies throughout the U.S., for example, in connection with the promotion of products for
unapproved uses and other allegedly unlawful sales and marketing practices;
• The U.S. federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created new federal, civil and criminal statutes that
prohibit among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit
program, including private third-party payors, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully
obstructing a criminal investigation of a healthcare offense, 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. Similar to the federal Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific
intent to violate it in order to have committed a violation;
• The Physician Payments Sunshine Act, enacted as part of the Affordable Care Act of 2010, among other things, imposes reporting
requirements on manufacturers of FDA-approved drugs, devices, biologics and medical supplies covered by Medicare, Medicaid, or the
Children’s Health Insurance Program to report, on an annual basis, to the Centers for Medicare & Medicaid Services, or CMS, information
related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists, chiropractors
and, beginning in 2022 for payments and other transfers of value provided in the previous year, certain advanced non-physician health care
practitioners), teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members;
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• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, or HITECH, and their respective
implementing regulations impose specified requirements relating to the privacy, security and transmission of individually identifiable health
information. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to “business associates,”
defined as independent contractors or agents of covered entities, which include certain healthcare providers, health plans, and healthcare
clearinghouses, that create, receive, maintain or transmit protected 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;
• Analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, that may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private
insurers;
•
•
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 and may require drug manufacturers to report information related to
payments and other transfers of value to physicians and other healthcare providers or marketing expenditures to the extent that those laws
impose requirements that are more stringent than the Physician Payments Sunshine Act, as well as state and local laws that require the
registration of pharmaceutical sales representatives; and
State laws and foreign laws and regulations (particularly European Union laws regarding personal data relating to individuals based in
Europe) that govern the privacy and security of health information in certain circumstances, many of which differ from each other in
significant ways, thus complicating compliance efforts.
Moreover, in November 2020, the Department of Health and Human Services (“DHHS”) finalized significant changes to the regulations implementing the
Anti-Kickback Statute, as well as the Physician Self-Referral Law (Stark Law) and the civil monetary penalty rules regarding beneficiary inducements,
with the goal of offering the healthcare industry more flexibility and reducing the regulatory burden associated with those fraud and abuse laws,
particularly with respect to value-based arrangements among industry participants. As noted below under “Healthcare Reform,” however, those final rules
may be potentially overturned under the Congressional Review Act following the change in control of the legislative and executive branches in January
2021.
Ensuring that our current and future business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial
costs. It is possible that governmental authorities may conclude that our business practices may not comply with current or future statutes, regulations,
agency guidance 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,
including monetary damages, fines, disgorgement, imprisonment, loss of eligibility to obtain approvals from the FDA, exclusion from participation in
government contracting, healthcare reimbursement or other government programs, including Medicare and Medicaid, reputational harm, diminished profits
and future earnings, or additional reporting requirements if we become subject to a corporate integrity agreement or other agreement to resolve allegations
of non-compliance with any of these laws, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or
entities with whom we expect to do business is found to be not in compliance with applicable laws, they may be subject to criminal, civil or administrative
sanctions, including exclusions from government funded healthcare programs.
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Healthcare Reform and potential changes to drug and healthcare laws
In the United States and some foreign jurisdictions, there have been, and continue to be, several legislative and regulatory changes and proposed changes
regarding the healthcare system that could prevent or delay marketing approval of product and therapeutic candidates, restrict or regulate post-approval
activities, and affect the ability to profitably sell product and therapeutic candidates that obtain marketing approval. The FDA’s and other regulatory
authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our
product and therapeutic candidates. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies,
or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we otherwise may have obtained and we may not achieve
or sustain profitability, which would adversely affect our business, prospects, financial condition and results of operations. Moreover, 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/or expanding access.
For example, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or collectively the ACA,
was enacted in March 2010 and has had a significant impact on the health care industry in the U.S. The ACA expanded coverage for the uninsured while at
the same time containing overall healthcare costs. With regard to biopharmaceutical products, the ACA, among other things, addressed a new methodology
by which rebates owed by manufacturers under the Medicaid Drug Rebate Program are calculated for drugs that are inhaled, infused, instilled, implanted or
injected, increased the minimum Medicaid rebates owed by manufacturers under the Medicaid Drug Rebate Program and extended the rebate program to
individuals enrolled in Medicaid managed care organizations, established annual fees on manufacturers of certain branded prescription drugs, and created a
new Medicare Part D coverage gap discount program. Additionally, on December 20, 2019, President Trump signed the Further Consolidated
Appropriations Act for 2020 into law (P.L. 116-94) that includes a piece of bipartisan legislation called the Creating and Restoring Equal Access to
Equivalent Samples Act of 2019 or the “CREATES Act.” The CREATES Act aims to address the concern articulated by both the FDA and others in the
industry that some brand manufacturers have improperly restricted the distribution of their products, including by invoking the existence of a REMS for
certain products, to deny generic product developers access to samples of brand products. Because generic product developers need samples to conduct
certain comparative testing required by the FDA, some have attributed the inability to timely obtain samples as a cause of delay in the entry of generic
products. To remedy this concern, the CREATES Act establishes a private cause of action that permits a generic product developer to sue the brand
manufacturer to compel it to furnish the necessary samples on “commercially reasonable, market-based terms.” Whether and how generic product
developments will use this new pathway, as well as the likely outcome of any legal challenges to provisions of the CREATES Act, remain highly uncertain
and its potential effects on future competition for COSELA or any of our other future commercial products are unknown.
As another example, the 2021 Consolidated Appropriations Act signed into law on December 27, 2020 incorporated extensive healthcare provisions and
amendments to existing laws, including a requirement that all manufacturers of drugs and biological products covered under Medicare Part B report the
product’s average sales price, or ASP, to DHHS beginning on January 1, 2022, subject to enforcement via civil money penalties.
Since its enactment, there have been executive, judicial and Congressional challenges to certain aspects of the ACA and we expect there will be additional
challenges and amendments to the ACA in the future. Members of the US Congress have indicated that they may continue to seek to modify, repeal or
otherwise invalidate all, or certain provisions of, the ACA. For example, the Tax Cuts and Jobs Act, or TCJA, was enacted in 2017 and, among other
things, removed penalties, starting January 1, 2019, for not complying with the ACA’s individual mandate to carry health insurance, commonly referred to
as the “individual mandate.” In December 2018, a U.S. District Court Judge in the Northern District of Texas ruled that the individual mandate was a
critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the TCJA, the remaining provisions of the ACA were invalid
and the law in its entirety was unconstitutional. In December 2019, the U.S. Court of Appeals for the Fifth Circuit upheld the District Court ruling that the
individual mandate was unconstitutional but remanded the case back to the District Court to determine whether other reforms enacted as part of the ACA
but not specifically related to the individual mandate or health insurance could be severed from the rest of the ACA so as not to be declared invalid as well.
On March 2, 2020, the United States Supreme Court granted the petitions for writs of certiorari to review this case and allocated one hour for oral
arguments, which occurred on November 10, 2020. A decision from the Supreme Court is expected to be issued in spring 2021. It is unclear how this
litigation and other efforts to repeal and replace the ACA will impact the implementation of the ACA, the pharmaceutical industry more generally, and our
business. Complying with any new legislation or reversing changes implemented under the ACA could be time-intensive and expensive, resulting in a
material adverse effect on our business.
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In addition, other legislative changes have been proposed and adopted in the United States since the ACA that affect health care expenditures. These
changes include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year pursuant to the Budget Control Act of 2011, which
began in 2013 and will remain in effect through 2030 unless additional Congressional action is taken. The Coronavirus Aid, Relief, and Economic Security
Act, or the CARES Act, which was signed into law on March 27, 2020 and was designed to provide financial support and resources to individuals and
businesses affected by the COVID-19 pandemic, suspended the 2% Medicare sequester from May 1, 2020 through December 31, 2020, and extended the
sequester by one year, through 2030, in order to offset the added expense of the 2020 cancellation. The 2021 Consolidated Appropriations Act was
subsequently signed into law on December 27, 2020 and extends the CARES Act suspension period to March 31, 2021.
Moreover, 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 product pricing, review the relationship between pricing and manufacturer patient programs, and reform government program reimbursement
methodologies for drug products. DHHS, has solicited feedback on some of various measures intended to lower drug prices and reduce the out of pocket
costs of drugs and implemented others under its existing authority. For example, in May 2019, DHHS issued a final rule to allow Medicare Advantage
plans the option to use step therapy for Part B drugs beginning January 1, 2020. This final rule codified a DHHS policy change that was effective January
1, 2019. As part of the Trump Administration’s so-called “Blueprint” to lower drug prices, DHHS and FDA also released on July 31, 2019 their Safe
Importation Action Plan proposing two different pathways for the importation of foreign drug products. One pathway focuses on the importation of certain
drugs from Canada, which required the agencies to go through notice-and-comment rulemaking, while the second pathway allows manufacturers to
distribute their drugs manufactured abroad and was released as agency policy in an FDA guidance document first issued in December 2019. FDA’s notice
of proposed rulemaking to implement a system whereby state governmental entities could lawfully import and distribute prescription drugs sourced from
Canada was published at the end of December 2019 and in September 2020, the rulemaking was finalized by FDA. Those new regulations became
effective on November 30, 2020, although the impact of such future programs is uncertain, in part because lawsuits have been filed challenging the
government’s authority to promulgate them. The final regulations may also be vulnerable to being overturned by a joint resolution of disapproval from
Congress under the procedures set forth in the Congressional Review Act, which could be applied to regulatory actions taken by the Trump Administration
on or after August 21, 2020 (i.e., in the last 60 days of legislative session of the 116th Congress). Congress and the executive branch have each indicated
that it will continue to seek new legislative and/or administrative measures to control drug costs, making this area subject to ongoing uncertainty. In
addition, the probability of success of other policies enacted over the final months of the Trump Administration and their impact on the U.S. prescription
drug marketplace is unknown. There are likely to be political and legal challenges associated with implementing these reforms as they are currently
envisioned, and the January 20, 2021 transition to a new Democrat-led presidential administration created further uncertainty. Following his inauguration,
President Biden took immediate steps to order a regulatory freeze on all pending substantive executive actions in order to permit incoming department and
agency heads to review whether questions of fact, policy, and law may be implicated and to determine how to proceed.
Individual states in the United States have also increasingly passed legislation and implemented regulations designed to control pharmaceutical 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 December 2020, the U.S.
Supreme Court held unanimously that federal law does not preempt the states’ ability to regulate pharmaceutical benefit managers (PBMs) and other
members of the health care and pharmaceutical supply chain, an important decision that may lead to further and more aggressive efforts by states in this
area.
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. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which
could limit the amounts that federal and state governments will pay for healthcare products and services, including COSELA and any future products for
which we secure marketing approval.
Human Capital
As of December 31, 2021, we had 148 full-time employees, including 58 in research and development and 90 in selling, general and administrative
functions. Of these full-time employees, 33 had an MD, PhD or PharmD. We have no collective bargaining agreements with our employees, and we have
not experienced any work stoppages. We expect headcount growth to continue for the foreseeable future, particularly as we continue to develop our
products and commercialize COSELA. We consider our relations with our employees to be good.
Diversity and Inclusion
Diversity and inclusion are an important part of our culture. We seek to build a diverse and inclusive workplace where we can leverage our collective
cognitive and other diversity. We conduct routine pay equity analysis to determine we have pay equity across gender and race in similar jobs, accounting
for factors such as role, experience, education and level. We also have a Culture Committee comprised of employees across departments, who focus on
employee engagement and other initiatives throughout the year.
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Compensation and Benefits
We offer competitive compensation to attract and retain the best people. Our total compensation package includes market-competitive salary, bonuses, and
equity. We offer full-time employees equity at the time of hire and through annual equity grants because we want them to consider themselves to have an
ownership stake in the company and to be committed to our long-term success. We offer a wide range of benefits across areas such as health, family,
finance, community, and time off, including healthcare and wellness benefits, a 401(k) plan, access to legal services, family leave, and paid time off.
Protection and Support of our Employees During the COVID-19 Pandemic
In response to the COVID-19 pandemic, we put in place the following safety measures for our employees, patients, healthcare professionals, and suppliers
to limit exposure and protect the health of those we employ and serve. These measures included, but were not limited to, we substantially restricted travel,
supplied personal protective equipment to employees, limited access to our headquarters and asked most of our staff to work remotely. On short notice, we
transitioned most of our employees to working remotely and added bandwidth and VPN capacity to our infrastructure. In addition, we continued to enhance
our cybersecurity protections. As a company, we supported our employees by maintaining base compensation throughout the year, and our year-end
practices around merit, bonus and equity were not impacted. We continue to build a strong supportive culture around values of patients first, integrity,
respect and collaboration. Our efforts to develop our culture will last far beyond this pandemic.
Available Information
Our internet address is www.g1therapeutics.com. Our annual reports on Form 10‑K, quarterly reports on Form 10‑Q, current reports on Form 8‑K, and all
amendments to those reports, are available to you free of charge through the Investors section of our website as soon as reasonably practicable after such
materials have been electronically filed with, or furnished to, the Securities and Exchange Commission, or the SEC. The information found on our website
is not part of this or any other report we file with, or furnish to, the SEC.
In addition, the SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file
electronically with the SEC. Our filings with the SEC may be accessed through the SEC’s website at http://www.sec.gov.
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Item 1A. Risk Factors.
Investing in our common stock involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with all of
the other information in this Annual Report, including our financial statements and related notes, before investing in our common stock. The risks and
uncertainties described below are not the only ones we face. Additional risks and uncertainties that we are unaware of, or that we currently believe are not
material, may also become important factors that affect us. If any of the following risks occur, our business, operating results and prospects could be
materially harmed. In that event, the price of our common stock could decline, and you could lose part or all of your investment.
Summary Risk Factors
Below is a summary of the principal risk factors in each risk category that could adversely affect our business, operations, and financial results.
Risks related to the commercialization of COSELA
COSELA may fail to achieve the degree of market acceptance for commercial success.
COSELA may become subject to unfavorable pricing regulations or third-party coverage and reimbursement policies.
• We depend almost entirely on the commercial success of COSELA.
•
• We may not be able to effectively sell or market our COSELA, or generate substantial product revenues.
•
• We face substantial competition.
• We must comply with post-approval development and regulatory requirements to maintain FDA approval of COSELA.
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Product liability lawsuits against us could cause us to incur substantial liabilities.
If we violate the guidelines pertaining to promotion and advertising we may be subject to disciplinary action.
Our relationships with customers and third-party payors will be subject to applicable anti-kickback, fraud and abuse and other healthcare laws
and regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and
future earnings.
Risks related to development of COSELA:
If we are unable to successfully develop and commercialize COSELA, our business will be materially harmed.
Delays in the enrollment of patients in clinical trials, may delay or prevent our plans.
Initial success in our ongoing clinical trials may not be indicative of results obtained when these trials are completed.
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• We may incur additional costs or experience delays in completing the development and may ultimately be unable to obtain the approval
COSELA in additional indications.
Risks related to our financial position and need for additional capital:
• We may need additional funding.
• We expect to incur losses for the foreseeable future and may never achieve or maintain profitability.
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Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights.
Our limited operating history may make it difficult for you to evaluate the success of our business.
Risks related to marketing approval of COSELA:
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If we are not able to obtain, or if there are delays in obtaining, the additional required marketing approvals, we will not be able to broadly
commercialize COSELA, and our ability to generate revenue will be materially impaired.
COSELA may cause undesirable side effects that could delay or prevent its marketing approval, limit the commercial profile of an approved
label, or result in significant negative consequences following marketing approval, if any.
COSELA is subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from
the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with
COSELA.
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Risks related to employee matters, managing growth and other risks related to our business
• We currently have a limited number of employees, and our future success depends on our ability to retain key executives and to attract, retain and
motivate qualified personnel.
• We face risks related to health epidemics and outbreaks, including the novel coronavirus (COVID-19), which could significantly disrupt our
preclinical studies and clinical trials.
• We expect to potentially implement sales, marketing and distribution capabilities, and as a result, we may encounter difficulties in managing our
growth, which could disrupt our operations.
Risks related to our dependence on third parties
• We rely on, and expect to continue to rely on, third parties to conduct our clinical trials for COSELA. If these third parties do not successfully
carry out their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to obtain marketing
approval for or commercialize COSELA, and our business could be substantially harmed.
• We contract with third parties for the manufacture of COSELA for preclinical studies and clinical trials and commercialization. This reliance on
third parties increases the risk that we will not have sufficient quantities of COSELA or drugs or such quantities at an acceptable cost, which
could delay, prevent or impair our development or commercialization efforts.
• We rely on, and expect to continue to rely on, third parties for the supply of COSELA. If these third parties do not successfully carry out their
contractual duties or meet expected deadlines, we may not be able to fulfill orders of COSELA and our business could be substantially harmed.
Risks related to our intellectual property
•
If we are unable to obtain and maintain intellectual property protection for our technology and products, or if the scope of the intellectual
property protection obtained is not sufficiently broad, our competitors could commercialize technology and products similar or identical to ours,
and our ability to successfully commercialize our technology and products may be impaired and, if we infringe the valid patent rights of others,
we may be prevented from making, using or selling our products or may be subject to damages or penalties.
• We may become involved in administrative adversarial proceedings in the U.S. PTO or in the patent offices of foreign countries brought by a
third party to attempt to cancel or invalidate our patent rights, which could be expensive, time consuming and cause a loss of patent rights.
• We may have to file one or more lawsuits in court to prevent a third party from selling a product or using a product in a manner that infringes our
patent, which could be expensive, time consuming and unsuccessful, and ultimately result in the loss of our proprietary market.
Risks related to our common stock
•
•
The price of our common stock may be volatile and fluctuate substantially.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to
our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
For a more complete discussion of the material risks facing our business, see below.
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Risks related to the commercialization of COSELA
We depend almost entirely on the commercial success of COSELA. There is no assurance that our commercialization efforts in the U.S. with respect to
COSELA will be successful or that we will be able to generate revenues at the levels or within the timing we expect or at the levels or within the timing
necessary to support our goals.
To date, we have generated $11.1 million in revenues from the sale of COSELA. COSELA was approved by the FDA in February 2021 and was
commercially available in the U.S. on March 2, 2021. There is no assurance that the sales of COSELA will grow on the timing we anticipate. We may
encounter delays or hurdles related to our sales efforts that affect amount of revenue generated and the timing of such revenue.
Our business currently depends heavily on our ability to successfully commercialize COSELA in the U.S. to treat patients with ES-SCLC. We may never
be able to successfully commercialize COSELA or meet our expectations with respect to revenues. We have never marketed, sold or distributed for
commercial use any pharmaceutical product prior to COSELA. There is no guarantee that the infrastructure, systems, processes, policies, personnel,
relationships and materials we have built in anticipation of the commercialization of COSELA in the U.S. will be sufficient for us to achieve success at the
levels we expect. Additionally, healthcare providers may not accept a new treatment paradigm for patients with ES-SCLC. We may also encounter
challenges related to reimbursement of COSELA, even as we have had positive early indications from payors, including potential limitations in the scope,
breadth, availability, or amount of reimbursement covering COSLEA. Similarly, healthcare settings or patients may determine that the financial burdens of
treatment are not acceptable. Our results may also be negatively impacted if we have not adequately sized our field teams or our physician segmentation
and targeting strategy is inadequate or if we encounter deficiencies or inefficiencies in our infrastructure or processes. Any of these issues could impair our
ability to successfully commercialize COSELA or to generate substantial revenues or profits or to meet our expectations with respect to the amount or
timing of revenue or profits. Any issues or hurdles related to our commercialization efforts may materially adversely affect our business, results of
operations, financial condition and prospects. There is no guarantee that we will be successful in our commercialization efforts with respect to COSELA.
Our COSELA commercialization efforts may fail to achieve the degree of market acceptance by physicians, patients, third-party payors and others in
the medical community necessary for commercial success.
Our COSELA commercialization efforts may fail to gain sufficient market acceptance by physicians, patients, third-party payors and others in the medical
community. If COSELA does not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become
profitable. The degree of market acceptance of COSELA and will depend on a number of factors, including:
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the timing of our receipt of any additional marketing approvals;
the terms of any approvals and the countries in which approvals are obtained;
the efficacy and safety and potential advantages and disadvantages compared to alternative treatments;
the prevalence and severity of any side effects associated with our products;
the additional indications for which our products are approved;
adverse publicity about our products or favorable publicity about competing products;
the approval of other products for the same indications as our products;
our ability to offer our products for sale at competitive prices;
the convenience and ease of administration compared to alternative treatments;
the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
the success of our physician education programs;
the strength of our marketing and distribution support;
the availability of third-party coverage and adequate reimbursement, including patient cost-sharing programs such as copays and deductibles;
and
any restrictions on the use of our products together with other medications.
If COSELA fails to achieve market acceptance, it could have a material and adverse effect on our business, financial condition, results of operation and
prospects.
If we are unable to establish effective sales or marketing capabilities or enter into agreements with third parties to sell or market COSELA, we may not
be able to effectively sell or market COSELA, if approved, or generate substantial product revenues.
To achieve commercial success for COSELA, we must build our sales, marketing, managerial, and other non-technical capabilities or make arrangements
with third parties to perform these services. There are risks involved with both establishing our own sales and marketing capabilities and entering into
arrangements with third parties to perform these services.
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Factors that may inhibit our efforts to commercialize COSELA on our own include:
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our inability to recruit and retain adequate numbers of effective sales and marketing personnel;
the inability of sales personnel to obtain access to physicians or persuade adequate numbers of physicians to prescribe any future drugs;
the lack of complementary drugs to be offered by sales personnel, which may put us at a competitive disadvantage relative to companies with
more extensive product lines; and
unforeseen costs and expenses associated with creating an independent sales and marketing organization.
In addition, we may not be successful in entering into arrangements with third parties to market and distribute COSELA or may be unable to do so when
needed or on terms that are favorable to us. We likely will have little control over such third parties, and any of them may fail to devote the necessary
resources and attention to market and distribute our products effectively. If we do not establish sales, marketing, and distribution capabilities successfully,
either on our own or in collaboration with third parties, we will not be successful in commercializing COSELA to receive marketing approval or any such
commercialization may experience delays or limitations. If we are not successful in commercializing COSELA, either on our own or through collaborations
with one or more third parties, our business, results of operations, financial condition and prospects will be materially adversely affected.
Even if we are able to commercialize COSELA, it may become subject to unfavorable pricing regulations or third-party coverage and reimbursement
policies, which would harm our business.
The regulations that govern marketing approvals, pricing and reimbursement for new drugs vary widely from country to country. Some countries require
approval of the sale price of a drug before it can be marketed. In many countries, the pricing review period begins after marketing approval is granted. In
some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. As a
result, we might obtain marketing approval for COSELA in a particular country, but then be subject to price regulations that delay our commercial launch,
possibly for lengthy time periods, and negatively impact the revenues we are able to generate from the sale of COSELA in that country. Adverse pricing
limitations may hinder our ability to recoup our investment in COSELA, even if marketing approval is obtained.
Our ability to commercialize COSELA successfully also will depend in part on the extent to which coverage and reimbursement for COSELA and related
treatments will be available from government authorities, private health insurers and other organizations. In the United States, the principal decisions about
reimbursement for new medicines are typically made by the CMS, an agency within the U.S. Department of Health and Human Services, as CMS decides
whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payors tend to follow CMS to a substantial degree. It is
difficult to predict what CMS will decide with respect to reimbursement. Reimbursement agencies in Europe may be more conservative than CMS. For
example, a number of cancer drugs are generally covered and paid for in the United States, but have not been approved for reimbursement in certain
European countries. A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and third-party payors have
attempted to control costs by limiting coverage and the amount of payments for particular drugs. Increasingly, third-party payors are requiring that drug
companies provide them with predetermined discounts from list prices and are challenging the prices charged for drugs. We cannot be sure that coverage
will be available for COSELA and, if coverage is available, the level of payments. Reimbursement may impact the demand for, or the price of, COSELA. If
reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize COSELA.
In addition to CMS and private payors, professional organizations such as the National Comprehensive Cancer Network and the American Society of
Clinical Oncology can influence decisions about reimbursement for medicines by determining standards of care. In addition, many private payors contract
with commercial vendors who sell software that provide guidelines that attempt to limit utilization of, and therefore reimbursement for, certain products
deemed to provide limited benefit to existing alternatives. Such organizations may set guidelines that limit reimbursement or utilization of our products.
There may be significant delays in obtaining reimbursement for newly approved drugs, and coverage may be more limited than the purposes for which the
drug is approved by the FDA or similar regulatory authorities outside the United States. Moreover, eligibility for reimbursement does not imply that any
drug will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim
reimbursement levels for new drugs, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Reimbursement rates may
vary according to the use of the drug and the clinical setting in which it is used, may be based on reimbursement levels already set for lower cost drugs and
may be incorporated into existing payments for other services. Net prices for drugs may be reduced by mandatory discounts or rebates required by
government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of drugs from countries where they
may be sold at lower prices than in the United States. Our inability to promptly obtain coverage and profitable payment rates from both government-funded
and private payors for any approved drugs that we develop could have a material adverse effect on our operating results, our ability to raise capital needed
to commercialize drugs and our overall financial condition.
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If market opportunities for COSELA are smaller than we estimate or if any FDA approval that we receive for additional indications for COSELA are
based on a narrower definition of the patient population, our revenues may be substantially lower than we estimate.
We are focused on the development and commercialization of COSELA, the first and only therapy indicated to proactively help protect bone marrow from
the damage of chemotherapy. We have estimated the number of people who have cancer or will develop cancer and have estimated those who could benefit
from COSELA. However, our estimates, which have been developed from a number of sources, may ultimately be inaccurate. Our estimates may change
because of novel studies, the number of potential patients may be fewer than contemplated, the additional indications for COSELA approved by FDA may
be based on a narrower definition of the patient population than we have estimated, patients may not be receptive to treatment with COSELA, patients may
select our competitors’ products instead of ours, or it may be more difficult to identify the potential patient population than anticipated, all of which could
cause the market opportunities for COSELA to be more limited than we predicted and adversely impact our business and profitability.
We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more
successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect to COSELA from major
pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are a number of large pharmaceutical and
biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications
for which we are developing COSELA. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar
to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and
other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research,
development, manufacturing and commercialization.
Specifically, there are a large number of companies developing or marketing treatments for cancer, including many major pharmaceutical and
biotechnology companies. COSELA competes with (a) existing growth factor support treatments, and (b) multiple approved drugs or drugs that may be
approved in the future for indications for which we may develop COSELA.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have
fewer or less severe side effects, are more convenient or are less expensive than any products that we may develop. Our competitors also may obtain FDA
or other marketing approval for their products more rapidly than we may obtain approval for ours, which could result in our competitors establishing a
strong market position before we are able to enter the market and/or slow our marketing approval. Some of the important competitive factors affecting the
success of all COSELA are likely to be their efficacy, safety, convenience, price and the availability of reimbursement from government and other third-
party payors.
Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and
expertise in research and development, manufacturing, preclinical studies, conducting clinical trials, obtaining marketing approvals and marketing
approved products than we do. 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 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.
Because COSELA received approval by the FDA, we must still comply with post-approval development and regulatory requirements to maintain that
approval and, if we fail to do so, FDA could withdraw its approval of COSELA, which would lead to substantially lower revenues.
For drugs granted approval, the FDA typically requires post-marketing confirmatory trials to evaluate the anticipated effect on irreversible morbidity or
mortality or other clinical benefit. These confirmatory trials must be completed with due diligence. As a condition of the accelerated approval of COSELA,
we are required to (i) conduct a study in a sufficient number of adult patients with extensive stage-small cell lung cancer undergoing chemotherapy to
evaluate the impact of COSELA on disease progression or survival in patients with chemotherapy-induced myelosuppression treated with a
platinum/etoposide-containing regimen or topotecan-containing regimen with at least 2 years of follow-up (ii) conduct an in vitro metabolism study and
CYP phenotyping study at clinically relevant concentrations to appropriately determine major metabolic pathway for COSELA. Characterize the formation
of the major circulating metabolite of trilaciclib, M8, using the purified M8 compound with a validated bioanalytical method), (iii) conduct an in vitro
Drug-Drug Interaction (DDI) study to evaluate the major circulating metabolite of COSELA, M8, as an inhibitor for major
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CYP enzymes and drug transporters, and (iv) conduct a clinical trial to evaluate the effect of hepatic impairment on the pharmacokinetics and safety of
COSELA.
The FDA may withdraw approval of COSELA if, for example, the trial required to verify the predicted clinical benefit fails to verify such benefit or does
not demonstrate sufficient clinical benefit to justify the risks associated with COSELA. The FDA may also withdraw approval if other evidence
demonstrates that COSELA is not shown to be safe or effective under the conditions of use, we fail to conduct any required post approval trial of COSELA
with due diligence or we disseminate false or misleading promotional materials relating thereto.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the evaluation of COSELA in human clinical trials and will face an even greater risk if we
commercially sell any products that we may develop. If we cannot successfully defend ourselves against claims that COSELA caused injuries, we will
incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
decreased demand for COSELA or products that we may develop;
injury to our reputation and significant negative media attention;
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• withdrawal of clinical trial participants;
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significant costs to defend the related litigation;
substantial monetary awards to trial participants or patients;
loss of revenue;
reduced resources of our management to pursue our business strategy; and
the inability to successfully commercialize any products that we may develop.
We currently hold $10.0 million in product liability insurance coverage in the aggregate, with a per incident limit of $10.0 million, which may not be
adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials. Insurance coverage is
increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may
arise.
If we or any of our current or future partners violate the guidelines pertaining to promotion and advertising of COSELA, we or they may be subject to
disciplinary action by the FDA's Office of Prescription Drug Promotion (OPDP) or other regulatory authorities.
The FDA’s Office of Prescription Drug Promotion (OPDP), is responsible for reviewing prescription drug advertising and promotional labeling to ensure
that the information contained in these materials is not false or misleading. There are specific disclosure requirements, and the applicable regulations
mandate that advertisements cannot be false or misleading or omit material facts about the product. Prescription drug promotional materials must present a
fair balance between the drug’s effectiveness and the risks associated with its use. Most warning letters from OPDP cite inadequate disclosure of risk
information.
OPDP prioritizes its actions based on the degree of risk to the public health, and often focuses on newly introduced drugs and those associated with
significant health risks. There are two types of letters that OPDP typically sends to companies that violate its drug advertising and promotional guidelines:
untitled letters and warning letters. In the case of an untitled letter, OPDP typically alerts the drug company of the violation and issues a directive to refrain
from future violations, but does not typically demand other corrective action. A warning letter is typically issued in cases that are more serious or where the
company is a repeat offender. Although we have not received any such letters from OPDP, we or any of our current or future partners may inadvertently
violate OPDP’s guidelines in the future and be subject to an OPDP untitled letter or warning letter, which may have a negative impact on our business.
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Our relationships with customers and third-party payors are subject to applicable anti-kickback, fraud and abuse and other healthcare laws and
regulations, which could expose us to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future
earnings.
As we are commercializing COSELA, we are subject to additional healthcare statutory and regulatory requirements and enforcement by federal
government and the states and foreign governments in the jurisdictions in which we conduct our business. Healthcare providers, physicians and third-party
payors play a primary role in the recommendation and prescription of COSELA. Our arrangements with third-party payors and customers expose us to
broadly applicable fraud and abuse and other healthcare laws and regulations that constrain the business or financial arrangements and relationships
through which we market, sell and distribute any products for which we obtain marketing approval. Restrictions under applicable federal and state
healthcare laws and regulations include the following:
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the federal Anti-Kickback Statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or
paying remuneration, directly or indirectly, in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or
the purchase, order or recommendation of, any good or service, for which payment may be made under a federal healthcare program such as
Medicare and Medicaid; a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to
have committed a violation;
the federal false claims laws impose criminal and civil penalties, including civil whistleblower or qui tam actions, against individuals or
entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or
making a false statement to avoid, decrease or conceal an obligation to pay money to the federal government; in addition, the government
may assert that a claim including items and services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or
fraudulent claim for purposes of the False Claims Act;
the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes criminal and civil liability for executing a
scheme to defraud any healthcare benefit program, or knowingly and willfully falsifying, concealing or covering up a material fact or making
any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal
Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific intent to violate it in order to have
committed a violation;
the federal physician payment transparency requirements, sometimes referred to as the “Sunshine Act” under the Patient Protection and
Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively the ACA, require
manufacturers of drugs, devices, biologics and medical supplies that are reimbursable under Medicare, Medicaid, or the Children’s Health
Insurance Program to report to the Centers for Medicare & Medicaid Services, or CMS, information related to payments and other transfers
of value to physicians and teaching hospitals and the ownership and investment interests of physicians and their immediate family members
in such manufacturers;
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• HIPPA, as amended by the Health Information Technology for Economic and Clinical Health Act and its implementing regulations, which
also imposes obligations on certain covered entity healthcare providers, health plans, and healthcare clearinghouses as well as their business
associates that perform certain services involving the use or disclosure of individually identifiable health information, including mandatory
contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information;
analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, may apply to sales or marketing
arrangements and claims involving healthcare items or services reimbursed by non-governmental third-party payors, including private
insurers;
some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary compliance guidelines and the
relevant compliance guidance promulgated by the federal government and may 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 foreign laws also govern the privacy and security of health information in certain circumstances, many of which differ from each
other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
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Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and regulations involve substantial costs. It is
possible that governmental authorities may conclude that our business practices 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,
imprisonment, exclusion of products from government funded healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of
our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business is found to be not in compliance with
applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
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Governments outside the United States tend to impose strict price controls, which may adversely affect our revenues, if any.
In some countries, particularly the countries of the European Union, the pricing of prescription pharmaceuticals is subject to governmental control. In these
countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain
reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of COSELA to
other available therapies. If reimbursement of COSELA is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our
business could be harmed, possibly materially.
Risks related to development of COSELA
If we are unable to successfully commercialize additional indications for COSELA or experience significant delays in doing so, our business will be
materially harmed.
We have invested substantially all of our efforts and financial resources identifying and developing our COSELA. Our ability to generate product revenues
will depend on the successful development and commercialization of COSELA. COSELA will require additional development, management of
development and manufacturing activities, marketing approval in multiple jurisdictions, obtaining manufacturing supply, commercialization activities,
substantial investment and significant marketing efforts.
We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and
rapidly evolving fields, particularly in the biopharmaceutical area. For example, to execute our business plan, we will need to successfully:
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build and maintain robust sales, distribution and marketing capabilities, either on our own or in collaboration with strategic partners;
gain acceptance for COSELA by patients, the medical community and third-party payors;
compete effectively with other therapies;
execute development activities for COSLEA, including successful enrollment in and completion of clinical trials;
obtain required marketing approvals for the development and commercialization of additional indications for COSELA;
obtain and maintain patent and trade secret protection and regulatory exclusivity for COSELA and ensure that we do not infringe the valid
patent rights of third parties;
protect, leverage and expand our intellectual property portfolio;
establish and maintain clinical and commercial manufacturing capabilities or make arrangements with third-party manufacturers for clinical
and commercial manufacturing;
obtain and maintain healthcare coverage and adequate reimbursement;
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• maintain a continued acceptable safety profile for COSELA ;
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• manage our spending as costs and expenses increase due to preclinical development, clinical trials, marketing approvals and
develop and maintain any strategic relationships;
enforce and defend intellectual property rights and claims; and
commercialization.
If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully
commercialize COSELA, which would materially harm our business.
If we experience delays or difficulties in the enrollment of patients in clinical trials, development of COSELA may be delayed or prevented, which
would have a material adverse effect on our business.
Identifying and qualifying patients to participate in clinical trials for COSELA is critical to our success. In particular, because we are initially focused on
patients with diseases with genetically defined tumors, our ability to enroll eligible patients may be limited or may result in slower enrollment than we
anticipate. We may not be able to initiate or continue clinical trials for COSELA if we are unable to locate and enroll a sufficient number of eligible
patients to participate in these trials. Patient enrollment may be affected by many factors including:
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the severity of the disease under investigation;
the eligibility criteria for the clinical trial in question;
the perceived risks and benefits of COSELA under study;
the efforts to facilitate timely enrollment in clinical trials;
the patient referral practices of physicians;
the availability of competing therapies and clinical trials; and
the proximity and availability of clinical trial sites for prospective patients.
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If we experience delays or difficulties in the enrollment of patients in clinical trials, our clinical trials may be delayed or terminated. Any delays in
completing our clinical trials will increase our costs, delay or prevent development of COSELA and the approval process, and jeopardize our ability to
commence product sales and generate revenue. Any of these occurrences may harm our business, financial condition and prospects significantly.
Initial success in our ongoing clinical trials may not be indicative of results obtained when these trials are completed or in later stage trials.
We are currently evaluating COSELA in clinical trials. There can be no assurance that any of our clinical trials will ultimately be successful or support
further clinical development of COSELA. There is a high failure rate for drugs and biologics proceeding through clinical trials. A number of companies in
the pharmaceutical and biotechnology industries have suffered significant setbacks in clinical development even after achieving promising results in earlier
studies, and any such setbacks in our clinical development could have a material adverse effect on our business and operating results.
We may not be able to identify additional therapeutic indications for COSELA or to expand our portfolio of product candidates.
We are conducting a number of clinical trials to identify new therapeutic indications for COSELA and to expand our portfolio of product candidates.
However, we may be unsuccessful in developing additional therapeutic indications for COSELA. For example, our initial research in colorectal cancer,
breast cancer, and bladder cancer may have shown potential for therapeutic opportunities yet our clinical trials in these possible additional therapeutic
indications may ultimately fail. Moreover, such clinical trials require the use of significant financial, human, and technical resources. Even if we are able to
identify new opportunities, COSELA will not be commercially available in these indications for a number of years due to extensive clinical testing
requirements and regulatory approvals. Additionally, we may focus our limited efforts and resources on a new therapeutic indication that is ultimately
unsuccessful. Therefore, we cannot guarantee that we will ever be able to identify and develop additional therapeutic indications for COSELA or expand
our portfolio of product candidates, which could adversely impact our future growth and prospects.
Clinical drug development involves a lengthy and expensive process, with an uncertain outcome. We may incur additional costs or experience delays in
completing, or ultimately be unable to complete, the development and may experience delays in obtaining, or ultimately be unable to obtain, the
approval of COSELA in additional indications.
The risk of failure in drug development is high. Before obtaining marketing approval from regulatory authorities for the sale of COSELA, we must
complete preclinical development and conduct extensive clinical trials to demonstrate the safety and efficacy of COSELA in humans. Clinical trials are
expensive, difficult to design and implement and can take several years to complete, and their outcomes are inherently uncertain. Failure can occur at any
time during the clinical trial process. Further, the results of preclinical studies and early clinical trials of COSELA may not be predictive of the results of
later-stage clinical trials, and interim results of a clinical trial do not necessarily predict final results. 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 during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval
in additional indications or commercialize COSELA. Clinical trials may be delayed, suspended or prematurely terminated because costs are greater than we
anticipate or for a variety of reasons, such as:
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delay or failure in reaching agreement with the FDA or a comparable foreign regulatory authority on a trial design that we are able to
execute;
delay or failure in obtaining authorization to commence a trial or inability to comply with conditions imposed by a regulatory authority
regarding the scope or design of a clinical trial;
delays in reaching, or failure to reach, agreement on acceptable terms with prospective trial sites and prospective contract research
organizations, or CROs, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and
trial sites;
inability, delay, or failure in identifying and maintaining a sufficient number of trial sites, many of which may already be engaged in other
clinical programs;
delay or failure in recruiting and enrolling suitable subjects to participate in a trial;
delay or failure in having subjects complete a trial or return for post-treatment follow-up;
clinical sites and investigators deviating from the clinical protocol, failing to conduct the trial in accordance with regulatory requirements, or
dropping out of a trial;
failure to initiate or delay of or failure to complete a clinical trial as a result of an IND being placed on clinical hold by the FDA, or for other
reasons;
lack of adequate funding to continue a clinical trial, including unforeseen costs due to enrollment delays, requirements to conduct additional
clinical trials and increased expenses associated with the services of our CROs and other third parties;
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clinical trials of COSELA may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct
additional clinical trials or abandon product development programs;
the number of patients required for clinical trials of COESLA may be larger than we anticipate, enrollment in these clinical trials may be
slower than we anticipate, or participants may drop out of these clinical trials at a higher rate than we anticipate;
our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or
at all;
regulators, or a Data Safety Monitoring Board, or DSMB, if one is used for our clinical trials, may require that we suspend or terminate our
clinical trials for various reasons, including noncompliance with regulatory requirements, unforeseen safety issues or adverse side effects,
failure to demonstrate a benefit from using a drug, or a finding that the participants are being exposed to unacceptable health risks;
the supply or quality of COSELA or other materials necessary to conduct clinical trials may be insufficient;
the FDA or other regulatory authorities may require us to submit additional data or impose other requirements before permitting us to initiate
a clinical trial; or
there may be changes in governmental regulations or administrative actions.
Many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the denial of marketing
approval for COSELA in additional indications. Further, the FDA may disagree with our clinical trial design and our interpretation of data from clinical
trials or may change the requirements for approval even after it has reviewed and commented on the design for our clinical trials.
If we are required to conduct additional clinical trials or other studies of COSELA beyond those that we currently contemplate, if we are unable to
successfully complete clinical trials of COSELA or other studies, if the results of these trials or tests are not positive or are only modestly positive or if
there are safety concerns, we may:
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be delayed in obtaining marketing approval for COSELA in additional indications;
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 that would reduce the potential
market for our products or inhibit our ability to successfully commercialize our products;
be subject to additional post-marketing restrictions and/or requirements; or
have the product removed from the market after obtaining marketing approval.
Our product development costs will also increase if we experience delays in preclinical and clinical development or receiving the requisite marketing
approvals. We do not know whether any of our preclinical studies or clinical trials will need to be restructured or will be completed on schedule, or at all.
Significant preclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize COSELA or
allow our competitors to bring products to market before we do and impair our ability to successfully commercialize COSELA and may harm our business
and results of operations.
Our development of COSELA, a CDK4/6 inhibitor to decrease the incidence of chemotherapy-induced myelosuppression, is novel, unproven and
rapidly evolving.
COSELA is a short-acting intravenous CDK4/6 inhibitor. The use of a CDK4/6 inhibitor to decrease the incidence of chemotherapy-induced
myelosuppression is a novel approach and we believe that we are the only company currently developing a CDK4/6 inhibitor for this patient population.
Even though COSELA has demonstrated positive results in clinical trials for small cell lung cancer, we may not succeed in demonstrating safety and
efficacy of COSELA in additional indications.
Advancing COSELA creates significant challenges for us, including:
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obtaining marketing approval for multiple indications, as the FDA and other regulatory authorities have limited experience with commercial
development of a CDK4/6 inhibitor for this type of use;
educating medical personnel regarding the potential safety benefits, as well as the challenges, of incorporating our product candidates into
their treatment regimens; and
establishing sales and marketing capabilities to gain market acceptance of a novel therapy.
43
Risks related to our financial position and need for additional capital
We will need substantial additional funding. If we are unable to raise capital when needed, we would be compelled to delay, reduce or eliminate our
product development programs or commercialization efforts.
The development of pharmaceutical drugs is a capital-intensive venture. We expect our expenses to continue to increase along with our ongoing activities,
particularly as we support commercial activities and conduct larger-scale clinical trials of, and seek marketing approval for, COSELA in additional
indications. For example, we expect to incur significant COSELA commercialization expenses related to product sales, marketing, manufacturing and
distribution. We may also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for COSELA or otherwise
expand more rapidly than we presently anticipate. Furthermore, we have incurred, and expect to continue to incur, additional costs associated with
operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are
unable to raise capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our clinical programs, development efforts or
any future commercialization efforts.
As of December 31, 2021, we had $221.2 million in cash and cash equivalents. We believe that, based upon our current operating plan, our existing capital
resources will be sufficient to fund our anticipated operations for greater than 12 months from the date of filing this Annual Report. Our future capital
requirements and the period for which we expect our existing resources to support our operations may vary significantly from what we expect. Our
monthly spending levels vary based on new and ongoing commercialization expenses, research and development, and other corporate activities. Because
the length of time and activities associated with successful commercialization and research and development of COSELA is highly uncertain, we are unable
to estimate the actual funds we will require for commercialization and development of COSELA. In addition, our future capital requirements will depend
on many factors, and could increase significantly as a result of many factors, including:
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the costs of commercialization activities, including product sales, marketing, manufacturing and distribution of COSELA for which we
receive marketing approval;
the scope, progress, results and costs of development, laboratory testing and clinical trials for COSELA;
the scope, prioritization and number of our research and development programs;
the costs, timing and outcome of regulatory review of COSELA;
the extent to which we enter into non-exclusive, jointly funded clinical research collaboration arrangements, if any, for the development of
COSELA in combination with other companies’ products;
our ability to establish collaboration arrangements for the development of COSELA on favorable terms, if at all;
the achievement of milestones or occurrence of other developments that trigger payments under our license agreement and any collaboration
agreements into which we may enter, if any;
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements,
if any;
the extent to which we acquire or in-license product candidates and technologies, and the terms of such in-licenses;
revenue received from commercial sales of COSELA and any future product candidates; and
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims.
Conducting studies and clinical trials is a time-consuming, expensive and uncertain process that can take years to complete, and we may never generate the
necessary data or results required to obtain marketing approval and achieve product sales. In addition, COSELA and our future product candidates, if
approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that may not be commercially
available for some time, if ever. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives.
Any additional fundraising efforts may divert our management from their day-to-day activities, which may adversely affect our ability to develop and
commercialize COSELA and future product candidates. Volatility in the financial markets have generally made equity and debt financing more difficult to
obtain and may have a material adverse effect on our ability to meet our fundraising needs. We cannot guarantee that future financing will be available in
sufficient amounts or on terms acceptable to us, if at all. Moreover, the terms of any financing may adversely affect the holdings or the rights of our
stockholders and the issuance of additional securities, whether equity or debt, by us, or the possibility of such issuance, may cause the market price of our
shares to decline.
If we are unable to obtain funding on a timely basis, we may be required to significantly curtail, delay or discontinue the commercialization of COSELA or
any one or more of our research or development programs or be unable to expand our operations or otherwise capitalize on our business opportunities, as
desired, which could materially affect our business, financial condition and results of operations.
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We have incurred significant operating losses since our inception. We expect to incur losses for the foreseeable future and may never achieve or
maintain profitability.
We have incurred significant operating losses since our inception. We incurred net losses of $148.4 million for the year ended December 31, 2021, $99.3
million for the year ended December 31, 2020, and $122.4 million for the year ended December 31, 2019. As of December 31, 2021, we had an
accumulated deficit of $584.5 million. It may be several years, if ever, before we become profitable. To date, we have financed our operations through sales
of our preferred and common stock, license agreements and debt. We expect to continue to incur significant expenses and increasing operating losses for
the foreseeable future. The net losses we incur may fluctuate significantly from quarter to quarter. We anticipate that our expenses will increase
substantially as we:
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continue development of trilaciclib, including initiation of additional clinical trials
identify and develop new product candidates;
seek additional marketing approvals for trilaciclib upon successful completion of clinical trials;
grow our sales, marketing and distribution infrastructure to commercialize COSELA and any future products for which we may obtain
marketing approval;
achieve market acceptance of our product candidates in the medical community and with third-party payors;
maintain, expand and protect our intellectual property portfolio;
hire additional personnel;
enter into collaboration arrangements, if any, for the development of our product candidates or in-license other products and technologies;
identify and develop new product candidates;
add operational, financial and management information systems and personnel, including personnel to support our product development and
planned future commercialization efforts; and
continue to incur increased costs as a result of operating as a public company.
Because of the numerous risks and uncertainties associated with developing and commercializing pharmaceutical drugs, we are unable to predict the extent
of any future losses or when we will become profitable, if at all. In addition, our expenses could increase beyond expectations if we are required by the
FDA or foreign regulatory agencies, to perform studies and clinical trials in addition to those that we currently anticipate for COSELA, or if there are any
delays in our or our partners completing clinical trials or the development of any of our product candidates.
To become and remain profitable, we must develop and commercialize products with significant market potential. This will require us to be successful in a
range of challenging activities, including the following:
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completing clinical trials of COSELA that meet their clinical endpoints;
manufacturing, marketing and selling those products for which we may obtain marketing approval; and
achieving market acceptance of COSELA in the medical community and with third-party payors.
We may never succeed in these activities and, even if we do, may never generate revenues that are significant or large enough to achieve profitability. 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 the company and could impair our ability to raise capital, maintain our discovery and preclinical development efforts, expand
our business or continue our operations and may require us to raise additional capital that may dilute your ownership interest. A decline in the value of our
company could also cause you to lose all or part of your investment.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to relinquish rights to our technologies or
COSELA.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of equity financings,
debt financings, collaborations, strategic alliances and licensing arrangements. The sale of additional equity or convertible debt securities would dilute all
of our stockholders. The incurrence of indebtedness would result in increased fixed payment obligations, and we may be required to agree to certain
restrictive covenants, such as limitations on our ability to incur additional debt, limitations on our ability to acquire, sell or license intellectual property
rights, limitations on declaring dividends and other operating restrictions that could adversely impact our ability to conduct our business. We could also be
required to seek funds through collaborations, strategic alliances or licensing arrangements with third parties, and we could be required to do so at an earlier
stage than otherwise would be desirable. In connection with any such collaborations, strategic alliances or licensing arrangements, we may be required to
relinquish valuable rights to our intellectual property, future revenue streams, research programs or product , grant rights to develop and market product
that we would otherwise prefer to develop and market ourselves, or otherwise agree to terms unfavorable to us, any of which may have a material adverse
effect on our business, operating results and prospects.
45
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.
Biopharmaceutical drug development is a highly speculative undertaking and involves a substantial degree of risk. Our operations to date have been limited
to organizing and staffing our company, business planning, raising capital, developing our technology, identifying potential products, undertaking
preclinical studies, and conducting clinical trials of trilaciclib. We have not yet demonstrated our ability to successfully complete large-scale, pivotal
clinical trials, manufacture a commercial scale product, or arrange for a third party to do so on our behalf, or conduct sales and marketing activities
necessary for successful product commercialization. Typically, it takes several years to develop one new drug from the time it is discovered to when it is
available for treating patients. In addition, as a new business, we may encounter unforeseen expenses, difficulties, complications, delays and other known
and unknown factors. We will need to transition from a company with a research focus to a company capable of supporting commercial activities and
continuing to develop products. We may not be successful in such a transition.
Our level of indebtedness and debt service obligations could adversely affect our financial condition and may make it more difficult for us to fund our
operations.
We have entered into a Second Amendment to the Loan and Security Agreement with Hercules Capital, Inc. for up to $150.0 million of debt under a term
loan. The maturity date of the Hercules Loan Agreement is November 1, 2026. As of December 31, 2021, the Company has borrowed $75.0 million under
the Hercules Loan Agreement. The Company’s obligations under the Hercules Loan Agreement are secured by a blanket lien on substantially all of the
Company’s assets, including a security interest in the intellectual property.
This indebtedness may create additional financing risk for us, particularly if our business or prevailing financial market conditions are not conducive to
paying off or refinancing our outstanding debt obligations at maturity. This indebtedness could also have important negative consequences, including the
fact that we will need to repay our indebtedness by making payments of interest and principal, which will reduce the amount of money available to finance
our operations, our commercialization efforts, our research and development efforts and other general corporate activities.
If we were to become unable to pay, when due, the principal of, interest on, or other amounts due in respect of, our indebtedness, our financial condition
would be adversely affected. Further, under the Hercules Loan Agreement, we are subject to certain restrictive covenants that, among other things, subject
to exceptions, restrict the Company’s ability to do the following things: declare dividends or redeem or repurchase equity interests; incur additional liens;
make loans and investments; incur additional indebtedness; engage in mergers, acquisitions, and asset sales; transact with affiliates; undergo a change in
control; and add or change business locations. If we breach any of these restrictive covenants or are unable to pay our indebtedness under the Hercules
Loan Agreement when due, this could result in a default under the Hercules Loan Agreement. In such event, Hercules may elect (after the expiration of any
applicable notice or grace periods) to declare all outstanding borrowings, together with accrued and unpaid interest and other amounts payable under the
Hercules Loan Agreement, to be immediately due and payable. Any such occurrence would have an adverse impact on our financial condition.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could
harm our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use,
storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including
chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these
materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from
our use of hazardous materials, we could be held liable for any resulting damages, and the amount of the liability could exceed our resources. We also
could incur significant costs associated with civil or criminal fines and penalties for failure to comply with such laws and regulations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from
the use of hazardous materials, this insurance may not provide adequate coverage against other potential liabilities. We do not maintain insurance for
environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive
materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or
future laws and regulations may impair our discovery, preclinical development or production efforts. Our failure to comply with these laws and regulations
also may result in substantial fines, penalties or other sanctions.
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Our ability to use our net operating loss carryforwards and other tax attributes may be limited, and changes in tax laws could adversely impact our
business and financial position.
The Internal Revenue Service or other tax authority may review and adjust our net operating loss and tax credit carryforwards pursuant to the Internal
Revenue Code of 1986 (the “Code”). In the event of an “ownership change” under Section 382 of the Code (“Section 382”), we may be subject to annual
limitations on our ability to utilize net operating loss and tax credit carryforwards. An ownership change constitutes a change in the ownership interest of
significant shareholders in excess of 50 percent on a cumulative basis over a three-year period. In April 2019, the Company completed an evaluation study
as to whether an “ownership change” had occurred and determined that the limitation would be approximately $8.0 million on federal net operating loss
carryforwards, $1.2 million on state net operating loss carryforwards, and $0.1 million on R&D tax credit carryforwards. The carryforward amounts
reported above have already been reduced for these limitations. The Company continues to maintain a valuation allowance on the remaining NOLs as it
believes that it is more likely than not that all of the deferred tax asset associated with the NOLs will not be realized regardless of whether an “ownership
change” has occurred. As of December 31, 2021, our federal and state net operating loss carryforwards amounted to $510.0 million and $332.7 million,
respectively. Other changes in the ownership of our stock may have caused an ownership change in the past or could cause one in the future. Additional
ownership changes under Section 382 could further limit our ability to reduce future tax liabilities by utilizing our net operating loss carryforwards.
In addition, our capacity to utilize our net operating loss carryforwards and other tax attributes could be limited due to statutory and regulatory changes. For
example, among other things, the Tax Cuts and Jobs Act of 2017 (the “TCJA”) comprehensively changed U.S. federal tax rates, permitted capital
expenditures to be expensed, and restricted tax deductions for net interest expense and net operating losses. The CARES Act of 2020 was enacted to restore
the ailing U.S. economy during the COVID-19 pandemic. Among other things, the CARES Act temporarily eased the TCJA’s restrictions on net interest
expense tax deductions and altered the payroll tax scheme. Congress may enact additional tax legislation, and we cannot predict how future amendments in
tax laws and regulations will impact our business and financial position.
Risks related to marketing approval of COSELA for additional indications
If we are not able to obtain, or if there are delays in obtaining, additional required marketing approvals for COSELA, we will not be able to
commercialize it in other indications, and our ability to generate revenue will be materially impaired.
COSELA and the activities associated with its development and commercialization, including design, testing, manufacture, safety, efficacy, recordkeeping,
labeling, storage, approval, advertising, promotion, sale, distribution, import and export are subject to comprehensive regulation by the FDA and other
regulatory agencies in the United States and by comparable authorities in other countries. These requirements include submissions of safety and other post-
marketing information and reports, registration and listing requirements, current good manufacturing practice, or cGMP, requirements relating to
manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by FDA and other
regulatory authorities, requirements regarding the distribution of samples to physicians and recordkeeping. Before we can commercialize COSELA in
additional indications, it must be approved by the FDA pursuant to a new drug application, or NDA, in the United States, by the European Medicines Agency,
or EMA, pursuant to a marketing authorization application, or MAA, in the European Union, and by similar regulatory authorities outside the United States
prior to commercialization.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive and takes several years, if approval is obtained at all, and
can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain
marketing approval for COSELA in additional indications will prevent us from commercializing it in those indications. We have limited experience in
planning and conducting the clinical trials required for marketing approvals, and we expect to rely on third-party contract research organizations, or CROs,
to assist us in this process. Obtaining marketing approval requires the submission of extensive preclinical and clinical data and supporting information to
regulatory authorities for each therapeutic indication to establish product safety and efficacy. Securing marketing approval also requires the submission of
information about the product manufacturing process, and in many cases the inspection of manufacturing facilities by the regulatory authorities. COSELA
may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that
may limit commercial use. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may
decide that our data are insufficient for approval and require additional preclinical studies or clinical trials. COSLEA may be delayed in receiving, or fail to
receive, marketing approval in additional indications for many reasons, including the following:
the FDA or comparable foreign regulatory authorities may disagree with the design or implementation of our clinical trials;
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• we may be unable to demonstrate to the satisfaction of the FDA or comparable foreign regulatory authorities that COSELA is safe and
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effective for its proposed indication;
the results of clinical trials may not meet the level of statistical significance required by the FDA or comparable foreign regulatory authorities
for approval;
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• we may be unable to demonstrate that COSELA’s clinical and other benefits outweigh its safety risks;
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the FDA or comparable foreign regulatory authorities may disagree with our interpretation of data from preclinical studies or clinical trials;
the data collected from clinical trials of COSELA may not be sufficient to support the submission of an NDA or other submission to obtain
marketing approval in the United States or elsewhere;
third-party manufacturers or our clinical or commercial product may be unable to meet the FDA’s cGMP requirements or similar
requirements of foreign regulatory authorities; and
the approval requirements or policies of the FDA or comparable foreign regulatory authorities may significantly change in a manner
rendering our clinical data insufficient for approval.
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In addition, even if we were to obtain approval for additional indications, regulatory authorities, may grant approval contingent on the performance of
costly post-marketing clinical trials, or may approve a label that does not include the labeling claims necessary or desirable for the successful
commercialization of COSELA. Any of the foregoing scenarios could materially harm the commercial prospects of COSELA.
If we experience delays in obtaining approval or if we fail to obtain approval of COSELA in additional indications, the commercial prospects for COSELA
may be harmed and our ability to generate revenues will be materially impaired.
Our product may cause undesirable side effects that could delay or prevent its marketing approval for additional indications, limit its commercial
profile, or result in significant negative consequences following marketing approval, if any.
Undesirable side effects caused by our product could cause us or the FDA or other regulatory authorities to interrupt, delay or halt our clinical trials for any
additional indiciations and could result in more restrictive labels or the delay or denial of marketing approval by the FDA or other regulatory authorities of
our product in additional indications. Results of our ongoing clinical trials could reveal a high and unacceptable severity and prevalence of these or other
side effects we may observe when trilaciclib is administered in the other tumor types and treatment combinations. In such an event, our trials could be
suspended or terminated, and the FDA or comparable foreign regulatory authorities could order us to cease further development of or deny approval of our
product for any or all additional indications. In addition to this, the drug-related side effects could affect patient recruitment or the ability of enrolled
patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and
prospects significantly.
Further, clinical trials by their nature utilize a sample of the potential patient population. With a limited number of patients, rare and severe side effects of
trilaciclib may only be uncovered with a significantly larger number of patients exposed to the product. If our product receives marketing approval in
additional indications and we or others identify undesirable side effects caused by such product (or any other similar drugs) after such approval, a number
of potentially significant negative consequences could result, including:
regulatory authorities may withdraw or limit their approval of such product;
regulatory authorities may require the addition of labeling statements, such as a “boxed” warning or a contraindication;
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• we may be required to create a medication guide outlining the risks of such side effects for distribution to patients;
• we may be required to change the way such product is distributed or administered, conduct additional clinical trials or change the labeling of
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the product;
regulatory authorities may require a Risk Evaluation and Mitigation Strategy plan to mitigate risks, which could include medication guides,
physician communication plans, or elements to assure safe use, such as restricted distribution methods, patient registries and other risk
minimization tools;
• we may be subject to regulatory investigations and government enforcement actions;
• we may decide to remove the product from the marketplace after it is approved;
• we could be sued and held liable for injury caused to individuals exposed to or taking our product; and
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our reputation may suffer.
We believe that any of these events could prevent us from achieving or maintaining market acceptance of COSELA in ES-SCLC and could substantially
increase the costs of gaining marketing approval for COSELA in additional indications and significantly impact our ability to successfully commercialize
COSELA and generate revenues in other tumor types and treatment combinations.
COSELA will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from
the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our
products, when approved.
Commercialization activities for COSELA, such as the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage,
advertising, promotion and recordkeeping for the product will be subject to extensive and ongoing regulatory
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requirements. The FDA or a comparable foreign regulatory authority may also impose requirements for costly post-marketing preclinical studies or clinical
trials and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to
ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent
restrictions on manufacturers’ communications regarding use of their products, and if we promote COSELA or any other of our products beyond their
approved indications, we may be subject to enforcement actions or prosecution arising from that off-label promotion. Violations of the Federal Food, Drug,
and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and
abuse and other laws, as well as state consumer protection laws.
In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or
failure to comply with regulatory requirements, may yield various results, including:
restrictions on such products, manufacturers or manufacturing processes;
restrictions on the labeling or marketing of a product;
restrictions on product distribution or use;
requirements to conduct post-marketing studies or clinical trials;
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• warning or untitled letters;
• withdrawal of the products from the market;
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refusal to approve pending applications or supplements to approved applications that we submit;
recall of products;
fines, restitution or disgorgement of profits or revenues;
suspension or withdrawal of marketing approvals;
refusal to permit the import or export of our products;
product seizure; or
injunctions or the imposition of civil or criminal penalties.
Non-compliance with European Union requirements regarding safety monitoring or pharmacovigilance can also result in significant financial penalties.
Similarly, failure to comply with the European Union’s requirements regarding the protection of personal information can also lead to significant penalties
and sanctions.
The FDA’s policies may change and additional government regulations may be enacted that could prevent, limit or delay marketing approval of COSELA.
If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain
regulatory compliance, we may lose any marketing approval that we may have obtained, which would adversely affect our business, prospects and ability
to achieve or sustain profitability.
Current and future legislation may increase the difficulty and cost for us to obtain marketing approval of and commercialize COSELA and affect the
prices we may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the
healthcare system that could prevent or delay marketing approval of COSELA, restrict or regulate post-approval activities and affect our ability to
profitably sell COSELA.
In the United States, 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 certain disabled people and
introduced a reimbursement methodology based on average sales prices for physician-administered drugs. In addition, this law provided authority for
limiting the number of drugs that will be covered in any therapeutic class. Cost reduction initiatives and other provisions of this law and future laws could
decrease the coverage and price that we will receive for any approved products. While the MMA only applies to drug benefits for Medicare beneficiaries,
private payors often follow Medicare coverage policy and payment limitations in setting their own payment rates. Therefore, any limitations in
reimbursement that results from the MMA may result in reductions in payments from private payors.
In March 2010, the ACA became law. The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of
healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries,
impose new taxes and fees on the health industry and impose additional health policy reforms.
Among the provisions of the ACA of importance to COSELA are the following:
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an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs and biologic products;
an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program;
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expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative
powers, and enhanced penalties for noncompliance;
a new Medicare Part D coverage gap discount program, in which manufacturers must agree to offer 50% point-of-sale discounts off
negotiated prices;
extension of manufacturers’ Medicaid rebate liability;
expansion of eligibility criteria for Medicaid programs;
expansion of the entities eligible for discounts under the Public Health Service Act’s pharmaceutical pricing program;
new requirements to report financial arrangements with physicians and teaching hospitals;
a new requirement to annually report drug samples that manufacturers and distributors provide to physicians; and
a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness
research, along with funding for such research.
There have been several recent U.S. congressional inquiries and proposed and enacted federal and state legislation designed to bring more transparency to
drug pricing, reduce the costs of drugs under Medicare, review the relationship between pricing and manufacturer patient programs, and reform
government program reimbursement methodologies for drug products. Although any proposed measures will require authorization through additional
legislation to become effective, Congress and the current administration have each indicated that it will continue to seek new legislative and/or
administrative measures to control drug costs. Also, the FDA recently issued draft guidance that would allow manufacturers to import their own FDA-
approved drugs that are authorized for sale in other countries as a means to lower drug prices.
We expect that the ACA, as well as 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 will receive for any approved product. Any reduction in payments 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 products.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and promotional activities for pharmaceutical
products. We cannot be sure whether additional legislative changes will be enacted, or whether FDA regulations, guidance or interpretations will be
changed, or what the impact of such changes on the marketing approvals, if any, of our product candidates, may be. In addition, increased scrutiny by the
U.S. Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us to more stringent product
labeling and post-marketing conditions and other requirements.
The FDA and other government agencies could prevent the timely development and commercialization of COSELA due to concerns about the quality
of that data from clinical trials performed in China.
Numerous factors, including regulatory and policy changes, could impact the likelihood and timing of obtaining FDA approval of additional indications for
COSELA. The FDA has recently expressed reservations regarding the quality of data from clinical trials conducted in China for the development of cancer
treatments. In August 2020, we entered into a license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., Ltd. (“Simcere”), for the
development and commercialization of COSELA in Greater China. In addition, we have collaborated with Simcere in China to help us develop additional
indications for COSELA. We are dependent on Simcere’s ability to comply with applicable foreign and U.S. regulatory requirements. The FDA may be
hesitant to approve drugs that include data from clinical trials performed in China. This may require us to modify our current clinical trials to exclude the
data from China or perform additional clinical trials without Simcere’s assistance, which could be expensive and time-consuming. A delay in obtaining the
required regulatory approvals could in turn lead to delays in the development of additional indications for COSELA, which could adversely affect us
financially.
Our future growth may depend, in part, on our ability to penetrate foreign markets, where we would be subject to additional regulatory burdens and
other risks and uncertainties.
Our future profitability may depend, in part, on our ability to commercialize our product in foreign markets. In order to market and sell our product in the
European Union and many other jurisdictions, we or our third-party collaborators must obtain separate marketing approvals and comply with numerous and
varying regulatory requirements. The approval procedure varies among countries and economic areas and can involve additional testing. The time required
to obtain approval may differ substantially from that required to obtain FDA approval. The marketing approval process outside the United States generally
includes all of the risks associated with obtaining FDA approval. In addition, in many countries outside the United States, it is required that the product be
approved for reimbursement before the product can be approved for sale in that country. We or these third parties may not obtain approvals from regulatory
authorities outside the United States on a timely basis, if at all. Approval by FDA does not ensure approval by regulatory authorities in other countries or
jurisdictions, and approval by one regulatory authority outside the United States does not ensure approval by regulatory authorities in other countries or
jurisdictions or by FDA. Additionally, a failure or delay in obtaining marketing approval in one jurisdiction may have a negative effect on the marketing
approval process in others. Approval procedures
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vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States,
including additional preclinical studies or clinical trials. Obtaining foreign marketing 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 in certain countries. If we fail to comply
with the regulatory requirements in international markets and/or receive applicable marketing approvals, our target market will be reduced and our ability
to realize the full market potential of our product will be harmed.
We may not be able to file for marketing approvals and may not receive necessary approvals to commercialize our products in any market. If we obtain
approval of our product candidates and ultimately commercialize our product in foreign markets, we would be subject to additional risks and uncertainties,
including:
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our customers’ ability to obtain reimbursement for our product in foreign markets;
our inability to directly control commercial activities because we are relying on third parties;
the burden of complying with complex and changing foreign regulatory, tax, accounting and legal requirements;
different medical practices and customs in foreign countries affecting acceptance in the marketplace;
import or export licensing requirements;
longer accounts receivable collection times;
longer lead times for shipping;
language barriers for technical training;
reduced or no protection on pharmaceutical products or their use in some foreign countries;
the unwillingness of courts in some foreign jurisdictions to enforce patents even when valid and infringed in that country;
the possibility of pre-grant or post-grant review proceedings in certain foreign countries that allow a petitioner to hold up patent rights for an
extended period or permanently by challenging the patent filing at the patent office of that country;
the possibility of a compulsory license issued by a foreign country that allows a third-party company or a government to manufacture, use or
sell our products with a government-set low royalty to us;
the existence of additional potentially relevant third-party intellectual property rights;
foreign currency exchange rate fluctuations; and
the interpretation of contractual provisions governed by foreign laws in the event of a contract dispute.
Foreign sales of COSELA could also be adversely affected by the imposition of governmental controls, political and economic instability, trade restrictions
and changes in tariffs.
Risks related to employee matters, managing growth and other risks related to our business
We currently have a limited number of employees, and our future success depends on our ability to retain key executives and to attract, retain and
motivate qualified personnel.
We are a clinical development company, and, as of December 31, 2021, had 148 employees, which includes seven executive officers. We are highly
dependent on the commercialization, research and development, clinical, and business development expertise of our executive officers, as well as the other
principal members of our management, scientific and clinical team. Although we have entered into employment agreements with our executive officers,
each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other
employees. 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 be employed by employers other than us and 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.
Recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing personnel will also 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, obtain marketing approval of and commercialize products. 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. Failure to succeed in clinical trials may make it more challenging to recruit and retain qualified scientific personnel. If we are unable
to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
We face risks related to health epidemics and outbreaks, including the novel coronavirus (COVID-19), which could significantly disrupt our preclinical
studies and clinical trials.
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In December 2019, a novel strain of coronavirus (COVID-19) surfaced in Wuhan, China and in March 2020, in an effort to halt the outbreak of COVID-19,
the United States, along with many other countries, placed significant restrictions on travel and many businesses have announced extended closures which
could adversely impact our operations. The COVID-19 pandemic has continued to evolve, with new variants (such as the Omicron variant) emerging and
spreading more easily and quickly than other variants. As such, the duration and the geographic impact of the business disruption and related financial
impact resulting from the COVID-19 pandemic cannot be reasonably estimated at this time and our business could be adversely impacted by the effects of
the COVID-19 pandemic.
The enrollment of patients in current and future clinical trials may be slower due to the outbreak of COVID-19. In addition, we rely on independent clinical
investigators, contract research organizations and other third-party service providers to assist us in managing, monitoring and otherwise carrying out our
nonclinical studies and clinical trials, and the outbreak may affect their ability to devote sufficient time and resources to our programs. We also rely on third
party suppliers and contract manufacturers to produce the drug product we utilize in our clinical trials. Although we do not anticipate significant supply
chain delays or shortages as a result of the COVID-19 pandemic at this time, the outbreak may cause delays in delivery of APIs and drug product.
Temporary closure of our facilities, or facilities at which our clinical trials or nonclinical studies are conducted, or restrictions on the ability of our
employees, clinicians or patients enrolled in our trials to travel could adversely affect our operations and our ability to conduct and complete our
nonclinical studies and clinical trials. As a result of the foregoing factors, the expected timeline for data readouts of our clinical trials may be negatively
impacted, which would adversely affect our business.
The COVID-19 pandemic also presents a number of challenges for our commercial business, including, among others, the impact due to continued travel
limitations and government-mandated work-from-home or shelter-in-place orders, potential decreased product demand due to reduced numbers of in-
person meetings with prescribers and patient visits with physicians, possible delay in cancer treatments with chemotherapy as well as increased
unemployment resulting in lower new prescriptions.
In addition, the FDA’s ability to engage in routine regulatory and oversight activities, such as the review and clearance or approval of new products, may be
affected by the COVID-19 pandemic. The FDA and other regulatory authorities may have slower response times or be under-resourced. If the global health
concerns continue to disrupt or prevent the FDA or other regulatory authorities from conducting their regular reviews, inspections, or other regulatory
activities, it could significantly impact the ability of the FDA or other regulatory authorities to timely review and process our marketing applications,
clinical trial authorizations, or other regulatory submissions, which could have a material adverse effect on our business.
The full extent to which COVID-19 impacts our business will depend on future developments, including, but not limited to, the ultimate severity and scope
of the pandemic, the pace at which governmental and private travel restrictions and public concerns about public gatherings will ease, the rate at which
historically large increases in unemployment rates will decrease, if at all, and whether, and the speed with which the economy recovers, which are highly
uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to treat or contain
COVID-19 and any variants thereof, or to otherwise limit their impact.
Unfavorable global economic conditions could adversely affect our business, financial condition, or results of operations.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets. The global financial
crisis at the end of the last decade caused extreme volatility and disruptions in the capital and credit markets. A severe or prolonged economic downturn,
such as that global financial crisis, could result in a variety of risks to our business, including our ability to raise additional capital when needed on
acceptable terms, if at all. A weak or declining economy could also strain our suppliers, possibly resulting in supply disruption. Any of the foregoing could
harm our business, and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact
our business.
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We may encounter difficulties in managing our growth, which could disrupt our operations.
To manage our anticipated expansion, we must continue to implement and improve our managerial, operational and financial systems, and continue to
recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from its day-to-
day activities and devote a substantial amount of time to managing these growth activities. Due to our limited resources, we may not be able to effectively
manage the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to
operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The expansion of our
operations may lead to significant costs and may divert financial resources from other projects, such as the development of our product. If our management
is unable to effectively manage our expected expansion, our expenses may increase more than expected, our ability to generate or increase our revenue
could be reduced and we may not be able to implement our business strategy. Our future financial performance and our ability to commercialize our
product, if approved, and compete effectively will depend, in part, on our ability to effectively manage the future expansion of our company.
Our business and operations could suffer in the event of system failures.
We utilize information technology systems and networks to process, transmit and store electronic information in connection with our business activities. As
use of digital technologies has increased, cyber incidents, including deliberate attacks and attempts to gain unauthorized access to computer systems and
networks, have increased in frequency and sophistication. These threats pose a risk to the security of our systems and networks and the confidentiality,
availability and integrity of our data. There can be no assurance that we will be successful in preventing cyber-attacks or successfully mitigating their
effects.
Despite the implementation of security measures, our internal computer systems and those of our third-party CROs and other contractors and consultants
are vulnerable to damage from cyber-attack, computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical
failures. Furthermore, we have little or no control over the security measures and computer systems of our third-party CROs and other contractors and
consultants. While we have not experienced any such 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 material disruption of our programs. For example, the loss of clinical trial data for COSELA could result
in delays in our marketing 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 or other data or applications relating to our technology or product, or inappropriate
disclosure of confidential or proprietary information, we could incur liabilities and the further development of our COSELA could be delayed.
Our employees, principal investigators, CROs and consultants may engage in misconduct or other improper activities, including non-compliance with
regulatory standards and requirements and insider trading.
We are exposed to the risk that our employees, principal investigators, CROs and consultants may engage in fraudulent conduct or other illegal activity.
Misconduct by these parties could include intentional, reckless and/or negligent conduct or disclosure of unauthorized activities to us that violate the
regulations of the FDA and other regulatory authorities, including those laws requiring the reporting of true, complete and accurate information to such
authorities; healthcare fraud and abuse laws and regulations in the United States and abroad; or laws that require the reporting of financial information or
data accurately. 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 may restrict or prohibit a wide range of
pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Activities subject to these
laws also involve the improper use of information obtained in the course of clinical trials or creating fraudulent data in our preclinical studies or clinical
trials, which could result in regulatory sanctions and cause serious harm to our reputation. We have adopted a code of conduct applicable to all of our
employees, but it is not always possible to identify and deter misconduct by employees and other third parties, 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 governmental investigations or
other actions or lawsuits stemming from a failure to comply with these laws or regulations. Additionally, we are subject to the risk that a person could
allege such fraud or other misconduct, even if none occurred. If any such actions are instituted against us, and we are not successful in defending ourselves
or asserting our rights, those actions could have a significant impact on our business, including the imposition of civil, criminal and administrative
penalties, damages, monetary fines, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual
damages, reputational harm, diminished profits and future earnings, and curtailment of our operations, any of which could adversely affect our ability to
operate our business and our results of operations.
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We may fail to capitalize on product candidates that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on a specific product. As a result, we may forgo or delay pursuit of opportunities
with other product candidates that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on
viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product
candidates for specific indications may not yield any commercially viable product candidates. 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 cases in which it would have been more advantageous for us to retain sole development and commercialization rights to such
product candidate.
We or the third parties upon which we depend may be adversely affected by earthquakes, pandemics, or other natural disasters and our business
continuity and disaster recovery plans may not adequately protect us from a serious disaster.
Earthquakes, pandemics such as the COVID-19 (coronavirus), or other natural disasters could severely disrupt our operations and have a material adverse
effect on our business, results of operations, financial condition and prospects. If a natural disaster, power outage or other event occurred that prevented us
from using all or a significant portion of our headquarters, that damaged critical infrastructure, such as the manufacturing facilities of our third-party
contract manufacturers, or that otherwise disrupted operations, it may be difficult or, in certain cases, impossible for us to continue our business for a
substantial period of time. The disaster recovery and business continuity plans we have in place may prove inadequate in the event of a serious disaster or
similar event. We may incur substantial expenses as a result of the limited nature of our disaster recovery and business continuity plans, which could have a
material adverse effect on our business.
We may acquire businesses or drugs, or form strategic alliances, in the future, and we may not realize the benefits of such acquisitions.
We may acquire additional businesses or drugs, form strategic alliances or create joint ventures with third parties that we believe will complement or
augment our existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such
businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in
developing, manufacturing and marketing any new drugs resulting from a strategic alliance or acquisition that delay or prevent us from realizing their
expected benefits or enhancing our business. We cannot assure you that, following any such acquisition, we will achieve the expected synergies to justify
the transaction.
Risks related to our dependence on third parties
We rely on, and expect to continue to rely on, third parties to conduct our clinical trials for COSELA. If these third parties do not successfully carry out
their contractual duties, comply with regulatory requirements or meet expected deadlines, we may not be able to commercialize our product or obtain
marketing approval for additional indications, and our business could be substantially harmed.
We do not have the ability to independently conduct clinical trials. We rely on medical institutions, clinical investigators, contract laboratories and other
third parties, such as CROs, to conduct or otherwise support clinical trials for COSELA. We expect to rely heavily on these parties for performance of
clinical trials for our product. Nevertheless, we will be responsible for ensuring that each of our clinical trials is conducted in accordance with the
applicable protocol, legal and regulatory requirements and scientific standards.
We, our investigators, and our CROs will be required to comply with regulations, including good clinical practice, or GCP, and other related requirements
for conducting, monitoring, recording and reporting the results of clinical trials to ensure that the data and results are scientifically credible and accurate,
and that the trial patients are adequately informed of the potential risks of participating in clinical trials and their rights are protected. These regulations are
enforced by the FDA, the Competent Authorities of the Member States of the European Economic Area and comparable foreign regulatory authorities for
any drugs in clinical development. The FDA enforces GCPs through periodic inspections of clinical trial sponsors, principal investigators and trial sites. If
we, our investigators or our CROs fail to comply with applicable GCPs, the clinical data generated in our clinical trials may be called into question and the
FDA or comparable foreign regulatory authorities may require us to perform additional clinical trials before considering our marketing applications for
approval. We cannot assure you that, upon inspection, the FDA will determine that any of our future clinical trials will comply with GCPs.
In addition, our clinical trials must be conducted with product produced under cGMPs. Our failure or the failure of our investigators or CROs to comply
with these requirements may require us to repeat clinical trials, which would delay the marketing approval process and could also subject us to enforcement
action. We also are required to register certain clinical trials and post the results of such completed clinical trials involving our product for which we
receive marketing approval on a government-sponsored database, ClinicalTrials.gov, within certain timeframes. Failure to do so can result in fines, adverse
publicity and civil and criminal sanctions.
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Although we intend to design the clinical trials for COSELA, CROs will administer all of the clinical trials. As a result, many important aspects of our
development programs, including their conduct and timing, will be outside of our direct control. Our reliance on third parties to conduct future clinical
trials will also 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 outside parties can also be challenging, potentially leading to mistakes as well as difficulties in coordinating
activities. Outside parties may:
have staffing difficulties;
fail to comply with contractual obligations;
experience regulatory compliance issues;
undergo changes in priorities or become financially distressed;
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form relationships with other entities, some of which may be our competitors.
These factors may materially 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 the CROs do not perform clinical trials in a satisfactory manner, breach their obligations to us or fail to comply
with regulatory requirements, the development, marketing approval and commercialization of our product may be delayed, we may not be able to obtain
marketing approval and commercialize our product candidates, or our development program may be materially and irreversibly harmed. If we are unable to
rely on clinical data collected by our CROs, we could be required to repeat, extend the duration of, or increase the size of any clinical trials we conduct, and
this could significantly delay commercialization and require significantly greater expenditures.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements with alternative CROs. If CROs do not
successfully carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if the quality or accuracy of the
clinical data they obtain is compromised due to the failure to adhere to our clinical protocols, regulatory requirements or for other reasons, any clinical
trials such CROs are associated with may be extended, delayed or terminated, and we may not be able to obtain marketing approval in additional
indications or successfully commercialize COSELA. As a result, we believe that our financial results and the commercial prospects for COSELA in the
subject indication would be harmed, our costs could increase and our ability to generate revenue could be delayed.
We contract with third parties for the manufacture of COSELA for preclinical studies, clinical trials, and commercial supply. This reliance on third
parties increases the risk that we will not have sufficient quantities of COSELA or such quantities at an acceptable cost, which could delay, prevent or
impair our development or commercialization efforts.
We do not currently own or operate, nor do we have any plans to establish in the future, any manufacturing facilities. We rely, and expect to continue to
rely, on third parties for the manufacture of COSELA for preclinical studies, clinical trials, and commercial supply of COSELA. This reliance on third
parties increases the risk that we will not have sufficient quantities of our product or drugs or such quantities at an acceptable cost or quality, which could
delay, prevent or impair our development or commercialization efforts.
The facilities used to manufacture COSELA (drug substance and drug product) must be approved by the FDA (and comparable foreign regulatory authority
depending on where marketing authorizations are filed) before marketing authorizations are approved. Often, but not always, these inspections are
triggered by marketing authorization submissions. We are completely dependent on our contract manufacturers for compliance with current Good
Manufacturing Practices (cGMPs) in connection with the manufacture of our product. If our contract manufacturers cannot successfully manufacture
material that conforms to our specifications and to the regulatory requirements of the FDA or comparable foreign regulatory authority, then we will not be
able to use the products produced at their manufacturing facilities. 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 comparable foreign regulatory authority finds that these facilities do not
comply with cGMP, we may need to find alternative manufacturing facilities, which would significantly impact our ability to develop, obtain marketing
approval for or market COSELA. Further, our failure, or the failure of our third party manufacturers, to comply with these or other applicable regulations
could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals,
license revocation, seizures or recalls of product or drugs, if approved, operating restrictions and criminal prosecutions, any of which could significantly
and adversely affect our business and supplies of COSELA.
We may be unable to establish any agreements with third-party manufacturers or do so on acceptable terms. Even if we are able to establish agreements
with third party manufacturers, reliance on third party manufacturers entails additional risks, including:
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reliance on the third party for regulatory compliance and quality assurance;
the possible breach of the manufacturing agreement by the third party;
the possible misappropriation of our proprietary information, including our trade secrets and know-how; and
the possible termination or nonrenewal of the agreement by the third party at a time that is costly or inconvenient for us.
COSELA may compete with other product candidates and approved drugs for access to manufacturing facilities. There are a limited number of
manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.
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Any performance failure on the part of our existing or future manufacturers could delay clinical development, marketing approval, or commercialization
efforts. If our current contract manufacturers cannot perform as agreed, we may be required to replace such manufacturers. Although we believe that there
are several potential alternative manufacturers who could manufacture our product, we may incur added costs and delays in identifying and qualifying any
such replacements.
Our current and anticipated future dependence upon others for the manufacture of our product or drugs may adversely affect our future profit margins and
our ability to commercialize any drugs that receive marketing approval on a timely and competitive basis.
The third parties upon which we rely for the supply of the drug substance, and drug products are our sole sources of supply and have limited capacity,
and the loss of any of these suppliers could harm our business.
Some drug substances and drug products for our product are supplied to us from single source suppliers with limited capacity. Our ability to successfully
develop our product, and to ultimately supply our commercial drugs in quantities sufficient to meet the market demand, depends in part on our ability to
obtain the drug substances and drug products in accordance with cGMP requirements and in sufficient quantities for clinical trials and commercialization.
It is possible that our suppliers of drug substance or drug product which are not dual-sourced could, for any reason, cease their operations.
We do not know whether our suppliers will be able to meet our demand, either because of the nature of our agreements with those suppliers, our limited
experience with those suppliers or our relative importance as a customer to those suppliers. It may be difficult for us to assess their ability to timely meet
our demand in the future based on past performance. While our suppliers have generally met our demand for their products on a timely basis in the past,
they may subordinate our needs in the future to their other customers.
For our product, we intend to identify and qualify additional manufacturers to provide drug substances and drug products. Establishing additional or
replacement suppliers for drug substances and drug products for our product, if required, may not be accomplished quickly. If we are able to find a
replacement supplier, such replacement supplier would need to be qualified, or we may have to perform comparative studies comparing the drug product
from a new manufacturer to the product used in any completed clinical trials. All of this may require additional regulatory approval, which could result in
further delay. While we seek to maintain adequate inventory of drug substance and drug product for our product, any interruption or delay in the supply of
components or materials, or our inability to obtain such drug substance and drug product from alternate sources at acceptable prices in a timely manner
could impede, delay, limit, or prevent our development efforts, which could harm our business, results of operations, financial condition, and prospects.
We, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of COSELA in sufficient quality and quantity, which
would delay or prevent us from developing and commercializing COSELA.
In order to conduct large-scale clinical trials of COSELA, or successfully commercialize COSELA, we will need to manufacture them in large quantities.
We, or any of our manufacturing partners, may be unable to successfully increase the manufacturing capacity of COSELA in a timely or cost-effective
manner, or at all. In addition, quality issues may arise during scale-up activities. If we, or any manufacturing partners, are unable to successfully scale up
the manufacture COSELA in sufficient quality and quantity, the development, testing, and clinical trials of the product may be delayed or infeasible, and
regulatory approval or commercial launch of any resulting product may be delayed or not obtained, which could significantly harm our business.
We have entered into license agreements for lerociclib, a license agreement for the development of COSELA in greater China, and intend to continue
to use third-party collaborators to help us develop and commercialize any new products, and our ability to commercialize such products could be
impaired or delayed if these collaborations are unsuccessful.
Our drug development programs and the potential commercialization of COSELA will require substantial additional cash to fund expenses. We may decide
to collaborate with pharmaceutical and biotechnology companies for the development and potential commercialization of COSELA or lerociclib.
We have entered into license agreements with third-parties, and may continue to selectively pursue strategic collaborations, for the development and
commercialization of our products. For example, (i) in June 2020, we entered into a license agreement with Genor Biopharma Co. Inc., for the
development and commercialization of lerociclib in the Asia-Pacific region (excluding Japan); (ii) in July 2020, we and EQRx entered into license
agreement pursuant to which we have granted EQRx the exclusive rights to develop and commercialize lerociclib in the U.S., Europe, Japan and all other
global markets, excluding the Asia-Pacific region (except Japan); and (iii)in August 2020, we entered into a license agreement with Nanjing Simcere
Dongyuan Pharmaceutical Co., Ltd, for the development and commercialization of COSELA in Greater China.
In our third-party collaborations, we are dependent upon the success of the collaborators to perform their responsibilities with continued cooperation. Our
collaborators may not cooperate with us or perform their obligations under our agreements with them. We
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cannot control the amount and timing of our collaborators’ resources that will be devoted to performing their responsibilities under our agreements with
them. Our collaborators may choose to pursue alternative therapies in preference to those being developed in collaboration with us. Development and
commercialization will be delayed if collaborators fail to conduct their responsibilities in a timely manner or in accordance with applicable regulatory
requirements or if they breach or terminate their collaboration agreements with us. Disputes with our collaborators could also impair our reputation or
result in development delays, decreased revenues, and litigation expenses.
We face significant competition in seeking additional appropriate collaborators. Whether we reach a definitive agreement for a collaboration will depend,
among other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of the proposed collaboration and the
proposed collaborator’s evaluation of a number of factors. Those factors may include the design or results of clinical trials, the likelihood of approval by
the FDA or similar regulatory authorities outside the United States, the potential market for the subject product, the costs and complexities of
manufacturing and delivering such product to patients, the potential of competing drugs and market conditions generally. The proposed collaborator may
also consider alternative product candidates or technologies for similar indications that may be available to collaborate on and whether such a collaboration
could be more attractive than the one with us for our product. The terms of any collaborations or other arrangements that we may establish may not be
favorable to us.
We may also be restricted under existing collaboration agreements from entering into future agreements on certain terms with potential collaborators.
Collaborations are complex and time-consuming to negotiate and document. In addition, there have been a significant number of recent business
combinations among large pharmaceutical companies that have resulted in a reduced number of potential future collaborators. We may not be able to
negotiate collaborations on a timely basis, on acceptable terms, or at all. If we are unable to do so, we may have to curtail the development of the product
for which we are seeking to collaborate, reduce or delay its development program or one or more of our other development programs, delay its potential
commercialization or reduce the scope of any sales or marketing activities, or increase our expenditures and undertake development or commercialization
activities at our own expense. If we elect to increase our expenditures to fund development or commercialization activities on our own, we may need to
obtain additional capital, which may not be available to us on acceptable terms or at all. If we do not have sufficient funds, we may not be able to further
develop COSELA or bring it to market and generate drug revenue.
In addition, any collaboration that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts
and activities of our collaborators. Collaborators generally have significant discretion in determining the efforts and resources that they will apply to these
collaborations. Any such collaboration may require us to incur non-recurring or other charges, increase our near- and long-term expenditures and pose
significant integration or implementation challenges or disrupt our management or business. These transactions would entail numerous operational and
financial risks, including exposure to unknown liabilities, disruption of our business and diversion of our management’s time and attention in order to
manage a collaboration, incurrence of substantial debt or dilutive issuances of equity securities to pay transaction consideration or costs, higher than
expected collaboration or integration costs, write-down of assets or goodwill or impairment charges, increased amortization expenses and difficulty and
cost in facilitating the collaboration.
Lastly, disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in
the development process or commercializing a product and, in some cases, termination of the collaboration arrangement. These disagreements can be
difficult to resolve if neither of the parties has final decision-making authority. Collaborations with pharmaceutical or biotechnology companies and other
third parties often are terminated or allowed to expire by the other party. Any such termination or expiration would adversely affect us financially and could
harm our business reputation.
Risks related to our intellectual property
If we are unable to obtain and maintain intellectual property protection for our technology and products, or if the scope of the intellectual property
protection obtained is not sufficiently broad, our competitors could commercialize technology and products similar or identical to ours, and our ability
to successfully commercialize our technology and products may be impaired and, if we infringe the valid patent rights of others, we may be prevented
from making, using or selling our products or may be subject to damages or penalties.
Our success depends in large part on our ability to obtain and maintain patents in the United States and other countries that adequately protect our
proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and in foreign countries
that cover COSELA, lerociclib and rintodestrant and their uses, pharmaceutical formulations and dosages, and processes for the manufacture of them. Our
patent portfolio currently includes both patents and patent applications.
The patent prosecution process is expensive and time-consuming. We may not be able to file and prosecute all necessary or desirable patent applications at
a reasonable cost or in a timely manner. We may choose not to seek patent protection for certain innovations and may choose not to pursue patent
protection in certain jurisdictions. Under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in
scope. It is also possible that we will fail to identify patentable aspects of our research and development before it is too late to obtain patent protection.
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We currently solely own or exclusively license our patents and patent applications and we have the right to control the prosecution of the in-licensed patent
applications. In the future, we may choose to in-license additional patents or patent applications from third parties that we conclude are useful or necessary
for our business goals. We may not have the right to control the preparation, filing, prosecution or maintenance of such patent applications. Therefore, if we
do license additional patents or patent applications in the future, these patents and applications may not be prosecuted and enforced in a manner consistent
with the best interests of 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. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we
cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or
that we were the first to file for patent protection of such inventions. 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
products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent
laws or interpretation of the patent laws in the United States and other countries may diminish the value of our patents or narrow the scope of our patent
protection.
Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or
defense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-
Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted and
may also affect patent litigation. The U.S. Patent and Trademark Office, or U.S. PTO, recently developed new regulations and procedures to govern
administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first
to file provisions, became effective on March 16, 2013. The Leahy-Smith Act also created certain new administrative adversarial proceedings, discussed
below. It is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith 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 a material adverse effect on our business and financial condition.
The U.S. Supreme Court has issued opinions in patent cases in the last few years that many consider may weaken patent protection in the United States,
either by narrowing the scope of patent protection available in certain circumstances, holding that certain kinds of innovations are not patentable or
generally otherwise making it easier to invalidate patents in court. Additionally, there have been recent proposals for additional changes to the patent laws
of the United States and other countries that, if adopted, could impact our ability to obtain patent protection for our proprietary technology or our ability to
enforce our proprietary technology. Depending on future actions by the U.S. Congress, the U.S. courts, the U.S. PTO and the relevant law-making bodies in
other countries, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to
enforce our existing patents and patents that we might obtain in the future.
Even if our patent applications issue as patents, they may not issue in a form that will provide us with any meaningful protection, prevent competitors from
competing with us or otherwise provide us with any competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by
developing similar or alternative technologies or products in a non-infringing manner.
The issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our owned and licensed patents may be challenged in
the courts or patent offices in the United States and in other countries. Such challenges may result in loss of exclusivity or in patent claims being narrowed,
invalidated or held unenforceable, in whole or in part, 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 products. 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 owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from
commercializing products similar or identical to ours. Likewise, a court could uphold and enforce a third-party patent that it rules we have infringed, which
would subject us to damages or prevent us from making, using or selling our products.
During patent prosecution in the United States and in most foreign countries, a third party can submit prior art or arguments to the reviewing patent office
to attempt to prevent the issuance of a competitor’s patent. For example, our pending patent applications may be subject to a third-party pre-issuance
submission of prior art to the U.S. PTO or an Observation in Europe. Such submission may convince the receiving patent office not to issue the patent. In
addition, if the breadth or strength of protection provided by our patents and patent applications is reduced by such third-party submission, it could affect
the value of our resulting patent or dissuade companies from collaborating with us to license, develop or commercialize current or future products.
The risks described here pertaining to our patents and other intellectual property rights also apply to any intellectual property rights that we may license in
the future, and any failure to obtain, maintain and enforce these rights could have a material adverse effect on
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our business. In some cases, we may not have control over the prosecution, maintenance or enforcement of the patents that we license, and our licensors
may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain and enforce the licensed patents. Any inability on our part
to adequately protect or defend our intellectual property may have a material adverse effect on our business, operating results and financial position.
We may become involved in administrative adversarial proceedings in the U.S. PTO or in the patent offices of foreign countries brought by a third party
to attempt to cancel or invalidate our patent rights, which could be expensive, time consuming and cause a loss of patent rights.
The Leahy-Smith Act created for the first time new procedures to challenge issued patents in the United States, including post-grant review and inter
partes review proceedings, which some third parties have been using to cause the cancellation of selected or all claims of issued patents of competitors. For
a patent with a priority date of March 16, 2013 or later, a petition for post-grant review can be filed by a third party in a nine-month window from issuance
of the patent. A petition for inter partes review can be filed immediately following the issuance of a patent if the patent was filed prior to March 16, 2013.
A petition for inter partes review can be filed after the nine-month period for filing a post-grant review petition has expired for a patent with a priority date
of March 16, 2013 or later. Post-grant review proceedings can be brought on any ground of challenge, whereas inter partes review proceedings can only be
brought to raise a challenge based on published prior art. These administrative adversarial actions at the U.S. PTO review patent claims without the
presumption of validity afforded to U.S. patents in lawsuits in U.S. federal courts, use a lower burden of proof than used by U.S. federal courts. The U.S.
PTO issued a Final Rule on November 11, 2018, announcing that it will now use the same claim construction currently used in the U.S. federal courts to
interpret patent claims, which is the plain and ordinary meaning of words used. If any of our patents are challenged by a third party in such a U.S. patent
office proceeding, there is no guarantee that we will be successful in defending the patent, which would result in a loss of the challenged patent right to us.
Further, even if a U.S. federal court or PTAB rules that a patent owned by us is valid and enforceable, if the other venue takes a contrary position, the patent
is considered invalid and not enforceable. Therefore, a party seeking to invalidate a patent owned by us in the United States has the procedural advantage of
two alternative venues.
Opposition or invalidation procedures are also available in most foreign countries. Many foreign authorities, such as the authorities at the European Patent
Office, have only post-grant opposition proceedings, however, certain countries, such as India, have both pre-grant and post-grant opposition proceedings.
These procedures have been used frequently against pharmaceutical patents in foreign countries. For example, in some foreign countries, these procedures
are used by generic companies to hold up an innovator’s patent rights as a means to allow the generic company to enter the market. This activity is
particularly prevalent in India, China and South America and may become more prevalent in Africa and other parts of Asia as certain countries reach more
established economies. If any of our patents are challenged in a foreign opposition or invalidation proceeding, we could face significant costs to defend our
patents, and we may not be successful. Uncertainties resulting from the initiation, continuation or loss of such proceedings could have a material adverse
effect on our ability to compete in the market place. Further, in many foreign jurisdictions, the losing party must pay the attorneys’ fees of the winning
party, which can be substantial.
We may have to file one or more lawsuits in court to prevent a third party from selling a product or using a product in a manner that infringes our
patent, which could be expensive, time consuming and unsuccessful, and ultimately result in the loss of our proprietary market.
Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other
intellectual property. To counter infringement or unauthorized use, we may be required to file infringement lawsuits, which can be expensive and time
consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their
patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe
the patent’s claims narrowly or 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 proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We may
also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license
agreements may require us to pay royalties and other fees that could be significant. 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.
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Because our CDK 4/6 inhibitor candidates are small molecules, after commercialization they will be subject in the United States to the patent litigation
process of the Hatch Waxman Act, which allows a generic company to submit an Abbreviated New Drug Application, or ANDA, to the FDA to obtain
approval to sell our drug using bioequivalence data only. Under the Hatch Waxman Act, we will have the opportunity to list all of our patents that cover our
drug product or its method of use in the FDA’s compendium of “Approved Drug Products with Therapeutic Equivalence Evaluation,” sometimes referred
to as the FDA’s Orange Book. A generic company can submit an ANDA to the FDA four years after our drug approval because our drug products
candidates, COSELA and lerociclib, would be deemed new chemical entities. The submission of the ANDA by a generic company is considered a technical
act of patent infringement. The generic company can certify that it will wait until the natural expiration date of our listed patents to sell a generic version of
our product or can certify that one or more of our listed patents are invalid, unenforceable, or not infringed. If the latter, we will have 45 days to bring a
patent infringement lawsuit against the generic company. This will initiate a challenge to one or more of our Orange Book listed patents based on
arguments from the generic company that either our patent is invalid, unenforceable or not infringed. Under the Hatch Waxman Act, if a lawsuit is brought,
the FDA is prevented from issuing a final approval on the generic drug until the earlier of seven-and-a-half years from our drug approval or a final decision
of a court holding that our asserted patent claims are invalid, unenforceable or not infringed. If we do not properly list our relevant patents in the Orange
Book, or timely file a lawsuit in response to a certification from a generic company under an ANDA, or if we do not prevail in the resulting patent
litigation, we can lose our proprietary market, which can rapidly become generic. Further, even if we do correctly list our relevant patents in the Orange
Book, bring a lawsuit in a timely manner and prevail in that lawsuit, it may be at a very significant cost to us of attorneys’ fees and employee time and
distraction over a long period. Further, it is common for more than one generic company to try to sell an innovator drug at the same time, and so we may be
faced with the cost and distraction of multiple lawsuits. We may also determine it is necessary to settle the lawsuit in a manner that allows the generic
company to enter our market prior to the expiration of our patent or otherwise in a manner that adversely affects the strength, validity or enforceability of
our patent.
Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain
and could have a material adverse effect on the success of our business.
We may become party to, or threatened with, adversarial proceedings or litigation regarding intellectual property rights covering our products and
technology, including inter parties review proceedings before the U.S. PTO. Third parties may assert infringement claims against us based on existing
patents or patents that may be granted in the future. For example, we are aware that many companies, universities and institutions, including competitors,
have filed patent applications and received issued patents in our general areas of CDK 4/6 inhibitors and SERD compounds and their uses in methods of
treatment and combinations with other drugs as well as their processes of manufacture. If we are found to infringe a third party’s intellectual property
rights, we could be required to litigate the validity or enforceability of the third-party asserted patent, which may be expensive, time-consuming and
distracting to the company, and which litigation we may lose. We may, instead of litigating, seek to obtain a license from such third party to continue
developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or
at all. Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We
could be forced, including by court order, to cease commercializing the infringing technology or product. 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. A finding of infringement could
prevent us from commercializing COSELA or force us to cease some of our business operations, which could materially harm our business. Claims that we
have misappropriated the confidential information or trade secrets of third parties could have a similar negative impact on our business.
A number of pharmaceutical companies have been the subject of intense review by the U.S. Federal Trade Commission or a corresponding agency in
another country based on how they have conducted or settled drug patent litigation, and certain reviews have led to an allegation of an anti-trust
violation, sometimes resulting in a fine or loss of rights. We cannot be sure that we would not also be subject to such a review or that the result of the
review would be favorable to us, which could result in a fine or penalty.
The U.S. Federal Trade Commission, or FTC, has brought a number of lawsuits in federal court in the past few years to challenge Hatch Waxman ANDA
litigation settlements between innovator companies and generic companies as anti-competitive. The FTC has taken an aggressive position that anything of
value is a payment, whether money is paid or not. Under their approach, if an innovator as part of a patent settlement agrees not to launch or delay launch
of an authorized generic during the 180-day period granted to the first generic company to challenge an Orange Book listed patent covering an innovator
drug, or negotiates a delay in entry without payment, the FTC may consider it an unacceptable reverse payment. The biopharmaceutical industry argues
that such agreements are rational business decisions to dismiss risk and are immune from antitrust attack if the terms of the settlement are within the scope
of the exclusionary potential of the patent. In 2013, the U.S. Supreme Court, in a five-to-three decision in FTC v. Actavis, Inc. rejected both the
biopharmaceutical industry’s and FTC’s arguments with regard to so-called reverse payments, and held that whether a “reverse payment” settlement
involving the exchange of consideration for a delay in entry is subject to an anticompetitive analysis depends on five considerations: (a) the potential for
genuine adverse effects on competition; (b) the justification of payment; (c) the patentee’s ability to bring about anticompetitive harm; (d) whether the size
of the payment is a workable surrogate for the patent’s weakness; and (e) that antitrust liability for large unjustified payments does not prevent litigating
parties from settling their lawsuits, for example, by allowing the generic to enter the market before the patent expires without the patentee’s paying the
generic. Furthermore, whether a reverse payment is justified depends upon its size, its scale in relation to the patentee’s anticipated future litigation costs,
its independence from other services for which it might represent payment, as was the case in Actavis, and the lack of any other convincing justification.
The Court held that reverse payment settlements can potentially violate antitrust laws and are subject to the standard antitrust rule-of-reason analysis, with
the burden of proving that an agreement is unlawful on the FTC and leaving to lower courts the structuring of such rule of reason analysis. If we are faced
with drug patent litigation, including Hatch
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Waxman litigation with a generic company, we could be faced with such an FTC challenge based on that activity, including how or whether we settle the
case, and even if we strongly disagree with the FTC’s position, we could face a significant expense or penalty.
We may not be able to effectively enforce our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on COSELA, lerociclib and rintodestrant in all countries throughout the world would be prohibitively expensive,
and therefore we only file for patent protection in selected countries. The requirements for patentability may differ in certain countries, particularly in
developing countries. Moreover, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in
foreign intellectual property laws.
The laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, Europe, India, China and certain
other countries do not allow patents for methods of treating the human body. Many companies have encountered significant problems in protecting and
defending intellectual property rights in certain foreign jurisdictions that do not favor patent protection on drugs. This could make it difficult for us to stop
the infringement of our patents or the misappropriation of our other intellectual property rights. Competitors may use our technologies in jurisdictions
where we have not obtained patent protection to develop their own drugs and, further, may export otherwise infringing drugs to territories where we have
patent protection, if our ability to enforce our patents to stop infringing activities is inadequate. These drugs may compete with COSELA, and our patents
or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Proceedings to enforce our patent rights in foreign jurisdictions, whether or not successful, could result in substantial costs and divert our efforts and
resources from other aspects of our business. Furthermore, while we intend to protect our intellectual property rights in the major markets for COSELA, we
cannot ensure that we will be able to initiate or maintain similar efforts in all jurisdictions in which we may wish to market it. Accordingly, our efforts to
protect our intellectual property rights in such countries may be inadequate.
A number of foreign countries have stated that they are willing to issue compulsory licenses to patents held by innovator companies on approved drugs to
allow the government or one or more third party companies to sell the approved drug without the permission of the innovator patentee where the foreign
government concludes it is in the public interest. India, for example, has used such a procedure to allow domestic companies to make and sell patented
drugs without innovator approval. There is no guarantee that patents covering any of our drugs will not be subject to a compulsory license in a foreign
country, or that we will have any influence over if or how such a compulsory license is granted. Further, Brazil allows its regulatory agency ANVISA to
participate in deciding whether to grant a drug patent in Brazil, and patent grant decisions are made based on several factors, including whether the patent
meets the requirements for a patent and whether such a patent is deemed in the country’s interest. In addition, several other countries have created laws that
make it more difficult to enforce drug patents than patents on other kinds of technologies. Further, under the treaty on the Trade-Related Aspects of
Intellectual Property, or TRIPS, as interpreted by the Doha Declaration, countries in which drugs are manufactured are required to allow exportation of the
drug to a developing country that lacks adequate manufacturing capability. Therefore, our drug markets in the United States or foreign countries may be
affected by the influence of current public policy on patent issuance, enforcement or involuntary licensing in the healthcare area.
In addition, in November 2015, members of the World Trade Organization, or the WTO, which administers TRIPS, voted to extend the exemption against
enforcing pharmaceutical drug patents in least developed countries until 2033. We currently have no patent applications filed in least developed countries,
and our current intent is not to file in these countries in the future, at least in part due to this WTO pharmaceutical patent exemption.
Some intellectual property may have been discovered through government funded programs and thus may be subject to federal regulations such as
“march-in” rights, certain reporting requirements and a preference for U.S.-based companies. Compliance with such regulations may limit our
exclusive rights, and limit our ability to contract with non-U.S. manufacturers.
Many of our intellectual property rights were generated through the use of U.S. government funding and are therefore subject to certain federal regulations.
As a result, the U.S. government may have certain rights to intellectual property embodied in our current or future product candidates pursuant to the Bayh-
Dole Act of 1980, or Bayh-Dole Act. These U.S. government rights in certain inventions developed under a government-funded program include a non-
exclusive, non-transferable, irrevocable worldwide license to use inventions for any governmental purpose. In addition, the U.S. government has the right,
under certain limited circumstances, to require us to grant exclusive, partially exclusive, or non-exclusive licenses to any of these inventions to a third party
if it determines that: (i) adequate steps have not been taken to commercialize the invention; (ii) government action is necessary to meet public health or
safety needs; or (iii) government action is necessary to meet requirements for public use under federal regulations (also referred to as “march-in rights”).
The U.S. government also has the right to take title to these inventions if we fail to disclose the invention to the government or fail to file an application to
register the intellectual property within specified time limits. Intellectual property generated under a government funded program is also subject to certain
reporting requirements, compliance with which may require us to expend substantial resources. In addition, the U.S. government requires that any products
embodying the subject invention or
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produced through the use of the subject invention be manufactured substantially in the United States. The manufacturing preference requirement can be
waived if the owner of the intellectual property can show that reasonable but unsuccessful efforts have been made to grant licenses on similar terms to
potential licensees that would be likely to manufacture substantially in the United States or that under the circumstances domestic manufacture is not
commercially feasible. This preference for U.S. manufacturers may limit our ability to contract with non-U.S. product manufacturers for products covered
by such intellectual property. To the extent any of our 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.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for some of our technology and products, we also rely on trade secrets, including unpatented know-how, technology and other
proprietary information, to maintain our competitive position. We seek to protect these trade secrets, in part, by entering into non-disclosure 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 seek to protect our confidential proprietary information, in part, by entering into
confidentiality and invention or patent assignment agreements with our employees and consultants, however, we cannot be certain that such agreements
have been entered into with all relevant parties. Moreover, to the extent we enter into such agreements, any of these parties may breach the agreements and
disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for 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. 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.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other
requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these
requirements.
Periodic maintenance fees, renewal fees, annuity fees and various other governmental fees on patents and/or applications will be due to be paid to the U.S.
PTO and various governmental patent agencies outside of the United States in several stages over the lifetime of the patents and/or applications. We have
systems in place to remind us to pay these fees, and we employ an outside firm and rely on our outside counsel to pay these fees due to non-U.S. patent
agencies. We employ reputable law firms and other professionals to help us comply, and 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. However, there are situations in which non-compliance 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, our competitors
might be able to enter the market and this circumstance would have a material adverse effect on our business.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Litigation or other legal proceedings relating to intellectual property claims, with or without merit, is unpredictable and generally expensive and time
consuming and is likely to divert significant resources from our core business, including distracting our technical and management personnel from their
normal responsibilities. 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. In addition, there could be public
announcements of the results of hearings, motions or other interim proceedings or developments and if securities analysts or investors perceive these results
to be negative, it could have a substantial adverse effect on the price of our common stock. Such litigation or proceedings could substantially increase our
operating losses and reduce the resources available for development activities or any future sales, marketing or distribution activities.
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 a material adverse effect on our ability to compete in the marketplace.
62
We may be subject to claims by third parties asserting that our employees or we have misappropriated their intellectual property, or claiming ownership
of what we regard as our own intellectual property.
Many of our employees 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 do not use the proprietary information or know-how of others in their work for us, we
may be subject to claims that these employees or we have used or disclosed intellectual property, including trade secrets or other proprietary information, of
any such employee’s former employer. Litigation may be necessary to defend against these claims.
In addition, while it is our policy to require our employees and contractors who may be involved in the 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 develops
intellectual property that we regard as our own. Our and their assignment agreements may not be self-executing or may be breached, and we may be forced
to bring claims against third parties, or defend claims they may bring against us, to determine the ownership of what we regard as our intellectual property.
If we fail in prosecuting or 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 prosecuting or defending against such claims, litigation could result in substantial costs and be a distraction to
management.
Risks related to our common stock
The price of our common stock may be volatile and fluctuate substantially.
The market price of shares of our common stock could be subject to wide fluctuations in response to many risk factors listed in this section, and others
beyond our control, including:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
results of preclinical and clinical trials;
results of clinical trials of our competitors’ products;
regulatory actions with respect to our products or our competitors’ products;
actual or anticipated fluctuations in our financial condition and operating results;
publication of research reports by securities analysts about us or our competitors or our industry;
our failure or the failure of our competitors to meet analysts’ projections or guidance that we or our competitors may give to the market;
developments or disputes concerning patent applications, issued patents or other proprietary rights;
additions and departures of key personnel;
strategic decisions by us or our competitors, such as acquisitions, collaborations, divestitures, spin-offs, joint ventures, strategic investments
or changes in business strategy;
the passage of legislation or other regulatory developments in the United States and other countries affecting us or our industry;
fluctuations in the valuation of companies perceived by investors to be comparable to us;
sales of our common stock by us, our insiders or our other stockholders;
speculation in the press or investment community;
announcement or expectation of additional financing efforts;
changes in accounting principles;
changes in the structure of healthcare payment systems;
terrorist acts, acts of war or periods of widespread civil unrest;
natural disasters and other calamities;
changes in market conditions for pharmaceutical and biopharmaceutical stocks;
changes in general market, industry and economic conditions; and
the other factors described in this “Risk Factors” section.
In addition, the stock market has experienced significant volatility, particularly with respect to pharmaceutical, biotechnology and other life sciences
company stocks. The volatility of pharmaceutical, biotechnology and other life sciences company stocks often does not relate to the operating performance
of the companies represented by the stock. In the past, securities class action litigation has often been initiated against companies following periods of
volatility in their stock price. This type of litigation could result in substantial costs and divert our management’s attention and resources, and could also
require us to make substantial payments to satisfy judgments or to settle litigation.
63
Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, 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 certificate of incorporation and our by-laws may discourage, delay or prevent a merger, acquisition or other change in control of our
company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These
provisions could also 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. Although we believe these provisions collectively provide for an opportunity to obtain greater value for stockholders by
requiring potential acquirers to negotiate with our board of directors, they would apply even if an offer rejected by our board of directors were considered
beneficial by some stockholders. Among other things, these provisions:
•
•
•
•
•
•
•
•
establish a classified board of directors such that only one of three classes of directors is elected each year;
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 our board of directors;
establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings and nominations to our board of
directors;
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 “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 two-thirds of the voting power of all of the then-outstanding shares of capital stock that would
be entitled to vote generally in the election of directors to amend or repeal specified provisions of our certificate of incorporation or by-laws.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, 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.
We have incurred and will continue to incur 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 and corporate governance practices.
As a public company, we have incurred and will continue to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, the
Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of The Nasdaq Stock Market and other applicable securities rules
and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls
and corporate governance practices. Our management and other personnel devote a substantial amount of time to these compliance initiatives. Moreover,
these rules and regulations increase our legal and financial compliance costs and make some activities more time-consuming and costly. For example, these
rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance.
Our certificate of incorporation includes a forum selection clause, which could limit our stockholders’ ability to obtain a favorable judicial forum for
disputes with us.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of
Delaware will be the sole and exclusive forum for any stockholder to bring (i) any derivative action or proceeding brought on our behalf, (ii) any action
asserting a claim of breach of a fiduciary duty owed by any of our directors, officers, or employees to us or to our stockholders, (iii) any action asserting a
claim arising pursuant to any provision of the Delaware General Corporation Law or our certificate of incorporation or by-laws, or (iv) any action asserting
a claim governed by the internal affairs doctrine; in all cases subject to the court’s having personal jurisdiction over the indispensable parties named as
defendants. Any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to have notice of and consented to
the foregoing provisions. This forum selection provision in our certificate of incorporation may limit our stockholders’ ability to obtain a favorable judicial
forum for disputes with us. It is also possible that, notwithstanding the forum selection clause included in our certificate of incorporation, a court could rule
that such a provision is inapplicable or unenforceable.
64
We do not anticipate paying any cash dividends on our capital stock in the foreseeable future.
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 the sole source of gain for our stockholders for the foreseeable future.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties.
Our corporate headquarters is located in Research Triangle Park, North Carolina, where we lease approximately 60,000 square feet of laboratory and office
space. This lease on our corporate headquarters commenced in September 2019 and expires on September 30, 2027. None of our leases are material to our
business operations. We believe our facility is adequate for our current needs and that suitable additional or substitute space would be available if needed.
Item 3. Legal Proceedings.
We are not currently subject to any material pending legal proceedings.
Item 4. Mine Safety Disclosures.
Not applicable.
65
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market Information
Our common stock has traded on the Nasdaq Global Select Market under the symbol “GTHX” since May 17, 2017. Prior to that time, there was no public
market for our common stock.
Holders
As of February 18, 2022, there were approximately 9 stockholders of record of our common stock. Holders of record are defined as those stockholders
whose shares are registered in their names in our stock records and do not include beneficial owners of common stock whose shares are held in the names
of brokers, dealers or clearing agencies.
66
Stock Performance Graph
This performance graph is not “soliciting material,” is not deemed filed with the SEC and is not to be incorporated by reference in any filing by us under
the Securities Act of 1933 or the Securities Exchange Act of 1934, as amended, whether made before or after the date hereof and irrespective of any
general incorporation language in any such filing. The stock price performance shown on the graph is not necessarily indicative of future price
performance.
Comparison of Cumulative Total Return
Among G1 Therapeutics, Inc., the Nasdaq Biotechnology Index and the Nasdaq Composite Index
The above graph measures the change in a $100 investment in our common stock from May 17, 2017 (the date our common stock commenced trading on the
Nasdaq Global Select Market) through December 31, 2021. Our relative performance is then compared with the Nasdaq Composite Index and the Nasdaq
Biotechnology Index.
Recent Sales of Unregistered Securities
None.
Equity Compensation Plans
67
The information required by Item 5 of Form 10-K regarding equity compensation plans is incorporated herein by reference from Item 12 of Part III of this
Annual Report.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
We did not purchase any of our equity securities during the fiscal year 2021.
68
Item 6. Selected Financial Data.
You should read the following selected financial data together with the information under the caption “Management’s Discussion and Analysis of Financial
Condition and Results of Operations” and our audited financial statements and accompanying notes included in this Annual Report. We have derived the
statement of operations data for the years ended December 31, 2021, 2020 and 2019 and the balance sheet data as of and December 31, 2021 and 2020
from our audited financial statements included elsewhere in this Annual Report. The statement of operations data for the year ended December 31, 2018
and 2017 and the balance sheet data as of December 31, 2019, 2018 and 2017 is derived from audited financial statements that are not included in this
Annual Report. Our historical results are not necessarily indicative of results that should be expected in the future.
Statements of Operations Data:
Revenues:
Product sales, net
License revenue
Total revenues
Operating expenses:
Cost of goods sold
Research and development
Selling, general and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Other income (expense)
Change in fair value of warrant liability
Total other income (expense), net
Loss before income taxes
Income tax expense
Net loss
Accretion of redeemable convertible preferred stock(1)
Net loss attributable to common shareholders
Basic and diluted net loss per share(2)
Weighted average shares outstanding, basic and diluted(2)
Balance Sheet Data:
Cash, cash equivalents and short-term investments
Working capital(3)
Total assets
Total stockholders' equity/(deficit)
2021
2020
Year Ended December 31,
2019
2018
(in thousands except share and per share amounts)
2017
$
11,120 $
20,356
31,476
—
$
45,285
45,285
— $
—
—
$
—
—
—
—
—
—
2,016
76,225
95,692
173,933
(142,457)
43
(4,667)
(346)
—
(4,970)
(147,427)
925
(148,352)
—
$
$
(148,352) $
(3.54) $
—
73,271
68,490
141,761
(96,476)
952
(1,778)
(542)
—
(1,368)
(97,844)
1,410
(99,254)
—
(99,254) $
(2.62) $
—
89,002
40,039
129,041
(129,041)
6,579
—
15
—
6,594
(122,447)
—
(122,447)
—
(122,447) $
(3.27) $
—
70,683
18,603
89,286
(89,286)
—
53,881
7,087
60,968
(60,968)
3,998
—
—
—
3,998
(85,288)
—
(85,288)
—
(85,288) $
(2.56) $
891
—
(3)
(41)
847
(60,121)
—
(60,121)
(4,757)
(64,878)
(3.57)
18,197,970
41,943,417
37,878,026
37,499,256
33,316,719
2021
2020
Year Ended December 31,
2019
2018
2017
(in thousands)
$
$
$
221,186
215,952
254,094
143,541
207,306
192,949
228,552
177,351
269,208 $
251,234
284,831
255,527
369,290
357,771
371,270
358,820
$
103,812
92,957
105,171
93,388
(1) Subsequent to our initial public offering in May 2017, our redeemable convertible preferred stock was converted to common stock and no further accretion has
been recorded.
(2) See Note 12 to our financial statements appearing elsewhere in this Annual Report for further details on the calculation of basic and diluted net loss per share
applicable to common stockholders.
(3) We define working capital as current assets less current liabilities.
69
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
related notes included elsewhere in this Annual Report. This discussion contains forward-looking statements that involve risk and uncertainties, such as
statements of our plans, objectives, expectations and intentions. 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 the forward-looking statements contained in the
following discussion and analysis.
Overview
We are a commercial-stage biopharmaceutical company focused on the development and commercialization of novel small molecule therapeutics for the
treatment of patients with cancer. Our first product approved by the FDA, COSELA™ (trilaciclib), is the first and only therapy indicated to proactively
help protect bone marrow from the damage of chemotherapy and is the first innovation in managing myeloprotection in decades.
We shall use “COSELA” when referring to our FDA approved drug and “trilaciclib” when referring to our development of COSELA for additional
indications.
COSELA is a prescription medicine used to help reduce the occurrence of low blood cell counts caused by damage to bone marrow from chemotherapy.
COSELA is used to treat adults taking certain chemotherapies (platinum/etoposide or topotecan) for extensive-stage small cell lung cancer.
COSELA is an injection for intravenous (IV) use given within 4 hours before chemotherapy.
Commercial Product
On February 12, 2021, COSELA (trilaciclib) for injection was approved by the FDA to decrease the incidence of chemotherapy-induced myelosuppression
in adult patients treated with a platinum/etoposide-containing regimen or topotecan-containing regimen for ES-SCLC. We are also exploring potential use
of trilaciclib in a variety of tumors, including colorectal cancer (“CRC”), breast cancer, bladder cancer, and in trials designed to inform the design of future
additional pivotal studies across multiple tumor types and treatment combinations including targeted chemotherapy medicines called antibody-drug
conjugates (ADCs).
In June 2020, we entered into a three-year co-promotion agreement for COSELA in the United States and Puerto Rico with Boehringer Ingelheim
Pharmaceuticals, Inc. In December 2021, G1 and Boehringer Ingelheim mutually agreed to end the co-promotion agreement for COSELA, effective March
2022. At that time, the Company announced that it would hire and deploy a total of 34 oncology sales representatives to allow G1 to target all accounts to
accelerate sales activities and help maximize the adoption of COSELA. As of February 21, 2022, all 34 sales representatives have been hired, trained, and
deployed.
Product Pipeline
Trilaciclib is a first-in-class therapy designed to help protect against chemotherapy-induced myelosuppression.
We are executing on our tumor-agnostic strategy to evaluate the potential benefits of trilaciclib to patients with other tumors to continuously develop new
data with trilaciclib in a variety of chemotherapeutic settings and in combination with other agents to maximize the applicability of the drug to potential
future treatment paradigms. We currently have five on-going clinical trials: a pivotal trial in 1L colorectal cancer (“CRC”), a pivotal trial in 1L mTNBC, a
Phase 2 1L bladder cancer trial with chemotherapy and a checkpoint inhibitor, a Phase 2 trial designed to evaluate the antitumor efficacy and
myeloprotective benefit of trilaciclib administered prior to an antibody-drug conjugate (“ADC”), and a Phase 2 trial in neoadjuvant TNBC designed to
validate trilaciclib’s immune-based mechanism of action (“MOA”). These studies across treatment settings and tumor types will evaluate trilaciclib’s dual
benefits in both multi-lineage myeloprotection and anti-tumor efficacy. In addition, the MOA and ADC trials will inform the design of future additional
pivotal studies across multiple tumor types and treatment combinations. The Company is also conducting significant preclinical work to assess the
additive/synergistic potential of trilaciclib with a variety of novel and emerging therapeutic agents to identify synergies to evaluate in future clinical trials.
G1’s clinical approach to designing our clinical program includes monitoring the evolution of future standards of care and develop trilaciclib with these in
mind, allowing us to conduct or support trials that will generate important data to maximize future usage in a variety of future settings.
70
Trilaciclib Product Pipeline
Candidate
Indication
Current
Status
Timing of
Initial Results
Endpoints
Development &
Commercialization Rights
(all indications)
1L metastatic
Colorectal cancer
(CRC)
1L metastatic Triple
negative breast
cancer (mTNBC)
Registrational
trial
(enrolling)
Registrational
trial
(enrolling)
1Q 2023
Primary: myeloprotection
Secondary: ORR, PFS/OS, PRO
2H 2023
Primary: OS
Secondary: PRO,
myeloprotection, PFS/ORR
trilaciclib
1L Bladder cancer
(mUC)
Phase 2 trial
(enrolling)
4Q 2022
Primary: PFS
Secondary: ORR*, OS,
myeloprotection*, others
Primary: PFS
Secondary: ORR*, OS,
myeloprotection*, others
G1 Therapeutics owns all global
development and commercial rights
across all indications, with the
exception of Greater China
(Simcere)
Antibody-drug
conjugate (ADC)
combination trial in
mTNBC
Mechanism of action
trial in early stage
neoadjuvant TNBC
Phase 2 trial
(enrolling)
4Q 2022
Phase 2 trial
(enrolling)
4Q 2022
Primary: Immune-based MOA*
Secondary: pCR, immune
response, others
PFS=progression-free survival; OS=overall survival; PRO=patient reported outcome; ORR=overall response rate; pCR=pathological complete response;
MOA=mechanism of action. *=initial results for Phase 2 trials expected in 4Q 2022
Lerociclib
Lerociclib is a differentiated oral CDK4/6 inhibitor being developed for use in combination with other targeted therapies in multiple oncology indications.
In 2020, we entered into separate, exclusive agreements with EQRx, Inc. (rights for U.S., Europe, Japan and all markets outside Asia-Pacific) and Genor
Biopharma Co. Inc. (rights for Asia-Pacific, excluding Japan) for the development and commercialization of lerociclib in all indications. Combined, these
agreements provided $26.0 million in upfront payments, along with sales-based royalties, and the opportunity for up to $330.0 million in potential
milestone payments. EQRx, Inc. and Genor Biopharma Co. Inc. are responsible for all costs related to the development and commercialization of lerociclib
in their respective territories.
Rintodestrant
Rintodestrant is a clinical-stage oral SERD, for use as a monotherapy and in combination with CDK4/6 inhibitors, initially Ibrance® (palbociclib), for the
treatment of ER+, HER2- breast cancer. We are in the process of evaluating partnering options for rintodestrant.
CDK2 Inhibitor
In 2020, we entered into a global license agreement with ARC Therapeutics, LLC for the development and commercialization of an internally discovered
CDK2 inhibitor for all human and veterinary uses. ARC is currently granted an exclusive, royalty-bearing, license with the right to grant sublicenses to one
of our solely owned patent families.
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Coronavirus (COVID-19) impact on operations
We have implemented business continuity plans to address the COVID-19 pandemic and minimize disruptions to ongoing operations. Enrollment of
patients in current and future clinical trials may be impacted by COVID-19. Although we have not had any significant supply chain delays or shortages as a
result of the COVID-19 pandemic to date, we have experienced delays in the delivery of our investigational product to certain investigative sites due to
shortages of ancillary materials and the delay of governmental inspections. To date, we are on track to meet all of our previously announced clinical
milestones. If the COVID-19 pandemic continues or increases in severity, we could experience disruptions to our clinical development timelines. If we
experience delays in patient enrollment, we could incur increased clinical program expense if it is deemed necessary or advisable to improve patient
recruitment by opening additional clinical sites. COVID-19 travel limitations and government-mandated work-from-home or shelter-in-place orders, may
reduce the number of in-person meetings with prescribers and fewer patient visits with physicians, potentially resulting in fewer new prescriptions.
We established a COVID-19 response team which continually monitors the impact of COVID-19 on our operations. The COVID-19 response team
manages our workplace protocols that govern our employees’ use of our office. To mitigate the impact of COVID-19 on our business, we put in place the
following safety measures for our employees, patients, healthcare professionals, and suppliers to limit exposure: we substantially restricted travel, supplied
personal protective equipment to employees, limited access to our headquarters and asked most of our staff to work remotely. As of December 31, 2021,
the majority of our employees are still working remotely, which may negatively impact our ability to conduct research and development activities, engage
in sales-related initiatives, or efficiently conduct day-to-day operations. In addition, we added bandwidth and VPN capacity to our infrastructure to
facilitate remote work arrangements. We will continue to monitor the impact of COVID-19 on our operations, including how it will impact our employees,
clinical trials, development programs, supply chain, and other aspects of our operations, and report to our Board of Directors regularly on the progress of
our response to the COVID-19 outbreak.
Financial Overview
Since our inception in 2008, we have devoted substantially all of our resources to synthesizing, acquiring, testing and developing our product candidates,
including conducting preclinical studies and clinical trials and providing selling, general and administrative support for these operations as well as securing
intellectual property protection for our products. Currently, COSELA is our only product approved for sale. We began generating revenue for the net
product sales from COSELA in March of 2021.We recorded $11.1 million of net product sales from COSELA and $20.4 million of license revenue for the
year ended December 31, 2021, and $45.3 million of license revenue for the year ended December 31, 2020. To date, we have financed our operations
primarily through the sale of equity securities, our loan agreement with Hercules Capital, Inc., and licensing arrangements. Under our licensing
arrangements, we are eligible to receive certain development and sales-based milestones. Our ability to earn these milestones and the timing of achieving
these milestones is primarily dependent upon the outcome of the licensee’s activities and is uncertain at this time.
As of December 31, 2021, we had cash and cash equivalents of $221.2 million. Since inception, we have incurred net losses. Our net losses were
$148.4 million, $99.3 million and $122.4 million for the years ended December 31, 2021, 2020 and 2019, respectively. As of December 31, 2021, we had
an accumulated deficit of $584.5 million. Substantially all of our net losses have resulted from costs incurred in connection with our research and
development programs, our commercial launch of COSELA, and from selling, general and administrative expenses associated with our operations. We
expect our research and development, commercial activities, and selling, general and administrative expenses will continue to increase in connection with
our ongoing and future activities as we:
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•
continue development of trilaciclib, including initiation of additional clinical trials
identify and develop new product candidates;
seek additional marketing approvals for trilaciclib upon successful completion of clinical trials;
grow our sales, marketing and distribution infrastructure to commercialize COSELA and any future products for which we may obtain
marketing approval;
achieve market acceptance of our products in the medical community and with third-party payors;
maintain, expand and protect our intellectual property portfolio;
hire additional personnel;
enter into collaboration arrangements, if any, for the development of our products or in-license other products and technologies;
identify and develop new product candidates;
72
•
•
add operational, financial and management information systems and personnel, including personnel to support our product development and
planned future commercialization efforts; and
continue to incur increased costs as a result of operating as a public company.
Components of our Results of Operations
Revenues
On February 12, 2021, COSELA was approved by the FDA and we began generating revenue for the product sales of COSELA in March 2021. Prior to the
approval of COSELA, our revenues were derived solely from our license agreements.
We entered into an exclusive license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., Ltd (“Simcere”) in August 2020 and granted them
the rights to develop and commercialize trilaciclib in Greater China (mainland China, Hong Kong, Macau, and Taiwan) (the “Simcere Territory”). We
received an upfront payment of $14.0 million (less applicable withholding taxes of $1.4 million) in September 2020. This was recognized as revenue once
the transfer of the license and related technology and know-how was completed in the fourth quarter of 2020. We have the potential to receive $156.0
million upon reaching development and commercial milestones, and receive tiered low double-digit royalties on annual net sales of trilaciclib in the
Simcere Territory. During the twelve months ended December 31, 2021, three development milestones totaling $8.0 million (less applicable withholding
taxes of $0.8 million) were received and recognized as revenue.
We entered into an exclusive license agreement with EQRx, Inc. (“EQRx”) in July 2020 and granted them the rights to develop and commercialize
lerociclib in the United States, Europe, Japan and all other global markets, excluding the Asia-Pacific region (except Japan) (the “EQRx Territory”). We
received an upfront payment of $20.0 million in August 2020. This was recognized as revenue in September 2020 when we transferred the license and
related technology and know-how. We have the potential to receive $290.0 million upon reaching development and commercial milestones, and receive
tiered royalties ranging from mid-single digits to mid-teens based on annual net sales of lerociclib in the EQRx Territory.
We entered into an exclusive license agreement with Genor Biopharma Co. Inc. (“Genor”) in June 2020 and granted them the rights to develop and
commercialize lerociclib in the Asia-Pacific Region, excluding Japan (the “Genor Territory”). We received an upfront payment of $6.0 million in July
2020. This was recognized as revenue in September 2020 when we transferred the license and related technology and know-how. We have the potential to
receive $40.0 million upon reaching development and commercial milestones, and receive tiered royalties ranging from high single to low double-digits
based on annual net sales of lerociclib in the Genor Territory. During the twelve months ended December 31, 2021, one development milestone totaling
$3.0 million was received and recognized as revenue.
We entered into an exclusive license agreement with ARC Therapeutics, LLC (“ARC”) in May 2020. We granted ARC an exclusive, worldwide, royalty-
bearing license of its CDK2 inhibitor compounds in exchange for an upfront payment and equity in ARC with a total value of approximately $2.1 million,
which resulted in the recognition of related party revenue. We are entitled to receive additional milestone payments and sales-based royalties, and has right
of first negotiation to re-acquire these assets.
Operating expenses
We classify our operating expenses into three categories: cost of goods sold, research and development and selling, general and administrative expenses.
Personnel costs, including salaries, benefits, bonuses and stock-based compensation expense, comprise a significant component of each of these expense
categories. We allocate expenses associated with personnel costs based on the nature of work associated with these resources.
Cost of goods sold
Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of COSELA, including third-party manufacturing costs,
packaging services, freight-in, third-party logistics costs associated with COSELA, and personnel costs. Cost of goods sold may also include period costs
related to certain inventory manufacturing services and inventory adjustment charges.
Research and Development Expenses
The largest component of our total operating expenses since inception has been research and development activities, including the preclinical and clinical
development of our product candidates.
Research and development costs are expensed as incurred. Our research and development expense primarily consists of:
•
salaries and personnel-related costs, including bonuses, benefits and any stock-based compensation, for our scientific personnel performing or
managing out-sourced research and development activities;
73
•
•
•
•
•
costs incurred under agreements with contract research organizations and investigative sites that conduct preclinical studies and clinical trials;
costs related to manufacturing pharmaceutical active ingredients and drug products for preclinical studies and clinical trials;
costs related to upfront and milestone payments under in-licensing agreements;
fees paid to consultants and other third parties who support our product development;
allocated facility-related costs and overhead.
The successful development of our products are highly uncertain. Products in later stages of clinical development 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. Accordingly, we expect
research and development costs to increase as we conduct later stage clinical trials. However, we do not believe that it is possible at this time to accurately
project total program-specific expenses through commercialization. Our expenditures on current and future preclinical and clinical development programs
are subject to numerous uncertainties in timing and cost to completion. The duration, costs and timing of clinical trials and development of products will
depend on a variety of factors including:
•
•
•
•
•
•
•
the scope, rate of progress, and expenses of our ongoing as well as any additional clinical trials and other research and development activities;
future clinical trial results;
achievement of milestones requiring payments under our in-licensing agreements;
uncertainties in clinical trial enrollment rates or drop-out or discontinuation rates of patients;
potential additional studies requested by regulatory agencies;
significant and changing government regulation; and
the timing and receipt of any regulatory approvals.
We track research and development expenses on a program-by-program basis only for clinical-stage product candidates. Preclinical research and
development expenses and chemical manufacturing research and development expenses are not assigned or allocated to individual development programs.
In 2021, we had two clinical-stage products, trilaciclib and rintodestrant.
Selling, general and administrative expenses
Selling, general and administrative expenses consist of personnel costs, allocated expenses and other expenses for outside professional services, including
legal, audit and accounting services. Personnel costs consist of salaries, bonuses, benefits and stock-based compensation. Other selling, general and
administrative expenses include facility-related costs not otherwise allocated to research and development expense, professional fees, pre-
commercialization costs, expenses associated with obtaining and maintaining patents and costs of our information systems. We anticipate that our selling,
general and administrative expenses will continue to increase in the future as we increase our headcount to support our continued research and development
and commercialization of COSELA.
We expect to continue to incur additional selling, general and administrative expenses in the future in connection with the commercialization of COSELA,
as we support continued research and development activities, and as we support our operations in a public company environment, including expenses
related to compliance with the rules and regulations of the SEC and Nasdaq, additional insurance expenses, and expenses related to investor relations
activities.
Total other income (expense), net
Total other income (expense), net consists of interest income earned on cash and cash equivalents and interest expenses incurred under our loan and
security agreement with Hercules.
Income taxes
To date, we have not been required to pay U.S. federal or state income taxes because we have not generated taxable income. Income tax expense
recognized in 2021 and 2020 related to the foreign withholding taxes incurred as a result of the Simcere license agreement.
74
Critical accounting policies and significant judgments and estimates
This discussion and analysis of our 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. The preparation of our financial statements requires us to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well
as the reported expenses incurred during the reporting periods. Our estimates are based on our historical experience and on various other factors that we
believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities
that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
While our significant accounting policies are more fully described in the notes to our financial statements appearing elsewhere in this Annual Report, we
believe that the following accounting policies are critical to the process of making significant judgments and estimates in the preparation of our financial
statements and understanding and evaluating our reported financial results.
Revenue Recognition
For elements of those arrangements that we determine should be accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”), we
assess which activities in our license or collaboration agreements are performance obligations that should be accounted for separately and determine the
transaction price of the arrangement, which includes the assessment of the probability of achievement of future milestones and other potential
consideration. For arrangements that include multiple performance obligations, such as granting a license or performing manufacturing or research and
development activities, we allocate the transaction price based on the relative standalone selling price and recognize revenue that is allocated to the
respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. Accordingly, we develop
assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key
assumptions may include revenue forecasts, clinical development timelines and costs, discount rates and probabilities of clinical and regulatory success.
License Revenue
Licenses of Intellectual Property
If a license to our intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, we recognize
revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the license. For licenses that
are bundled with other promises, we utilize judgment to assess the nature of the combined performance obligation to determine whether the combined
performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring progress for purposes of
recognizing revenue associated with the bundled performance obligation. We evaluate the measure of progress each reporting period and, if necessary,
adjusts the measure of progress and related revenue recognition.
Milestone Payments
At the inception of each arrangement that includes developmental and regulatory milestone payments, we evaluate whether the achievement of each
milestone specifically relates to our efforts to satisfy a performance obligation or transfer a distinct good or service within a performance obligation. We
evaluates each milestone to determine when and how much of the milestone to include in the transaction price. We first estimates the amount of the
milestone payment that we could receive using either the expected value or the most likely amount approach. We primarily uses the most likely amount
approach as that approach is generally most predictive for milestone payments with a binary outcome. Then, we considers whether any portion of that
estimated amount is subject to the variable consideration constraint (that is, whether it is probable that a significant reversal of cumulative revenue would
not occur upon resolution of the uncertainty). We update the estimate of variable consideration included in the transaction price at each reporting date
which includes updating the assessment of the likely amount of consideration and the application of the constraint to reflect current facts and
circumstances.
75
Royalties
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the
predominant item to which the royalties relate, we will recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance
obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, we have not recognized any revenue
related to sales-based royalties or milestone payments based on the level of sales.
Product Sales, Net
We sell COSELA to specialty distributors in the U.S. and, in accordance with ASC 606, recognizes revenue at the point in time when the customer is
deemed to have obtained control of the product. The customer is deemed to have obtained control of the product at the time of physical receipt of the
product at the customers’ distribution facilities, or Free on Board (“FOB”) destination, the terms of which are designated in the contract.
Product sales are recorded at the net selling price, which includes estimates of variable consideration for which reserves are established for (a) rebates and
chargebacks, (b) co-pay assistance programs, (c) distribution fees, (d) product returns, and (e) other discounts. Where appropriate, these estimates take into
consideration a range of possible outcomes which are probability-weighted for relevant factors such as current contractual and statutory requirements, and
forecasted customer buying and payment patterns. Overall, these reserves reflect our best estimates of the amount of consideration to which it is entitled
based on the terms of the applicable contract. The amount of variable consideration may be constrained and is included in the net sales price only to the
extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of
consideration ultimately received may differ from our estimates. If actual results in the future vary from estimates, we adjust these estimates, which would
affect net product revenue and earnings in the period such variances become known.
Liabilities related to co-pay assistance, rebates, and GPO fees are classified as “Accrued Expenses” in the Condensed Balance Sheets. Discounts such as
chargebacks, returns, and specialty distributor fees are recorded as a reduction to trade accounts receivable, which is included in “Accounts Receivable” in
the Condensed Balance Sheets.
Forms of Variable Consideration
Rebates and Chargebacks: We estimate reductions to product sales for Public Health Service Institutions, such as Medicaid, Medicare and Veterans
Administration (“VA”) programs, as well as certain other qualifying federal and state government programs, and other group purchasing organizations. We
estimate these reductions based upon our contracts with government agencies and other organizations, statutorily defined discounts and estimated payor
mix. These organizations purchase directly from our specialty distributors at a discount and the specialty distributors charge us back the difference between
the wholesaler price and the discounted price. Our liability for Medicaid rebates consists of estimates for claims that a state will make. We reserve for this
discounted pricing is based on expected sales to qualified healthcare providers and the chargebacks that customers have already claimed.
Co-pay assistance: Eligible patients who have commercial insurance may receive assistance from us to reduce the patient’s out of pocket costs. Liabilities
for co-pay assistance are calculated by actual program participation from third-party administrators.
Distribution Fees: We have written contracts with its customers that include terms for distribution fees and costs for inventory management. We estimate
and record distribution fees due to its customers based on gross sales.
Product Returns: We generally offers a right of return based on the product’s expiration date and certain spoilage and damaged instances. We estimate the
amount of product sales that may be returned and record the estimate as a reduction of product sales in the period the related product sales are recognized.
Our estimates for expected returns are based primarily on an ongoing analysis of sales information and visibility into the inventory remaining in the
distribution channel.
Cost of Goods Sold
Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of COSELA, including third-party manufacturing costs,
packaging services, freight-in, third-party logistics costs associated with COSELA, and our personnel costs. Cost of goods sold may also include period
costs related to certain inventory manufacturing services and inventory adjustment charges. In connection with the FDA approval of COSELA on February
12, 2021, we subsequently began capitalizing inventory manufactured or purchased after this date. As a result, certain manufacturing costs associated with
product shipments of COSELA were expensed prior to FDA approval and, therefore, are not included in cost of goods sold during the current period.
76
Accrued research and development expenses
As part of the process of preparing our financial statements, we estimate and accrue research and development expenses, including external clinical study
costs associated with clinical trial activities. The process involves reviewing contracts and purchase orders, identifying services that have been provided on
our behalf, and estimating the level of service performed and the associated cost incurred for the service when we have not yet been invoiced or otherwise
notified of the actual costs.
Costs for clinical trial activities are recognized based on an evaluation of our vendors’ progress towards completion of specific tasks, using data such as
patient enrollment, clinical site activations or information provided to us by our vendors regarding their actual costs incurred. Payments for these activities
are based on the terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. We
determine accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of
completion of trials, or the services completed. Our estimates of accrued external clinical study costs as of each balance sheet date are based on the facts
and circumstances known at the time.
Although we do not expect our estimates to be materially different from the amounts actually incurred, if our estimates of the status and timing of the
services performed differ from the actual status and timing of services performed, we may report amounts that are too high or too low in any particular
period. To date, there have been no material differences from our estimates to the amount actually incurred.
Stock-based compensation
We account for stock-based compensation awards in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 718, Compensation—Stock Compensation, or ASC 718. ASC 718 requires all stock-based payments to employees, including grants of
employee stock options, to be recognized in the statement of operations based on their fair values. Our stock-based compensation awards have historically
consisted of stock options.
We recognize compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of grant. We
estimate the grant date fair value, and the resulting stock-based compensation expense, using the Black-Scholes option-pricing model. The grant date fair
value of the stock-based awards is generally recognized on a straight-line basis over the requisite service period, which is generally the vesting period of
the respective awards. We account for forfeitures as they occur, rather than estimating forfeitures as of the date of grant.
We recorded non-cash stock-based compensation expense of $22.3 million, $18.8 million and $16.4 million for the years ended December 31, 2021, 2020
and 2019, respectively.
We calculate the fair value of stock options using the Black-Scholes option-pricing model. The Black-Scholes option-pricing model requires the use of
subjective assumptions, including the expected volatility of our common stock, the assumed dividend yield, the expected term of our stock options, the
risk-free interest rate for a period that approximates the expected term of our stock options, and the fair value of the underlying common stock on the date
of grant. In applying these assumptions, we considered the following factors:
•
•
•
•
•
we do not have sufficient history to estimate the volatility of our common stock; we calculate expected volatility based on reported data for
selected similar publicly traded companies for which the historical information is available as we do not have sufficient history to estimate
volatility using only our common stock; in 2019, we began incorporating our historical stock price in conjunction with selected similar
publicly traded companies; we plan to continue to use the guideline peer group volatility information until the historical volatility of our
common stock is sufficient to measure expected volatility for future option grants;
the assumed dividend yield of zero is based on our expectation of not paying dividends for the foreseeable future;
our estimates of expected term used in the Black-Scholes option-pricing model were based on the estimated time from the grant date to the
date of exercise;
we determine the risk-free interest rate by reference to implied yields available from U.S. Treasury securities with a remaining term equal to
the expected life assumed at the date of grant; and
we account for forfeitures as they occur, rather than estimating forfeitures as of an award’s grant date.
See “Note 10 – Stock-Based Compensation” to the accompanying audited financial statements included in Item 15 of this Annual Report for the weighted
average assumptions used in the Black-Scholes option-pricing model for awards granted in the years ended December 31, 2021, 2020 and 2019.
77
Prior to our initial public offering, the fair value of our common shares underlying our stock options was estimated on each grant date by our board of
directors. In order to determine the fair value of our common shares underlying granted stock options, our board of directors considered, among other
things, timely valuations of our common shares prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the
American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
Given the absence of a public trading market for our common shares, our board of directors exercised reasonable judgment and considered a number of
objective and subjective factors to determine the best estimate of the fair value of our common shares, including (1) our business, financial condition and
results of operations, including related industry trends affecting our operations; (2) our forecasted operating performance and projected future cash flows;
(3) the illiquid nature of our common shares; (4) liquidation preferences and other rights and privileges of our common shares; (5) market multiples of our
most comparable public peers and (6) market conditions affecting our industry. Since our IPO, our board of directors has determined the fair value of each
common share underlying share-based awards based on the closing price of our common shares as reported by the Nasdaq on the date of grant.
Income taxes
We recognize deferred income taxes for temporary differences between the basis of assets and liabilities for financial statement and income tax purposes.
We periodically evaluate the positive and negative evidence bearing upon the ability to realize our deferred tax assets. Based upon the weight of the
available evidence, which includes historical operating performance, reported cumulative net losses since inception and difficulty in accurately forecasting
our future results, we maintained a full valuation allowance on the net deferred tax assets for all periods presented. We intend to maintain a full valuation
allowance on the U.S. deferred tax assets for the foreseeable future until sufficient positive evidence exists to support reversal of the valuation allowance.
At December 31, 2021, we have federal net operating loss carryforwards (“NOLs”) of approximately $510.0 million, which are available to offset future
taxable income. Of the $510.0 million available, $95.4 million will begin to expire in 2029. The remaining $414.6 million has an indefinite carryforward
period. Under the Tax Cuts and Jobs Act (“Tax Act”), federal NOLs arising after December 31, 2017 may be carried forward indefinitely. However, for
NOLs arising after December 31, 2017, NOL carryforwards will be limited to 80% of taxable income. Our NOLs generated in 2017 and in prior years will
not be subject to the 80% limitation under the Tax Act. In addition, we had state net operating loss carryforwards totaling approximately $332.7 million,
which are available to offset future state taxable income. The state net operating loss carryforwards are inclusive of North Carolina net operating losses,
which are recorded at zero benefit, as discussed in the income tax footnote. State net operating losses begin to expire in 2024. Because we had incurred
cumulative net operating losses since inception, all tax years remain open to examination by U.S. federal and state income tax authorities. As of
December 31, 2021, we also had federal research and development (R&D) credit carryforwards of approximately $17.0 million available to offset future
income tax which begin to expire in 2035.
Our ability to utilize net operating losses and research and development credit carryforwards may be substantially limited due to ownership changes that
may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code), as well as
similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to offset
future taxable income and tax, respectively. In general, an “ownership change,” as defined by Section 382 of the Code, results from a transaction or series
of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain
stockholders or public groups.
In April 2019, we completed an evaluation study as to whether an “ownership change” had occurred and determined that the limitation would be
approximately $8.0 million on federal net operating loss carryforwards, $1.2 million on state net operating loss carryforwards, and $0.1 million on R&D
tax credit carryforwards. The carryforward amounts reported above have already been reduced for these limitations. We continue to maintain a valuation
allowance on the remaining NOLs and tax credits as we believe that it is more likely than not that all of the deferred tax asset associated with them will not
be realized regardless of whether an “ownership change” has occurred.
78
Results of operations
Comparison of the year ended December 31, 2021 and December 31, 2020
Revenues:
Product sales, net
License revenue
Total revenues
Operating expenses:
Cost of goods sold
Research and development
Selling, general and administrative
Total operating expenses
Loss from Operations
Other income (expense):
Interest income
Interest expense
Other income (expense)
Total other income (expense), net
Loss before income taxes
Income tax expense
Net Loss
Year Ended December 31,
2020
2021
(in thousands)
Change
$
$
11,120 $
20,356
31,476
— $
45,285
45,285
2,016
76,225
95,692
173,933
(142,457)
43
(4,667)
(346)
(4,970)
(147,427)
925
(148,352) $
—
73,271
68,490
141,761
(96,476)
952
(1,778)
(542)
(1,368)
(97,844)
1,410
(99,254) $
$
11,120
(24,929)
(13,809)
2,016
2,954
27,202
32,172
(45,981)
(909)
(2,889)
196
(3,602)
(49,583)
(485)
(49,098)
Product sales, net
Product sales, net was $11.1 million and $0 for the years ended December 31, 2021 and December 31, 2020, respectively. The sales revenue recognized in
the current year was related to the product sales of COSELA. We received FDA approval of COSELA on February 12, 2021 and the product has been
commercially available since March 2, 2021.
License revenue
License revenue was $20.4 million and $45.3 million for the years ended December 31, 2021 and December 31, 2020, respectively. License revenue
recognized in the current year was primarily related to $11.0 million in milestone payments from Genor and Simcere. We also recognized $2.5 million and
$1.0 million in clinical trial costs reimbursed by EQRx and Simcere, respectively. Additionally, we recognized $5.9 million in supply, manufacturing
services and patent reimbursable costs from EQRx, Genor, and Simcere. License revenue recognized in the prior year was primarily related to $42.1
million in revenue recognized from the Simcere, EQRx, Genor and ARC upfront payments under the respective license agreements following the transfer
of related technology and know-how which occurred during the period. We also recognized $1.3 million for clinical trial costs reimbursed by EQRx and
$0.4 million in patent costs to be reimbursed by EQRx, Genor, and Simcere. Additionally, we recognized $1.3 million in revenue for existing inventory
transfers to EQRx and Genor which occurred during the fourth quarter of 2020.
Cost of goods sold
Cost of goods sold was $2.0 million and $0 for the years ended December 31, 2021 and December 31, 2020, respectively. Cost of goods sold includes our
third-party logistics costs for the sales of COSELA, inventory overhead costs, and personnel costs.
79
Research and development
Research and development expenses were $76.2 million for the year ended December 31, 2021 as compared to $73.3 million for the year ended
December 31, 2020. The increase of $2.9 million, or 4%, was primarily due to an increase of $20.0 million in our clinical program costs, offset by a
decrease of $16.2 million for manufacturing of active pharmaceutical ingredient and drug product to support our clinical trials and a decrease of $0.9
million in external costs related to discovery and preclinical development. The following table summarizes our research and development expenses
allocated to trilaciclib, rintodestrant, lerociclib, and unallocated research and development expenses for the periods indicated:
Clinical expenses—trilaciclib
Clinical expenses—rintodestrant
Clinical expenses—lerociclib
Chemical manufacturing and development
Discovery and pre-clinical expenses
Total research and development expenses
Year Ended December 31,
2020
2021
(in thousands)
$
$
60,911 $
3,132
3,330
5,883
2,969
76,225 $
34,292
7,005
6,092
22,040
3,842
73,271
Selling, general and administrative
Selling, general and administrative expenses were $95.7 million for the year ended December 31, 2021 as compared to $68.5 million for the year ended
December 31, 2020. The increase of $27.2 million, or 40%, was due to an increase of $12.7 million in personnel related costs due to increased headcount,
of which $5.4 million related to non-cash stock compensation expense, an increase of $12.1 million in commercialization activities, an increase of $2.2 in
information technology systems and related expenses, and an increase of $0.2 million medical affairs costs related to trilaciclib, professional services,
insurance, and other administrative costs.
Total other income (expense), net
Total other income (expense), net was $(5.0) million for the year ended December 31, 2021 as compared to $(1.4) million for the year ended December 31,
2020. The decrease of $3.6 million, or -263%, was primarily driven and increase in interest expense on loan payable due to higher principal balance in
2021 as compared to 2020.
Income tax expense
Income tax expense was $0.9 million for the year ended December 31, 2021 as compared to $1.4 million for the year ended December 31, 2020. The
decrease of $0.5 million, or -34%, in foreign withhold taxes incurred is a result of a decrease in license revenue recognized from Simcere as compared to
the prior.
80
Comparison of the year ended December 31, 2020 and December 31, 2019
Revenues:
Product sales, net
License revenue
Total revenues
Operating Expenses:
Cost of goods sold
Research and Development
Selling, general and administrative
Total operating expenses
Loss from Operations
Other income (expense):
Interest income
Interest expense
Other income (expense)
Total other income (expense), net
Loss before income taxes
Income tax expense
Net Loss
Year Ended December 31,
2019
2020
(in thousands)
Change
$
$
$
— $
45,285
45,285
—
73,271
68,490
141,761
(96,476)
952
(1,778)
(542)
(1,368)
(97,844)
1,410
(99,254) $
— $
—
—
—
89,002
40,039
129,041
(129,041)
6,579
—
15
6,594
(122,447)
—
(122,447) $
—
45,285
45,285
—
(15,731)
28,451
12,720
32,565
(5,627)
(1,778)
(557)
(7,962)
24,603
1,410
23,193
Product sales, net
Product sales, net was $0 for each of the years ended December 31, 2020 and December 31, 2019.
License revenue
License revenue was $45.3 million and $0 for the years ended December 31, 2020 and December 31, 2019, respectively. The license revenue for the year
ended December 31, 2020 was primarily related to $42.1 million in revenue recognized from the Simcere, EQRx, Genor and ARC upfront payments under
the respective license agreements following the transfer of the related technology and know-how which occurred during the period. We also recognized
$1.3 million for clinical trial costs and $0.4 million in patent costs to be reimbursed by EQRx, Genor, and Simcere. Additionally, we recognized $1.3
million in revenue for existing inventory transfers to EQRx and Genor which occurred during the fourth quarter of 2020.
Cost of goods sold
Cost of goods sold was $0 for each of the years ended December 31, 2020 and December 31, 2019.
Research and development
Research and development expenses were $73.3 million for the year ended December 31, 2020 as compared to $89.0 million for the year ended
December 31, 2019. The decrease of $15.7 million, or -18%, was primarily due to a decrease of $10.2 million in our clinical program costs due to a
decrease in spend for ongoing clinical trials of $5.7 million and decrease of $5.9 million related to a regulatory filing expense of $2.9 million incurred in
2019 and reimbursed in 2020, partially offset by an increase in personnel costs of $1.4 million. The decrease of $1.3 million in costs for manufacturing of
active pharmaceutical ingredient and drug product to support our clinical trials, as well as a decrease in research and development expenses was also due to
a decrease of $4.2 million in external costs related to discovery and preclinical development. The following table summarizes our research and
development expenses allocated to trilaciclib, rintodestrant, lerociclib, and unallocated research and development expenses for the periods indicated:
81
Clinical expenses—trilaciclib
Clinical expenses—rintodestrant
Clinical expenses—lerociclib
Chemical manufacturing and development
Discovery and pre-clinical expenses
Total research and development expenses
Year Ended December 31,
2019
2020
(in thousands)
$
$
34,292 $
7,005
6,092
22,040
3,842
73,271 $
36,196
8,334
13,041
23,364
8,067
89,002
Selling, general and administrative
Selling, general and administrative expenses were $68.5 million for the year ended December 31, 2020 as compared to $40.0 million for the year ended
December 31, 2019. The increase of $28.5 million, or 71%, was due to an increase of $6.8 million in personnel related costs due to increased headcount, of
which $1.7 million related to non-cash stock compensation expense, an increase of $15.8 million in expenses related to pre-commercialization activities, an
increase of $2.0 million in medical affairs costs related to trilaciclib, an increase of $0.8 million in information technology systems and related expenses,
and an increase of $3.1 million professional services, insurance, and other administrative costs.
Total other income (expense), net
Total other income (expense), net was $(1.4) million for the year ended December 31, 2020 as compared to $6.6 million for the year ended December 31,
2019. The decrease of $8.0 million was primarily driven by a lower balance of money market funds due to cash used in operating activities and changes in
interest rates during the year ended December 31, 2020 as compared to the year ended December 31, 2019, interest expense on loan payable, and loss on
disposal of fixed assets.
Income tax expense
Income tax expense was $1.4 million and $0 for the year ended December 31, 2020 and December 31, 2019, respectively. The income tax expense
recognized in the year ended December 31, 2020 related to the foreign withholding taxes incurred as a result of the upfront payment received from the
Simcere license agreement entered into in 2020.
Liquidity and Capital Resources
We have incurred cumulative losses and negative cash flows from operations since our inception in 2008. We incurred net losses of $148.4 million for the
year ended December 31, 2021, $99.3 million for the year ended December 31, 2020, and $122.4 million for the year ended December 31, 2019. As of
December 31, 2021, we had an accumulated deficit of $584.5 million.
As of December 31, 2021, we had cash and cash equivalents of $221.2 million. To date, we have funded our operations primarily through proceeds from
our initial public offering, our follow-on stock offerings, our debt agreement with Hercules Capital, and proceeds from our license agreements. Under our
licensing arrangements, we are eligible to receive certain development and sales-based milestones. Our ability to earn these milestones and the timing of
achieving these milestones is primarily dependent upon the outcome of the licensee’s activities and are uncertain at this time.
Shelf registration statement
On July 2, 2021, we filed an automatically effective shelf registration statement with the Securities and Exchange Commission (the “SEC”), which we
refer to as the 2021 Form S-3. Each issuance under the shelf registration statement would have required the filing of a prospectus supplement identifying
the amount and terms of securities to be issued. The 2021 Form S-3 did not limit the amount of securities that could have been issued thereunder.
On February 23, 2022, because we are no longer a “well-known seasoned issuer” as such term is defined in Rule 405 under the Securities Act of 1933, as
amended, we filed an automatic post-effective amendment to the 2021 Form S-3 on Form POSASR, which became effective upon filing, to register for sale
up to $300.0 million of any combination of our common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices
and on terms that we may determine and, as required by SEC rules, will file another post-effective amendment to the 2021 Form S-3 on Form POS AM
after the filing of this Form 10-K. Once the post-effective amendment to the 2021 Form S-3 on Form POS AM has been declared effective by the SEC, the
2021 Form S-3 will remain in effect for up to three years from the date it originally became effective, which was July 2, 2021. We make no assurances as to
our ability to continue to use the 2021 Form S-3.
82
At-the-market offerings
On June 15, 2018, we entered into a sales agreement for “at the market offerings” with Cowen and Company, LLC (“Cowen”), which allows us to issue
and sell shares of common stock pursuant to a shelf registration statement for total gross sales proceeds of up to $125.0 million from time to time through
Cowen, acting as our agent. Between June 18, 2018 and August 2, 2018, we sold 752,008 shares of common stock pursuant to this agreement resulting in
$36.1 million in net proceeds, realizing $12.1 million in the second quarter and the remaining $24.0 million by August 2, 2018.
Between January 14, 2021 and February 9, 2021, we sold 3,513,027 shares of common stock pursuant to this agreement resulting in $86.4 million in net
proceeds. As of February 9, 2021, we have used the entirety of the remaining availability under the sales agreement with Cowen.
In connection with the 2021 Form S-3, on July 2, 2021, we entered into a sales agreement for “at the market offerings” with Cowen, which allowed us to
issue and sell shares of common stock pursuant to the 2021 Form S-3 for total gross sales proceeds of up to $150.0 million from time to time through
Cowen, acting as our agent (the “2021 Sales Agreement”). We did not sell any shares of common stock or other securities under the 2021 Sales Agreement
and we terminated the 2021 Sales Agreement on February 23, 2022. Also, on February 23, 2022, we entered into the 2022 Sales Agreement for “at the
market offerings” with Cowen, which allows us to issue and sell shares of common stock pursuant to the 2021 Form S-3, once it has been post-effectively
amended as noted above, for total gross sales proceeds of up to $100.0 million from time to time through Cowen, acting as our agent.
Loan and Security Agreement with Hercules
On May 29, 2020, we entered into a loan and security agreement with Hercules Capital, Inc. (“Hercules”) under which Hercules has agreed to lend us up to
$100.0 million, to be made available in a series of tranches, subject to specified conditions. We borrowed $20.0 million at loan closing. The term of the
loan is approximately 48 months, with a maturity date of June 1, 2024. No principal payments are due during an interest-only period, commencing on the
initial borrowing date and continuing through June 1, 2022. The interest only period may be extended through January 1, 2023 upon satisfaction of certain
milestones. Following the interest only period, we will repay the principal balance and interest of the advances in equal monthly installments through June
1, 2024.
On March 31, 2021, we entered into the First Amendment to Loan and Security Agreement (the “First Amendment”) with Hercules whereby the Company
drew the remaining $10.0 million of the first tranche and the interest rate and financial covenants were amended. Unless loan advances exceeded $40.0
million, no financial covenants were required.
On November 1, 2021, we entered into a Second Amendment to the loan and security agreement with Hercules under which Hercules has agreed to lend us
up to $150.0 million, to be made available in a series of tranches, subject to certain terms and conditions. The first tranche was increased to $100.0 million.
At close of the Second Amendment, we borrowed an additional $45.0 million from Tranche 1 with $25.0 million remaining to be borrowed through
September 15, 2022. No principal payments are due during an interest-only period, commencing on the close of the Second Amendment and continuing
through December 1, 2024. The interest only period may be extended through December 1, 2025, in quarterly increments, subject to compliance with
covenants of the Second Amendment. Following the interest only period, we will repay the principal balance and interest of the advances in equal monthly
installments through the maturity date of November 1, 2026.
Cash flows
The following table summarizes our cash flows for the periods indicated:
Net cash used in operating activities
Net cash provided/used in investing activities
Net cash provided by financing activities
Net change in cash, cash equivalents and restricted cash
Net cash used in operating activities
2021
Year Ended December 31,
2020
(in thousands)
2019
$
(132,108) $
—
145,863
$
13,755 $
(83,742) $
152
21,688
(61,902) $
(99,571)
(2,716)
2,705
(99,582)
During the year ended December 31, 2021, net cash used in operating activities was $132.1 million, which consisted of a net loss of $148.4 million and a
decrease in net operating assets and liabilities of $8.8 million, partially offset by an increase in non-cash equity interest of $0.4 million, non-cash stock
compensation expense of $22.3 million, $0.5 million of depreciation expense, $1.1 million in amortization of debt issuance costs, $0.6 million of non-cash
interest expense, and $0.2 million from loss on extinguishment of debt.
83
During the year ended December 31, 2020, net cash used in operating activities was $83.7 million, which consisted of a net loss of $99.3 million, a
decrease in net operating assets and liabilities of $4.0 million, and a decrease in non-cash equity interest of $0.9 million, partially offset by non-cash stock
compensation expense of $18.8 million, $0.6 million of depreciation expense, $0.6 million in amortization of debt issuance costs, $0.3 million loss on
disposal of fixed assets, and $0.2 million of non-cash interest expense.
During the year ended December 31, 2019, net cash used in operating activities was $99.6 million, which consisted of a net loss of $122.4 million, partially
offset by non-cash stock compensation expense of $16.4 million, working capital adjustments of $6.0 million and $0.4 million of depreciation expense.
Net cash used in investing activities
For the year ended December 31, 2021 there was no cash provided or used in investing activities.
Net cash used in investing activities was $0.2 million for the year ended December 31, 2020, which represented proceeds from the disposal of property and
equipment.
Net cash used in investing activities was $2.7 million for the year ended December 31, 2019, which represented purchases of property and equipment,
primarily associated with laboratory equipment and leasehold improvements for new office space.
Net cash provided by financing activities
During the year ended December 31, 2021, net cash provided by financing activities was $145.9 million, which consisted of $86.4 million in net proceeds
from our ATM offering after deducting cash paid during the year for underwriting discounts and commissions and other expenses, $55.0 million in
proceeds from our loan agreement with Hercules, partially offset by $1.4 million in payments related to debt issuances costs, and $5.9 million in net
proceeds from the exercise of stock options.
During the year ended December 31, 2020, net cash provided by financing activities was $21.7 million, which consisted of $2.3 million in net proceeds
from the exercise of stock options and $20.0 million in proceed from our loan agreement with Hercules, partially offset by $0.6 million in payments related
to debt issuances costs.
During the year ended December 31, 2019, net cash provided by financing activities was $2.7 million in net proceeds from the exercise of stock options.
Operating capital requirements and plan of operations
To date, we have generated limited revenue from product sales. We expect our expenses to increase as we continue the development of and seek additional
regulatory approvals for trilaciclib, and continue to commercialize COSELA. We are subject to all of the risks inherent in the development of new products,
and we may encounter unforeseen expenses, difficulties, complications, delays and other unknown factors that may adversely affect our business.
We believe that our existing cash and cash equivalents will be sufficient to fund our projected cash needs for greater than 12 months following the filing of
this Annual Report.
We have based our projections of operating capital requirements on assumptions that may prove to be incorrect and we may use all of our available capital
resources sooner than we expect. Because of the numerous risks and uncertainties associated with research, development and commercialization of
pharmaceutical products, we are unable to estimate the exact amount of our operating capital requirements. Our future funding requirements will depend on
many factors, including, but not limited to:
•
•
•
•
•
•
•
the scope, progress, results and costs of nonclinical development, laboratory testing and clinical trials for our product candidates;
the scope, prioritization and number of our research and development programs;
the costs, timing and outcome of regulatory review of our product candidates;
the extent to which we enter into non-exclusive, jointly funded clinical research collaboration arrangements, if any, for the development of
our product candidates in combination with other companies’ products;
our ability to establish such collaborative co-development arrangements on favorable terms, if at all;
the achievement of milestones or occurrence of other developments that trigger payments under our license agreement and any collaboration
agreements into which we enter;
the extent to which we are obligated to reimburse, or entitled to reimbursement of, clinical trial costs under future collaboration agreements, if
any;
84
•
•
•
•
the extent to which we acquire or in-license product candidates and technologies, such as rintodestrant, and the terms of such in-licenses;
the costs of commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product
candidates for which we receive marketing approval;
revenue received from commercial sales of our product candidates; and
the costs of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending
intellectual property-related claims.
Until such time, if ever, as we can generate substantial revenues, we expect to finance our cash needs through a combination of equity offerings, debt
financings, other third-party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements. We do
not have any committed external source of funds except for amounts included under our licensing arrangements and the loan agreement with Hercules. To the
extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interest will be diluted, and the
terms of these securities may include liquidation or other preferences that adversely affect your rights as a common stockholder. Debt financing, if available,
may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital
expenditures or declaring dividends. If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties, we may
have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may
not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development
or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.
Contractual Obligations, Commitments and Contingencies
Our principal commitments consist of obligations under our clinical trial commitments, consulting fees, operating lease commitments and long-term debt
obligations. The following table summarizes these contractual obligations as of December 31, 2021:
Total
Less than
1 Year
Payments due by period
1 to 3
Years
(in thousands)
3 to 5
Years
More Than
5 Years
Contractual Obligations:
Operating lease obligations(1)
Long-term debt obligation, including interest and end of term
charge (2)
Total contractual obligations(3,4,5)
$
9,871 $
1,703 $
3,313 $
3,498 $
1,357
109,925
119,796 $
$
6,958
8,661 $
16,795
20,108 $
86,172
89,670 $
—
1,357
(1)
(2)
Represents future minimum lease payments under the non-cancelable lease for our headquarters in Research Triangle Park, NC and our former
headquarters in Research Triangle Park, NC. The lease for the new office space commenced in September 2019 for approximately 60,000 square
feet of laboratory space and office space in Research Triangle Park, NC. The lease will expire in September 2027, with the Company having the
option to renew for an additional 5 years. The lease for our former headquarters will expire in December 2022. The minimum lease payments above
do not include any related common area maintenance charges or real estate taxes.
Amounts in the table reflect payments due for our Second Amendment to the Loan and Security Agreement with Hercules with outstanding
borrowings of $75.0 million as of December 31, 2021. The amounts in the table above reflect interest-only payments through December 1, 2024
with payments on principal beginning thereafter. For purposes of the table above, interest payments were calculated using an annual interest rate of
9.15%, which was the interest rate in effect as of December 31, 2021. Additionally, the table above includes end of term charges of $2.1 million due
on June 1, 2025 and $5.1 million due upon maturity on November 1, 2026. See Note 8 of the financial statements for further discussion of
the Hercules loan agreement.
(3) We enter into agreements in the normal course of business with contract research organizations (CROs) for clinical trials and with vendors for
preclinical studies and other services and products for operating purposes which are cancelable at any time by us, generally upon 30-60 days prior
written notice. As of December 31, 2021, we have several on-going clinical studies in various stages. Under agreements with various CROs and
clinical study sites, we incur expenses related to clinical studies of our product candidates and potential other clinical candidates. The timing and
amounts of these disbursements are contingent upon the services rendered or as expenses are incurred by the CROs or clinical trial sites. Therefore,
we cannot estimate the potential timing and amount of these payments and they have been excluded from the table above. Also, the above amounts
exclude potential payments to be made under our license agreement for rintodestrant with the University of Illinois that are based on the progress of
rintodestrant, as these payments are not determinable.
85
(4) We entered into a Product Agreement with Patheon Manufacturing Services, LLC as issued under the Master Manufacturing Services Agreement
dated August 27, 2019 to manufacture and supply trilaciclib for commercial production. The initial term of the agreement is effective until
December 31, 2024. If the annual volume of product ordered does not meet a specified amount, a true-up payment to this minimum will be due at
the end of the applicable year. This minimum purchase amount was excluded from the table above as the conditions of the committed amount make
it undeterminable at this time.
(5) We entered into a three-year co-promotion agreement in the United States and Puerto Rico with Boehringer Ingelheim Pharmaceuticals, Inc., or BI,
in June 2020. In December 2021, G1 and BI announced that the parties mutually agreed to end the co-promotion agreement for COSELA, effective
March 2022. At that time, we announced that we would hire and deploy a total of 34 oncology sales representatives to accelerate sales activities and
help maximize the adoption of COSELA. For two years following the termination, sales payments to BI will be decreased to mid-single digit
percentages of net sales. The sales payments will vary based on the level of net sales in an applicable year following the termination. Our obligations
to make sales payments under the co-promotion agreement will terminate in March 2024.
Off-Balance Sheet Arrangements
We did not have, during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under applicable SEC rules.
Recent Accounting Pronouncements
See Note 2 to our financial statements included elsewhere in this report regarding the impact of certain recent accounting pronouncements on our financial
statements.
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. We had cash and cash
equivalents of $221.2 million as of December 31, 2021, which consists of deposits in banks, including checking accounts, money market accounts and
certificates of deposit. Such interest-earning instruments carry a degree of interest rate risk; however, historical fluctuations in interest income have not
been significant.
We also have exposure to market risk on our loan agreement with Hercules Capital, Inc. Our loan agreement accrues interest from its date of issue at a
variable interest rate equal to the greater of either (i) (a) the prime rate as reported in The Wall Street Journal, plus (b) 5.90%, and (ii) 9.15%. As of
December 31, 2021, $75.0 million was outstanding under the loan agreement with Hercules.
We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, our operations may be subject to
fluctuations in foreign currency exchange rates in the future.
Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effect on our business financial condition or
results of operations three and twelve months ended December 31, 2021.
Item 8. Financial Statements and Supplementary Data.
The financial statements of G1 Therapeutics, Inc. are provided in Part IV, Item 15 in this Annual Report.
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.
Not Applicable.
86
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit
under the Securities and Exchange Act of 1934 is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and
forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, to allow timely
decisions regarding required disclosure.
As of December 31, 2021, our management, with the participation of our principal executive officer and principal financial officer, evaluated the
effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Our
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 judgement in evaluating the cost-benefit relationship of possible controls and procedures. Our
principal executive officer and principal financial officer have concluded based upon the evaluation described above that, as of December 31, 2021, our
disclosure controls and procedures were effective at the reasonable assurance level.
Changes in Internal Controls Over Financial Reporting
There were no changes in our internal control over financial reporting that occurred during 2021 that have materially affected, or are reasonably likely to
materially affect, our internal control over financial reporting.
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act
Rule 13a-15(f) and 15d-15(f). Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief
Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal
Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on our
evaluation under the framework in Internal Control—Integrated Framework, our management concluded that our internal control over financial reporting
was effective as of December 31, 2021.
The effectiveness of our internal control over financial reporting as of December 31, 2021, has been audited by PricewaterhouseCoopers LLP, an
independent registered public accounting firm, as stated in their report, which is included in this Annual Report on Form 10-K.
Item 9B. Other Information.
“At the Market” Offering
On February 23, 2022, we entered into a sales agreement (the “2022 Sales Agreement”) with Cowen and Company, LLC (“Cowen”) with respect to an at-
the-market offering program under which we may offer and sell, from time to time at our sole discretion, shares of our common stock, par value $0.0001
per share (the “Common Stock”), having an aggregate offering price of up to $100.0 million (the “Placement Shares”) through Cowen as our sales agent.
Our issuance and sale, if any, of the Placement Shares under the 2022 Sales Agreement is subject to the effectiveness of a post-effective amendment to our
registration statement on Form S-3 (File No. 333-257640), to be filed with the Securities and Exchange Commission after the filing of this Form 10-K on
February 23, 2022. We make no assurances as to if or when the registration statement, as post-effectively amended, will become effective or, if it does
become effective, as to the continued effectiveness of the registration statement.
We are not obligated to make any sales of Common Stock under the 2022 Sales Agreement. The offering of Placement Shares pursuant to the
2022 Sales Agreement will terminate upon the earlier of (i) the sale of all Placement Shares subject to the 2022 Sales Agreement or (ii) termination of the
2022 Sales Agreement in accordance with its terms.
Upon delivery of a placement notice and subject to the terms and conditions of the 2022 Sales Agreement, Cowen may sell the Placement Shares by any
method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act of 1933, as amended, including, without
limitation, sales made through The Nasdaq Global Select Market or on any other existing trading market for the Common Stock. Cowen will use
commercially reasonable efforts to sell the Placement Shares from time to time, based upon our instructions (including any price, time or size limits or
other customary parameters or conditions we may impose). We will pay Cowen a commission equal to three percent (3%) of the gross sales proceeds of
any Placement Shares sold
87
through Cowen under the 2022 Sales Agreement, and we also have provided Cowen with customary indemnification and contribution rights.
The foregoing description of the 2022 Sales Agreement is qualified in its entirety by reference to the full text of the 2022 Sales Agreement, which is
attached hereto as Exhibit 10.92 and incorporated herein by reference. The legal opinion of Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. relating to
the shares of common stock being offered pursuant to the 2022 Sales Agreement is filed as Exhibit 5.1 to the Company’s Form POSASR filed February 23,
2022.
In connection with our entering into the 2022 Sales Agreement with Cowen, on February 23, 2022, we terminated that certain sales agreement, dated as of
July 2, 2021 (the “2021 Sales Agreement”), that we previously entered into with Cowen with respect to an at-the-market offering program, under which we
could offer and sell, from time to time at our sole discretion, shares of our Common Stock having an aggregate offering price of up to $150.0 million (the
“2021 ATM Program”). As the date hereof, we had not sold any shares of common stock or other securities pursuant to the 2021 ATM Program. As a result
of the termination of the 2021 Sales Agreement, we will not offer or sell any additional shares under the 2021 ATM Program.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
88
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
The information required by this item is incorporated herein by reference from the Company’s Proxy Statement for the 2022 Annual Meeting of
Stockholders, which will be filed with the SEC within 120 days after the end of our 2021 fiscal year pursuant to Regulation 14A for our 2022 Annual
Meeting of Stockholders (the “Proxy Statement”), under the captions “Management and Corporate Governance” and “Code of Conduct and Ethics.
Item 11. Executive Compensation.
The information required by this item is incorporated herein by reference from the Proxy Statement under the captions “Compensation of Named Executive
Officers and Director,” “Compensation Discussion and Analysis,” “Compensation Committee Report,” and “Management and Corporate Governance –
Compensation Committee Interlocks and Insider Participation.”
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by this item is incorporated herein by reference from the Proxy Statement, under the captions “Security Ownership of Certain
Beneficial Owners and Management” and “Equity Compensation Plan Information.”
Item 13. Certain Relationships and Related Transactions, and Director Independence.
The information required by this item is incorporated herein by reference from the Proxy Statement, under the captions “Management and Corporate
Governance” and “Certain Relationships and Related Person Transactions.”
Item 14. Principal Accounting Fees and Services.
The information required by this item is incorporated herein by reference from the Proxy Statement under the caption “Independent Registered Public
Accounting Firm.”
89
PART IV
Item 15. Exhibits, Financial Statement Schedules.
The following documents are filed as part of this Annual Report:
(a)
Financial Statements.
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2021 and 2020
Statements of Operations for the Years ended December 31, 2021, 2020 and 2019
Statements of Stockholders’ Equity for the Years ended December 31, 2021, 2020 and 2019
Statements of Cash Flows for the Years ended December 31, 2021, 2020 and 2019
Notes to the Financial Statements
(b)
Financial Statement Schedules.
F-1
F-3
F-4
F-5
F-6
F-7
No financial statement schedules are provided because the information called for is not required or is shown either in the financial statements or notes.
(c)
Exhibits.
Exhibit
Number
3.1
3.2
3.3
4.1
4.2
4.3
10.1**
Description
Amended and Restated Certificate of Incorporation of G1 Therapeutics, Inc., dated as of May 22, 2017, filed
as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 26, 2017 (File No. 001-38096),
and incorporated herein by reference.
Certificate of Correction to G1 Therapeutics, Inc.’s
Amended and Restated Certificate of Incorporation
filed on May 22, 2017, dated June 30, 2021, filed as
Exhibit 3.1 to the Registrant’s Current Report on
Form 8-K filed on July 2, 2021 (File No. 001-38096),
and incorporated herein by reference.
Amended and Restated Bylaws of G1 Therapeutics, Inc., dated as of May 22, 2017, filed as Exhibit 3.2 to the
Registrant’s Current Report on Form 8-K filed on May 26, 2017 (File No. 001-38096), and incorporated
herein by reference.
Specimen Common Stock Certificate, filed as Exhibit 4.1 to the Registrant’s Second Amendment to the
Registration Statement on Form S-1 filed on May 8, 2017 (File No. 333-217285), and incorporated herein by
reference.
Description of Securities of the Registrant.
Second Amended and Restated Registration Rights Agreement, dated as of April 27, 2016, by and among the
Registrant and the Stockholders listed therein, filed as Exhibit 4.6 to the Registrant’s Registration Statement
on Form S-1 filed on April 13, 2017 (File No. 333-217285), and incorporated herein by reference.
Exclusive License Agreement, dated November 23, 2016, by and between the Registrant and The Board of
Trustees of the University of Illinois, filed as Exhibit 10.11 to the Registrant’s Registration Statement on
Form S-1 filed on April 13, 2017 (File No. 333-217285), and incorporated herein by reference.
90
10.2**
10.3**
10.4
10.5
10.6**
10.7**
10.8*
10.9*
10.10*
10.11*
10.12*
Amendment No. 1 to Exclusive License Agreement, dated March 24, 2017, by and between the Registrant
and The Board of Trustees of the University of Illinois, filed as Exhibit 10.12 to the Registrant’s Registration
Statement on Form S-1 filed on April 13, 2017 (File No. 333-217285), and incorporated herein by reference.
Loan and Security Agreement, by and between the Registrant and Hercules Capital, Inc., dated May 29,
2020, filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30,
2020 filed on August 5, 2020 (File No. 001-38096), and incorporated herein by reference.
First Amendment to Loan and Security Agreement,
by and between the Registrant and Hercules Capital,
Inc., dated March 31, 2021, filed as Exhibit 10.1 to
the Registrant’s Quarterly Report on Form 10-Q for
the quarter ended March 31, 2021 filed on May 5,
2021 (File No. 001-38096), and incorporated herein
by reference.
Second Amendment to Loan and Security Agreement,
by and between the Registrant and Hercules Capital,
Inc., dated November 1, 2021, filed as Exhibit 10.2 to
the Registrant’s Quarterly Report on Form 10-Q for
the quarter ended September 30, 2021 filed on
November 3, 2021 (File No. 001-38096), and
incorporated herein by reference.
Co-Promotion Agreement by and between the Registrant and Boehringer Ingelheim Pharmaceuticals, Inc.,
dated June 29, 2020, filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter
ended June 30, 2020 filed on August 5, 2020 (File No. 001-38096), and incorporated herein by reference.
Mutual Termination, Release, and Settlement
Agreement by and between G1 Therapeutics, Inc. and
Boehringer Ingelheim Pharmaceuticals, Inc., dated as
of December 15, 2021.
2011 Equity Incentive Plan, dated March 3, 2011, as amended; First Amendment effective August 27, 2011;
Second Amendment effective October 8, 2013; Third Amendment effective February 4, 2015; Fourth
Amendment effective December 10, 2015; Fifth Amendment effective April 27, 2016; and Sixth Amendment
effective November 7, 2016, filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1
filed on April 13, 2017 (File No. 333-217285), and incorporated herein by reference.
Amended and Restated 2017 Employee, Director and Consultant Equity Plan, filed as Exhibit 10.4 to the
Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018 filed on August 8, 2018
(File No. 001-38096), and incorporated herein by reference.
G1 Therapeutics, Inc. 2021 Inducement Equity Incentive Plan, filed as Exhibit 10.7 to the Registrant’s
Annual Report on Form 10-K for the year ended December 31, 2020 filed on February 24, 2021 (File No.
001-38096), and incorporated herein by reference.
G1 Therapeutics, Inc. 2021 Sales Force Inducement
Equity Incentive Plan, filed as Exhibit 10.1 to the
Registrant’s Quarterly Report on Form 10-Q for the
quarter ended September 30, 2021 filed on November
3, 2021 (File No. 001-38096), and incorporated
herein by reference.
Form of Indemnification Agreement, filed as Exhibit 10.1 to the Registrant’s Second Amendment to the
Registration Statement on Form S-1 filed on May 8, 2017 (File No. 333-217285), and incorporated herein by
reference.
91
10.13*
10.14*
10.15*
10.16*
10.17*
10.18*
10.19*
10.20*
10.21*
10.22*
10.23*
Non-Employee Director Compensation Policy, filed as Exhibit 10.13 to the Registrant’s Second Amendment
to the Registration Statement on Form S-1 filed on May 8, 2017 (File No. 333-217285), and incorporated
herein by reference, Amended and Restated Non-Employee Director Compensation Policy effective as of
June 12, 2019, filed as Exhibit 10.1 to the Registrant’s Form 8-K filed on June 13, 2019 (File No. 001-
38096), and incorporated herein by reference.
Second Amended and Restated Non-Employee
Director Compensation Policy, filed as Exhibit 10.1 to
the Registrant’s Current Report on Form 8-K filed on
June 21, 2021 (File No. 001-38096), and incorporated
herein by reference.
Scientific, Clinical, and Regulatory Advisor Agreement, by and between the Registrant and Seth A. Rudnick,
M.D., effective July 1, 2020, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the
quarter ended June 30, 2020 filed on August 5, 2020 (File No. 001-38096), and incorporated herein by
reference.
Scientific, Clinical, and Regulatory Advisor
Agreement by and between the Registrant and Seth A.
Rudnick, MD, effective July 1, 2021, filed as Exhibit
10.3 to the Registrant’s Quarterly Report on Form 10-
Q for the quarter ended June 30, 2021 filed on August
4, 2021 (File No. 001-38096), and incorporated herein
by reference.
Employment Agreement by and between Registrant and John E. Bailey, Jr. dated September 29, 2020, filed
as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020
filed on November 4, 2020 (File No. 001-38096), and incorporated herein by reference.
Senior Advisor Agreement between Registrant and John E. Bailey, Jr. dated September 29, 2020, filed as
Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020
filed on November 4, 2020 (File No. 001-38096), and incorporated herein by reference.
Employment Agreement by and between the Registrant and Mark Avagliano, dated as of July 29, 2019, filed
as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 filed
on August 7, 2019 (File No. 001-38096), and incorporated herein by reference.
Employment Agreement by and between the Registrant and Soma Gupta dated March 12, 2020, filed as
Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020 filed
on May 6, 2020 (File No. 001-38096), and incorporated herein by reference.
Employment Agreement by and between the Registrant and James S. Hanson, dated as of June 25, 2018,
filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2018
filed on August 8, 2018 (File No. 001-38096), and incorporated herein by reference.
Employment Agreement, by and between the Registrant and Rajesh K. Malik, M.D., dated July 1, 2014, as
amended; First Amendment effective May 5, 2017, filed as Exhibit 10.5 to the Registrant’s Second
Amendment to the Registration Statement on Form S-1 filed on May 8, 2017 (File No. 333-217285), and
incorporated herein by reference; and Second Amendment effective June 12, 2019, filed as Exhibit 10.2 to
the Registrant’s Form 8-K filed on June 13, 2019 (File No. 001-38096), and incorporated herein by
reference.
Amended and Restated Employment Agreement by and between the Registrant and Jennifer K. Moses dated
May 8, 2019, filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended
March 31, 2019 filed on May 9, 2019 (File No. 001-38096), and incorporated herein by reference.
92
10.24*
10.25*
10.26*
10.27*
10.28
10.29
21.1
23.1
31.1
31.2
32.1
32.2
101.INS
101.SCH
101.CAL
101.DEF
Employment Agreement by and between the Registrant and Terry Murdock, dated as of August 1, 2017,
filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2017 filed on November 8, 2017 (File No. 001-38096) incorporated herein by reference; and First
Amendment effective June 12, 2019, filed as Exhibit 10.3 to the Registrant’s Form 8-K filed on June 13,
2019 (File No. 001-38096), and incorporated herein by reference.
Employment Agreement by and between Registrant
and Andrew Perry dated July 28, 2021, filed as
Exhibit 10.2 to the Registrant’s Quarterly Report on
Form 10-Q for the quarter ended June 30, 2021 filed
on August 4, 2021 (File No. 001-38096) incorporated
herein by reference.
Executive Employment Agreement, by and between the Registrant and Mark A. Velleca, M.D., Ph.D., dated
May 19, 2014, as amended; First Amendment effective February 1, 2015; Second Amendment effective May
10, 2016; and Third Amendment effective May 5, 2017, filed as Exhibit 10.4 to the Registrant’s Second
Amendment to the Registration Statement on Form S-1 filed on May 8, 2017 (File No. 333-217285), and
incorporated herein by reference.
Senior Advisor Agreement between Registrant and Mark A. Velleca, M.D., Ph.D. dated September 29, 2020,
filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30,
2020 filed on November 4, 2020 (File No. 001-38096), and incorporated herein by reference.
Sales Agreement by and between the Registrant and
Cowen and Company, LLC, dated as of July 2, 2021,
filed as Exhibit 1.2 to the Registrant’s Registration
Statement on Form S-3ASR filed on July 2, 2021
(File No. 333-257640), and incorporated herein by
reference.
Sales Agreement by and between the Registrant and
Cowen and Company, LLC, dated as of February 23,
2022.
Subsidiaries of the Registrant, filed as Exhibit 21.1 to the Registrant’s Registration Statement on Form S-1
filed on April 13, 2017 (File No. 333-217285), and incorporated herein by reference.
Consent of PricewaterhouseCoopers LLP.
Certification of Principal Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities
Exchange Act of 1934, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Executive Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer Pursuant to 18 U.S.C. § 1350, as Adopted Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002.
Inline XBRL Instance Document
Inline XBRL Taxonomy Extension Schema Document
Inline XBRL Taxonomy Extension Calculation Linkbase Document
Inline XBRL Taxonomy Extension Definition Linkbase Document
93
101.LAB
101.PRE
Inline XBRL Taxonomy Extension Label Linkbase Document
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
*
**
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)XBRL Taxonomy
Extension Presentation Linkbase Document
Management contract or compensatory plan or arrangement.
Confidential treatment has been requested for portions of this exhibit. These portions have been omitted and have been filed separately with the
U.S. Securities and Exchange Commission.
Item 16. Form 10-K Summary.
None.
94
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SIGNATURES
Date: February 23, 2022
G1 THERAPEUTICS, INC.
By:
/s/ John E. Bailey, Jr.
John E. Bailey, Jr.
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below by the following persons on behalf of
the Registrant in the capacities and on the dates indicated.
Name
/s/ John E. Bailey, Jr.
John E. Bailey, Jr.
/s/ Jennifer K. Moses
Jennifer K. Moses
/s/ Willie A. Deese
Willie A. Deese
/s/ Glenn P. Muir
Glenn P. Muir
/s/ Garry A. Nicholson
Garry A. Nicholson
/s/ Cynthia L. Flowers
Cynthia L. Flowers
/s/ Alicia Secor
Alicia Secor
/s/ Mark A. Velleca
Mark A. Velleca, M.D., Ph.D.
Title
President, Chief Executive Officer and Director
(Principal Executive Officer)
Chief Financial Officer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
95
Date
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
February 23, 2022
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of G1 Therapeutics, Inc.
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying balance sheets of G1 Therapeutics, Inc. (the “Company”) as of December 31, 2021 and 2020, and the related statements
of operations, of redeemable convertible preferred stock and stockholders' equity (deficit) and of cash flows for each of the three years in the period ended
December 31, 2021, including the related notes (collectively referred to as the “financial statements”). We also have audited the Company's internal control
over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31,
2021 and 2020, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2021 in conformity with
accounting principles generally accepted in the United States of America. Also in our opinion, the Company maintained, in all material respects, effective
internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by
the COSO.
Basis for Opinions
The Company's management is responsible for these financial statements, for maintaining effective internal control over financial reporting, and for its
assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control over Financial Reporting
appearing under Item 9A. Our responsibility is to express opinions on the Company’s financial statements and on the Company's internal control over
financial reporting 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 audits to obtain reasonable
assurance about whether the financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control
over financial reporting was maintained in all material respects.
Our audits of the financial statements 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. Our audit of internal control over financial reporting included
obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the
design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we
considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
Definition and Limitations of Internal Control over Financial Reporting
A company’s 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. A company’s internal control
over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial
statements.
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.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or
required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the financial statements and (ii)
involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical
audit matter or on the accounts or disclosures to which it relates.
F-1
Accrued External Clinical Study Costs
As described in Notes 2 and 6 to the financial statements, management estimated and accrued research and development expenses including external
clinical study costs associated with clinical trial activities. The Company’s accrued external clinical study costs were $9.6 million as of December 31, 2021.
The process of estimating and accruing expenses involved reviewing contracts and purchase orders, identifying services that have been provided on the
Company’s behalf, and estimating the level of service performed and the associated cost incurred for the service when the Company has not yet been
invoiced or otherwise notified of the actual cost. Costs for clinical trial activities were estimated based on an evaluation of the vendors’ progress towards
completion of specific tasks, using data such as patient enrollment, clinical site activations or information provided by vendors regarding their actual costs
incurred. Management determined accrual estimates through reports from and discussion with applicable personnel and outside service providers as to the
progress or state of completion of trials, or the services completed.
The principal considerations for our determination that performing procedures relating to accrued external clinical study costs is a critical audit matter are
the significant judgment by management in estimating the costs incurred to date, specifically progress towards completion of specific tasks. This in turn led
to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating audit evidence relating to cost estimates made by
management to establish accrued external clinical study costs.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the financial
statements. These procedures included testing the effectiveness of controls relating to the completeness and accuracy of accrued external clinical study
costs. These procedures also included, among others, (i) testing management’s process for estimating accrued external clinical study costs, (ii) evaluating
the appropriateness of the method used by management to develop the estimate, (iii) evaluating the reasonableness of significant assumptions, including
progress towards completion of specific tasks and the associated cost incurred for services when the Company has not yet been invoiced or otherwise
notified of the actual cost, and (iv) testing the completeness and accuracy of underlying data used in the model.
/s/ PricewaterhouseCoopers LLP
Raleigh, North Carolina
February 23, 2022
We have served as the Company’s auditor since 2014.
F-2
G1 Therapeutics, Inc.
Balance Sheets
(in thousands, except share and per share amounts)
December 31, 2021
December 31, 2020
Assets
Current assets
Cash and cash equivalents
Restricted cash
Accounts Receivable
Inventories
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Restricted cash
Operating lease assets
Other assets
Total assets
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable
Accrued expenses
Deferred revenue
Other current liabilities
Total current liabilities
Loan payable
Deferred revenue
Operating lease liabilities
Total liabilities
Stockholders’ equity
Common stock, $0.0001 par value, 120,000,000 shares authorized as of
December 31, 2021 and December 31, 2020, respectively; 42,588,814 and 38,140,756 shares
issued as of December 31, 2021 and December 31, 2020, respectively; 42,562,148 and
38,114,090 shares outstanding as of December 31, 2021 and December 31, 2020, respectively
Treasury stock, 26,666 shares
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders' equity
$
$
$
$
221,186 $
63
5,688
3,471
13,157
243,565
2,013
312
7,035
1,169
254,094 $
2,897 $
23,180
31
1,505
27,613
75,190
1,000
6,750
110,553
4
(8)
728,004
(584,459)
143,541
254,094 $
207,306
63
237
—
8,786
216,392
2,482
437
8,026
1,215
228,552
3,572
16,486
237
3,148
23,443
19,893
—
7,865
51,201
4
(8)
613,462
(436,107)
177,351
228,552
The accompanying notes are an integral part of these financial statements.
F-3
G1 Therapeutics, Inc.
Statements of Operations
(in thousands, except share and per share amounts)
Revenues:
Product sales, net
License revenue
Total revenues
Operating expenses:
Cost of goods sold
Research and development
Selling, general and administrative
Total operating expenses
Loss from operations
Other income (expense):
Interest income
Interest expense
Other income (expense)
Total other income (expense), net
Loss before income taxes
Income tax expense
Net loss
Net loss per share, basic and diluted
Weighted average common shares outstanding, basic and diluted
2021
Year Ended December 31,
2020
2019
$
11,120 $
20,356
31,476
— $
45,285
45,285
2,016
76,225
95,692
173,933
(142,457)
43
(4,667)
(346)
(4,970)
(147,427) $
925
(148,352) $
(3.54) $
—
73,271
68,490
141,761
(96,476)
952
(1,778)
(542)
(1,368)
(97,844) $
1,410
(99,254) $
(2.62) $
41,943,417
37,878,026
$
$
$
—
—
—
—
89,002
40,039
129,041
(129,041)
6,579
—
15
6,594
(122,447)
—
(122,447)
(3.27)
37,499,256
The accompanying notes are an integral part of these financial statements.
F-4
G1 Therapeutics, Inc.
Statements of Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)
(in thousands, except share amounts)
Balance at December 31, 2018
Exercise of common stock options
Stock-based compensation
Net loss during year
Balance at December 31, 2019
Exercise of common stock options
Stock-based compensation
Net loss during year
Balance at December 31, 2020
Public offering (ATM)
Exercise of common stock options
Stock-based compensation
Net loss during year
Balance at December 31, 2021
Common stock
Shares
37,268,792
Amount
$
4
369,468
—
—
37,638,260
502,496
—
—
38,140,756
3,513,027
935,031
—
—
42,588,814
$
$
$
—
—
—
4
—
—
—
4
—
—
—
4
Treasury stock
Shares
Amount
Additional
paid-in
capital
Accumulated
deficit
Total stock-
holders'
equity
(26,666) $
(8) $
573,230
$
(214,406) $
—
—
—
(26,666) $
—
—
—
(26,666) $
—
—
—
(26,666) $
—
—
—
(8) $
—
—
—
(8) $
—
—
—
(8) $
2,705
16,449
—
592,384
2,308
18,770
—
613,462
86,378
5,845
22,319
—
728,004
$
$
$
—
—
(122,447)
(336,853) $
—
—
(99,254)
(436,107) $
—
—
(148,352)
(584,459) $
358,820
2,705
16,449
(122,447)
255,527
2,308
18,770
(99,254)
177,351
86,378
5,845
22,319
(148,352)
143,541
The accompanying notes are an integral part of these financial statements.
F-5
G1 Therapeutics, Inc.
Statements of Cash Flows
(amounts in thousands)
Cash flows from operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating activities
2021
Year Ended December 31,
2020
2019
$
(148,352) $
(99,254) $
(122,447)
Stock-based compensation
Depreciation and amortization
Loss on disposal of fixed assets
Amortization of debt issuance costs
Loss on extinguishment of debt
Non-cash interest expense
Non-cash equity interest, net
Change in operating assets and liabilities
Accounts Receivable
Inventories
Prepaid expenses and other assets
Accounts payable
Accrued expenses and other liabilities
Deferred revenue
Net cash used in operating activities
Cash flows from investing activities
Proceeds from disposal of property and equipment
Purchases of property and equipment
Net cash provided/used in investing activities
Cash flows from financing activities
Proceeds from stock options exercised
Proceeds from loan agreement
Payments of debt issuance costs
Proceeds from public offering, net of underwriting fees and commissions
Payment of public offering costs
Net cash provided by financing activities
Net change in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash
Beginning of period
End of period
Supplemental disclosure of cash flow information
Cash paid for interest
Non-cash investing and financing activities
Upfront project costs and other current assets in accounts payable and accrued expenses
Purchases of equipment in accounts payable and accrued expenses
Operating lease liabilities arising from obtaining right-of-use asset
22,319
469
—
1,113
220
591
370
(5,451)
(3,471)
(3,380)
(675)
3,345
794
(132,108)
—
—
—
5,845
55,000
(1,360)
86,429
(51)
145,863
13,755
18,770
582
322
615
—
166
(867)
(237)
—
(5,545)
(244)
1,713
237
(83,742)
152
—
152
2,308
20,000
(620)
—
—
21,688
(61,902)
$
$
207,806
221,561 $
269,708
207,806 $
2,908 $
997 $
—
—
—
132
—
—
16,449
356
—
—
—
—
—
—
—
(219)
248
6,042
—
(99,571)
—
(2,716)
(2,716)
2,705
—
—
—
—
2,705
(99,582)
369,290
269,708
—
43
41
8,947
The accompanying notes are an integral part of these financial statements.
F-6
G1 Therapeutics, Inc.
Notes to Financial Statements
1. Description of Business
G1 Therapeutics, Inc. (the “Company”) is a commercial-stage biopharmaceutical company based in Research Triangle Park, North Carolina focused on the
development and commercialization of novel small molecule therapeutics for the treatment of patients with cancer. The Company’s first FDA-approved
product, COSELA™ (trilaciclib) is the first and only therapy indicated to proactively help protect bone marrow from the damage of chemotherapy and is
first innovation in managing myelosuppression in decades. The Company was incorporated on May 19, 2008 in the state of Delaware.
The Company uses “COSELA” when referring to its FDA approved drug and “trilaciclib” when referring to the development of COSELA for additional
indications.
The Company is advancing trilaciclib, a first-in-class therapy designed to improve outcomes for patients who are treated with chemotherapy, in clinical
trials assessing myeloprotection and anti-tumor efficacy endpoints in a variety of tumors including colorectal cancer (“CRC”), breast cancer, bladder
cancer, and in trials designed to inform the design of future additional pivotal studies across multiple tumor types and treatment combinations including
targeted chemotherapy medicines called antibody-drug conjugates (“ADCs”).
The Company’s clinical approach to designing our clinical program includes monitoring the evolution of future standards of care and develop trilaciclib
with these in mind, allowing it to conduct or support trials that will generate important data to maximize future usage in a variety of future settings. The
Company’s robust clinical pipeline includes the following ongoing trials:
•
•
•
•
•
Phase 3 trial in colorectal cancer (initial results including myeloprotection and ORR endpoints expected in 1Q2023)
Phase 3 trial in 1L mTNBC (initial results including interim results for OS expected in 2H2023
Phase 2 trial in bladder cancer (initial results including ORR and myeloprotection endpoints expected in 4Q2022)
Phase 2 trial in combination with the ADC Trodelvy (initial results including ORR and myeloprotection endpoints expected in 4Q2022)
Phase 2 trial to confirm the immune-based mechanism of action (MOA) of trilaciclib in early-stage neoadjuvant TNBC (initial results
including immune endpoints (e.g., CD8+ / Treg ratio) expected in 4Q2022)
The Company is also conducting extensive preclinical development work to assess the synergistic potential of trilaciclib with a variety of new anti-cancer
mechanisms.
The Company also has a robust Investigator Initiated Studies (“ISS”) program. An ISS is a study that is developed and conducted by a qualified physician
external to the Company who assumes full responsibility for the conduct of the study. The Company supports investigator sponsored studies that align with
its areas of scientific interest. The Company anticipates that the first ISS to be supported by G1 will be in 1L NSCLC and expect it to be initiated in the first
half of 2022.
The Company out-licensed global rights to lerociclib, an internally discovered and differentiated oral CDK4/6 inhibitor designed to enable more effective
combination treatment strategies across multiple oncology indications. In addition, the company out-licensed global rights to an internally discovered
CDK2 inhibitor for all human and veterinary uses. The Company is in the process of evaluating partnering options for rintodestrant, an oral selective
estrogen receptor degrader (SERD) for the potential treatment of ER+, HER2- breast cancer. The Company also has intellectual property focused on cyclin-
dependent kinase targets.
Trilaciclib
The Company’s lead compound, COSELA™ (trilaciclib), is a first-in-class therapy approved to help protect hematopoietic stem and progenitor cells
(“HSPCs”) in bone marrow against chemotherapy-induced myelosuppression by transiently inhibiting CDK4/6 in patients with extensive-stage small cell
lunger cancer (“ES-SCLC”). This action leads to temporary arrest of susceptible host cells during chemotherapy. This reduces the duration and severity of
neutropenia and other myelosuppressive consequences of chemotherapy.
Trilaciclib is a novel therapeutic approach, which is given before chemotherapy, that temporarily blocks progression through the cell cycle. Its short half-
life and IV route of administration allows for rapid onset, controlled administration, and clean G1 arrest, which are important attributes required for its
unique mechanism of action. Transient IV CDK4/6 inhibition with trilaciclib provides two benefits. First, it proactively helps protect HSPCs in bone
marrow leading to preservation of neutrophils, erythrocytes, and platelets (called myeloprotection) which reduces the occurrences and severity of
neutropenia and other myelosuppressive consequences of chemotherapy. This myeloprotection benefit has been conclusively proven in double-blind
placebo-controlled clinical trials in
F-7
extensive-stage small cell lung cancer. Second, clinical data has shown that trilaciclib has the potential to activate and enhance the immune system response
driving increased anti-tumor efficacy, which we are exploring in clinical trials in a variety of solid tumor types and treatment settings.
On February 12, 2021, COSELA (trilaciclib) for injection was approved by the U.S. Food and Drug Administration (“FDA”) to decrease the incidence of
chemotherapy-induced myelosuppression in adult patients when administered prior to a platinum/etoposide-containing regimen or topotecan-containing
regimen for ES-SCLC. On March 2, 2021, COSELA became commercially available through the Company’s specialty distributor network. COSELA is
administered intravenously as a 30-minute infusion completed within four (4) hours prior to the start of chemotherapy and is the first FDA-approved
therapy to provide proactive, multilineage protection from chemotherapy-induced myelosuppression. The approval of COSELA is based on data from three
(3) randomized, placebo-controlled trials that showed patients receiving COSELA prior to chemotherapy had clinically meaningful and statistically
significant reduction in the duration and severity of neutropenia, reduction of red blood cell transfusions, as well as improvements in other myeloprotection
measures, compared to patients receiving chemotherapy without COSELA. The Company announced on March 25, 2021 that COSELA had been included
in two updated National Comprehensive Cancer Network® (“NCCN”) Clinical Practice Guidelines in Oncology (NCCN Guidelines®): The Treatment
Guidelines for Small Cell Lung Cancer and the Supportive Care Guidelines for Hematopoietic Growth Factors. These guidelines document evidence-based,
consensus-driven management to ensure that all patients receive preventive, diagnostic, treatment, and supportive services that are most likely to lead to
optimal outcomes. On October 1, 2021, the Company announced that the permanent J-code for COSELA that was issued in July 2021 by the Centers for
Medicare & Medicaid Services (CMS) is now effective for provider billing for all sites of care. All hospital outpatient departments, ambulatory surgery
centers and physician offices in the United States have one consistent Healthcare Common Procedure Coding System (HCPCS) code to standardize the
submission and payment of COSELA insurance claims across Medicare, Medicare Advantage, Medicaid and commercial plans. G1’s new technology add-
on payment (NTAP) for COSELA which provides additional payment to inpatient hospitals above the standard Medicare Severity Diagnosis-Related Group
(MS-DRG) payment amount also became effective for provider billing on October 1, 2021.
In June 2020, we entered into a three-year co-promotion agreement for COSELA in the United States and Puerto Rico with Boehringer Ingelheim
Pharmaceuticals, Inc. (“BI”). In December 2021, G1 and BI mutually agreed to end the co-promotion agreement for COSELA, effective March 2022. At
that time, the Company announced that it would hire and deploy a total of 34 oncology sales representatives to allow G1 to target all accounts to accelerate
sales activities and help maximize the adoption of COSELA. As of February 21, 2022, all 34 sales representatives have been hired, trained and deployed.
In August 2020, the Company entered into an exclusive license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., Ltd (“Simcere”) for
development and commercialization rights for trilaciclib in all indications in Greater China (mainland China, Hong Kong, Macau and Taiwan). Under the
terms of the agreement, the Company received an upfront payment of $14.0 million in September 2020 and will be eligible to receive up to $156.0 million
in development and commercial milestone payments. During the twelve months ended December 31, 2021, the Company received three development
milestone payments totaling $8.0 million. Simcere will also pay the Company tiered low double-digit royalties on annual net sales of trilaciclib in Greater
China. As part of this agreement, Simcere will participate in global clinical trials of trilaciclib and the companies will be responsible for all development
and commercialization costs in their respective territories.
The Company is also executing on our tumor-agnostic strategy to evaluate the potential benefits of trilaciclib to patients with other tumors and to
continuously develop new data with trilaciclib in a variety of chemotherapeutic settings and in combination with other agents to maximize the applicability
of the drug to potential future treatment paradigms.
Lerociclib
Lerociclib is a differentiated clinical-stage oral CDK4/6 inhibitor for use in combination with other targeted therapies in multiple oncology indications. In
2020, the Company entered into separate, exclusive agreements with EQRx, Inc. (rights for U.S., Europe, Japan and all markets outside Asia-Pacific) and
Genor Biopharma Co. Inc. (rights for Asia-Pacific, excluding Japan) for the development and commercialization of lerociclib in all indications. Combined,
these agreements provide $26.0 million in upfront payments to the Company, and the opportunity for up to $330.0 million in potential milestone payments,
plus sales-based royalties. EQRx, Inc. and Genor Biopharma Co. Inc. are responsible for all costs related to the development and commercialization of
lerociclib in their respective territories.
Rintodestrant
Rintodestrant is an oral SERD for the treatment of estrogen receptor-positive (“ER+”) breast cancer. The Company is in the process of evaluating
partnering options for rintodestrant.
F-8
CDK2 Inhibitor
In 2020, we entered into a global license agreement with ARC Therapeutics, LLC for the development and commercialization of an internally discovered
CDK2 inhibitor for all human and veterinary uses. ARC is currently granted an exclusive, royalty-bearing, license with the right to grant sublicenses to one
of our solely owned patent families.
The Company’s financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization
of assets and the settlement of liabilities and commitments in the normal course of business. As of December 31, 2021, the Company had an accumulated
deficit of $584.5 million. The Company has reported a net loss in all fiscal periods since inception and expects to incur substantial losses in the future to
conduct research and development and pre-commercialization activities.
As of December 31, 2021, the Company had cash and cash equivalents of $221.2 million. The Company expects that its existing cash and cash
equivalents will enable it to fund its operating expenses and capital expenditure requirements for greater than 12 months from the date of filing this Annual
Report.
2. Basis of Presentation and Summary of Significant Accounting Policies
Basis of Presentation
The Company has prepared the accompanying financial statements in conformity with generally accepted accounting principles in the United States of
America (“U.S. GAAP”).
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts
reported in the financial statements and the accompanying notes. On an ongoing basis, the Company’s management evaluates its estimates which include,
but are not limited to, estimates related to accrued expenses, accrued external clinical costs, net product sales, stock-based compensation expense and
deferred tax asset valuation allowance. Actual results could differ from those estimates. These estimates include the Company’s common stock valuation,
stock compensation, and deferred tax asset valuation allowance.
Accounts Receivable
The Company’s accounts receivable consists of amounts due from specialty distributors in the U.S. (collectively, its “Customers”) related to sales of
COSELA and have standard payment terms. Trade receivables are recorded net of the estimated variable consideration for chargebacks based on
contractual terms and the Company’s expectation regarding the utilization and earnings of the chargebacks and discounts as well as the net amount
expected to be collected from the Company’s customers. Estimates of the Company’s credit losses are determined based on existing contractual payment
terms, individual customer circumstances, and any changes to the economic environment.
In addition, the Company’s accounts receivable consists of open invoices issued to its license partners for services rendered by the Company or receivables
with its license partners for invoices related to milestones that were completed and recognized as revenue.
Inventories
Inventories are stated at the lower of cost or net realizable value and recognized on a weighted-average cost method. The Company uses actual cost to
determine the cost basis for inventory. Inventory is capitalized based on when future economic benefit is expected to be realized. Due to the nature of the
Company’s supply chain process, inventory that is owned by the Company, is physically stored at third-party warehouses, logistics providers, and contract
manufacturers. The Company began capitalizing inventory upon receiving FDA approval for COSELA on February 12, 2021. Prior to FDA approval of
COSELA, expenses associated with the manufacturing of the Company's products were recorded as research and development expense.
Inventory valuation is established based on a number of factors including, but not limited to, finished goods not meeting product specifications, product
excess and obsolescence, or application of the lower of cost or net realizable value concepts. The determination of events requiring the establishment of
inventory valuation, together with the calculation of the amount of such adjustments may require judgment. The Company analyzes its inventory levels on
a periodic basis to determine if any inventory is at risk for expiration prior to sale or has a cost basis that is greater than its estimated future net realizable
value. Any adjustments are recognized through
F-9
cost of sales in the period in which they are incurred. No inventory valuation adjustments have been recorded for any periods presented.
Revenue Recognition
For elements of those arrangements that we determine should be accounted for under ASC 606, Revenue from Contracts with Customers (“ASC 606”), we
assess which activities in our license or collaboration agreements are performance obligations that should be accounted for separately and determine the
transaction price of the arrangement, which includes the assessment of the probability of achievement of future milestones and other potential
consideration. For arrangements that include multiple performance obligations, such as granting a license or performing manufacturing or research and
development activities, we allocate the transaction price based on the relative standalone selling price and recognize revenue that is allocated to the
respective performance obligation when (or as) control is transferred to the customer and the performance obligation is satisfied. Accordingly, we develop
assumptions that require judgment to determine the standalone selling price for each performance obligation identified in the contract. These key
assumptions may include revenue forecasts, clinical development timelines and costs, discount rates and probabilities of clinical and regulatory success.
Licenses of Intellectual Property
If a license to the Company’s intellectual property is determined to be distinct from the other performance obligations identified in the arrangement, the
Company recognizes revenue allocated to the license when the license is transferred to the customer and the customer is able to use and benefit from the
license. For licenses that are bundled with other promises, the Company utilizes judgment to assess the nature of the combined performance obligation to
determine whether the combined performance obligation is satisfied over time or at a point in time and, if over time, the appropriate method of measuring
progress for purposes of recognizing revenue associated with the bundled performance obligation. The Company evaluates the measure of progress each
reporting period and, if necessary, adjusts the measure of progress and related revenue recognition.
Milestone Payments
At the inception of each arrangement that includes developmental and regulatory milestone payments, the Company evaluates whether the achievement of
each milestone specifically relates to the Company’s efforts to satisfy a performance obligation or transfer a distinct good or service within a performance
obligation. The Company evaluates each milestone to determine when and how much of the milestone to include in the transaction price. The Company
first estimates the amount of the milestone payment that the Company could receive using either the expected value or the most likely amount approach.
The Company primarily uses the most likely amount approach as that approach is generally most predictive for milestone payments with a binary outcome.
Then, the Company considers whether any portion of that estimated amount is subject to the variable consideration constraint (that is, whether it is probable
that a significant reversal of cumulative revenue would not occur upon resolution of the uncertainty). The Company updates the estimate of variable
consideration included in the transaction price at each reporting date which includes updating the assessment of the likely amount of consideration and the
application of the constraint to reflect current facts and circumstances.
Royalties
For arrangements that include sales-based royalties, including milestone payments based on the level of sales, and the license is deemed to be the
predominant item to which the royalties relate, the Company will recognize revenue at the later of (i) when the related sales occur, or (ii) when the
performance obligation to which some or all of the royalty has been allocated has been satisfied (or partially satisfied). To date, the Company has not
recognized any revenue related to sales-based royalties or milestone payments based on the level of sales.
Product Sales, Net
The Company sells COSELA to specialty distributors in the U.S. and, in accordance with ASC 606, recognizes revenue at the point in time when the
customer is deemed to have obtained control of the product. The customer is deemed to have obtained control of the product at the time of physical receipt
of the product at the customers’ distribution facilities, or Free on Board (“FOB”) destination, the terms of which are designated in the contract.
Product sales are recorded at the net selling price, which includes estimates of variable consideration for which reserves are established for (a) rebates and
chargebacks, (b) co-pay assistance programs, (c) distribution fees, (d) product returns, and (e) other discounts. Where appropriate, these estimates take into
consideration a range of possible outcomes which are probability-weighted for relevant factors such as current contractual and statutory requirements, and
forecasted customer buying and payment patterns. Overall, these reserves reflect the Company’s best estimates of the amount of consideration to which it is
entitled based on the terms of the applicable contract. The amount of variable consideration may be constrained and is included in the net sales price only to
the extent
F-10
that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of
consideration ultimately received may differ from the Company's estimates. If actual results in the future vary from estimates, the Company adjusts these
estimates, which would affect net product revenue and earnings in the period such variances become known.
Liabilities related to co-pay assistance, rebates, and GPO fees are classified as “Accrued Expenses” in the Condensed Balance Sheets. Discounts such as
chargebacks, returns, and specialty distributor fees are recorded as a reduction to trade accounts receivable, which is included in “Accounts Receivable” in
the Condensed Balance Sheets.
Forms of Variable Consideration
Rebates and Chargebacks: The Company estimates reductions to product sales for Public Health Service Institutions, such as Medicaid, Medicare and
Veterans Administration (“VA”) programs, as well as certain other qualifying federal and state government programs, and other group purchasing
organizations. The Company estimates these reductions based upon the Company’s contracts with government agencies and other organizations, statutorily
defined discounts and estimated payor mix. These organizations purchase directly from the Company’s specialty distributors at a discount and the specialty
distributors charge the Company back the difference between the wholesaler price and the discounted price. The Company’s liability for Medicaid rebates
consists of estimates for claims that a state will make. The Company’s reserve for this discounted pricing is based on expected sales to qualified healthcare
providers and the chargebacks that customers have already claimed.
Co-pay assistance: Eligible patients who have commercial insurance may receive assistance from the Company to reduce the patient’s out of pocket costs.
Liabilities for co-pay assistance are calculated by actual program participation from third-party administrators.
Distribution Fees: The Company has written contracts with its customers that include terms for distribution fees and costs for inventory management. The
Company estimates and records distribution fees due to its customers based on gross sales.
Product Returns: The Company generally offers a right of return based on the product’s expiration date and certain spoilage and damaged instances. The
Company estimates the amount of product sales that may be returned and records the estimate as a reduction of product sales in the period the related
product sales are recognized. The Company’s estimates for expected returns are based primarily on an ongoing analysis of sales information and visibility
into the inventory remaining in the distribution channel.
Cash and Cash Equivalents
The Company considers all highly liquid investments purchased with an original maturity of three months or less at the date of purchase to be cash
equivalents. Cash and cash equivalents at December 31, 2021 and 2020 consist of amounts on deposit in banks, including checking accounts, money
market accounts and certificates of deposit. Cash deposits are all in financial institutions in the United States. As part of the lease for the new office space,
the Company obtained a standby letter of credit in the amount of $0.5 million related to the security deposit. This letter of credit is secured by money
market funds at the financial institution. Therefore, these funds are classified as restricted cash on the balance sheet. The letter of credit will be reduced
ratably on each anniversary of the commencement of the lease until the end of the lease term. As of December 31, 2021, restricted cash totaled $0.4
million.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents. Deposits with financial institutions are
insured, up to certain limits, by the Federal Deposit Insurance Corporation (“FDIC”). The Company’s cash deposits often exceed the FDIC insurance limit;
however, all deposits are maintained with high credit quality institutions and the Company has not experienced any losses in such accounts. The financial
condition of financial institutions is periodically reassessed, and the Company believes the risk of any loss is minimal. The Company believes the risk of
any loss on cash due to credit risk is minimal.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is generally calculated using the straight-line method over the
following estimated useful lives:
Computer equipment
Laboratory equipment
Furniture and fixtures
Leasehold improvements
5 years
5 years
7 years
7 years
F-11
Costs associated with maintenance and repairs are charged to expense as incurred. Property and equipment held under leasehold improvements are
amortized over the shorter of the lease term or the estimated useful life of the related asset.
Impairment of Long-lived Assets
The Company evaluates its long-lived assets for indicators of possible impairment by comparison of the carrying amounts to future net undiscounted cash
flows expected to be generated by such assets when events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.
Should an impairment exist, the impairment loss would be measured based on the excess carrying value of the asset over the asset’s fair value based on
discounted estimates of future cash flows. For the years ended December 31, 2021, 2020 and 2019, the Company’s management evaluated its long-lived
assets and determined no impairment charge was needed.
Cost of Goods Sold
Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of COSELA, including third-party manufacturing costs,
packaging services, freight-in, third-party logistics costs associated with COSELA, and Company personnel costs. Cost of goods sold may also include
period costs related to certain inventory manufacturing services and inventory adjustment charges. In connection with the FDA approval of COSELA on
February 12, 2021, the Company subsequently began capitalizing inventory manufactured or purchased after this date. As a result, certain manufacturing
costs associated with product shipments of COSELA were expensed prior to FDA approval and, therefore, are not included in cost of goods sold during the
current period.
Research and Development
Research and development expenses consist of costs incurred to further the Company’s research and development activities and include salaries and related
employee benefits, manufacturing of pharmaceutical active ingredients and drug products, costs associated with clinical trials, nonclinical activities,
regulatory activities, research-related overhead expenses and fees paid to expert consultants, external service providers and contract research organizations
which conduct certain research and development activities on behalf of the Company. Costs incurred in the research and development of products are
charged to research and development expense as incurred.
Each reporting period, management estimated and accrued research and development expenses, including external clinical study costs associated with
clinical trial activities. The process of estimating and accruing expenses involved reviewing contracts and purchase orders, identifying services that have
been provided on the Company’s behalf, and estimating the level of service performed and the associated cost incurred for the service when the Company
has not yet been invoiced or otherwise notified of the actual costs.
Costs for clinical trial activities were estimated based on an evaluation of vendors’ progress towards completion of specific tasks, using data such as patient
enrollment, clinical site activations or information provided by vendors regarding their actual costs incurred. Payments for these activities are based on the
terms of individual contracts and payment timing may differ significantly from the period in which the services were performed. The Company determines
accrual estimates through reports from and discussions with applicable personnel and outside service providers as to the progress or state of completion of
trials, or the services completed. The estimates of accrued external clinical study costs as of each balance sheet date are based on the facts and
circumstances known at the time.
Fair value of Financial Instruments
The Company provides disclosure of financial assets and financial liabilities that are carried at fair value based on the price that would be received upon
sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements may
be classified based on the amount of subjectivity associated with the inputs to fair valuation of these assets and liabilities using the following three levels:
Level 1
Level 2
Inputs are unadjusted quoted prices in active markets for identical assets or liabilities that the Company has the ability to access at the
measurement date.
Inputs include quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets or liabilities in
markets that are not active, inputs other than quoted prices that are observable for the asset or liability and inputs that are derived principally
from or corroborated by observable market data by correlation or other means.
Level 3
Unobservable inputs that reflect the Company’s estimates of the assumptions that market participants would use in pricing the asset or liability.
The Company develops these inputs based on the best information available, including its own data.
F-12
The carrying amounts of cash, cash equivalents, accounts payable and accrued liabilities approximate fair value because of their short-term nature.
At December 31, 2021 and 2020 these financial instruments and respective fair values have been classified as follows (in thousands):
Assets
Money market funds
Certificates of Deposit
Total assets at fair value:
Assets
Money market funds
Certificates of Deposit
Total assets at fair value:
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
other
unobservable
inputs
(Level 3)
Balance at
December 31,
2021
$
$
110,443 $
—
110,443 $
— $
—
— $
— $
—
— $
110,443
—
110,443
Quoted prices
in active
markets for
identical
assets
(Level 1)
Significant
other
observable
inputs
(Level 2)
Significant
other
unobservable
inputs
(Level 3)
Balance at
December 31,
2020
$
$
190,180 $
15,970
206,150 $
— $
—
— $
— $
—
— $
190,180
15,970
206,150
During the twelve months ended December 31, 2021 and December 31, 2020, there were no changes in valuation methodology.
The Loan Payable (discussed in Note 8), which is classified as a Level 3 liability, has a variable interest rate and the carrying value approximates its fair
value. As of December 31, 2021, the carrying value was $75.2 million.
Patent Costs
Costs associated with the submission of patent applications are expensed as incurred given the uncertainty of the future economic benefits of the patents.
Patent-related legal expenses included in selling, general and administrative costs were approximately $1,934 thousand, $2,761 thousand, and $2,114
thousand for the years ended December 31, 2021, 2020 and 2019, respectively.
Income Taxes
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases, operating
loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the enactment date.
In accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) 740, Accounting for Income Taxes, the
Company reflects in the financial statements the benefit of positions taken in a previously filed tax return or expected to be taken in a future tax return only
when it is considered ‘more-likely-than-not’ that the position taken will be sustained by a taxing authority. As of December 31, 2021 and 2020, the
Company had no unrecognized income tax benefits and correspondingly there is no impact on the Company’s effective income tax rate associated with
these items. The Company’s policy for recording interest and penalties relating to uncertain income tax positions is to record them as a component of
income tax expense in the accompanying statements of operations. As of December 31, 2021 and 2020, the Company had no such accruals.
Stock-Based Compensation
The primary type of stock-based payments utilized by the Company are stock options. The Company accounts for stock-based employee compensation
arrangements by measuring the cost of employee services received in exchange for all equity awards granted
F-13
based on the fair value of the award on the grant date. The fair value of each employee stock option is estimated on the date of grant using an options
pricing model. The Company currently uses the Black-Scholes valuation model to estimate the fair value of its share-based payments. The model requires
management to make a number of assumptions including expected volatility, expected life, risk-free interest rate and expected dividends.
The Company also incurs stock-based compensation expense related to restricted stock units (“RSUs”) granted to employees. The fair value of RSUs is
determined by the closing market price of the Company’s common stock on the date of grant and then recognized over the requisite service period of the
award.
Segment Information
The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. All of the Company’s
assets are held in the United States.
Comprehensive Loss
Comprehensive loss includes net loss as well as other changes in stockholders’ equity (deficit) that result from transactions and economic events other than
those with stockholders. There was no difference between net loss and comprehensive loss for each of the periods presented in the accompanying financial
statements.
Leases
We determine if an arrangement is a lease at inception. Operating lease assets represent our right to use an underlying asset for the lease term and lease
liabilities represent our obligation to make lease payments arising from the lease. Operating leases are included in operating lease assets, other current
liabilities, and operating lease liabilities on our balance sheet at December 31, 2021. Operating lease assets and operating lease liabilities are recognized
based on the present value of the future minimum lease payments over the lease term at commencement date. As most of our leases do not provide an
implicit rate, we use our incremental borrowing rate based on the information available at commencement date to determine the present value of future
payments. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. Lease
expense for minimum lease payments is recognized on a straight-line basis over the lease term.
Debt Issuance Costs
Debt issuance costs are amortized to interest expense over the estimated life of the related debt based on the effective interest method. In accordance with
ASC 835, Interest, we present debt issuance costs on the condensed balance sheet as a direct deduction from the associated debt.
Coronavirus (COVID-19) Impact on Operations
The Company has implemented business continuity plans to address the COVID-19 pandemic and minimize disruptions to ongoing operations. To date,
enrollment of patients in current clinical trials have not been impacted by COVID-19. Although the Company has not had any significant supply chain
delays or shortages as a result of the COVID-19 pandemic to date, the Company has experienced delays in the delivery of its investigational product to
certain investigative sites due to shortages of ancillary materials and the delay of governmental inspections. To date, the Company is on track to meet all of
its previously announced clinical milestones. COVID-19 travel limitations and government-mandated work-from-home or shelter-in-place orders, has
reduced the number of in-person meetings in 2021 with prescribers and fewer patient visits with physicians, potentially resulting in fewer new
prescriptions.
The Company established a COVID-19 response team which continually monitors the impact of COVID-19 on its operations. The COVID-19 response
team manages workplace protocols that govern employees use of our office. To mitigate the impact of COVID-19 on its business, the Company put in place
the following safety measures for its employees, patients, healthcare professionals, and suppliers to limit exposure: the Company substantially restricted
travel, supplied personal protective equipment to employees, limited access to its headquarters and asked most of its staff to work remotely. In addition, the
Company transitioned most of its employees to working remotely and added bandwidth and VPN capacity to its infrastructure. The Company will continue
to monitor the impact of COVID-19 on its operations, including how it will impact our employees, clinical trials, development programs, supply chain, and
other aspects of our operations, and report to the Board regularly on the progress of its response to the COVID-19 outbreak.
F-14
3. Inventories
Inventories consists of the following (in thousands):
Raw materials
Work in process
Finished goods
Inventories
December 31, 2021
December 31, 2020
$
$
2,105 $
1,342
24
3,471 $
—
—
—
—
The Company uses third party contract manufacturing organizations for the production of its raw materials, active pharmaceutical ingredients, and finished
drug product which the Company owns. Costs incurred by the Company for manufacturing of initial commercial product of COSELA in preparation of
commercial launch were expensed prior to FDA approval.
4. Property and Equipment
Property and equipment consists of the following (in thousands):
Computer equipment
Laboratory equipment
Furniture and fixtures
Leasehold improvements
Accumulated depreciation
Property and equipment, net
December 31, 2021
December 31, 2020
$
$
327 $
334
866
1,782
(1,296)
2,013 $
327
334
866
1,782
(827)
2,482
Depreciation expenses relating to property and equipment were $469 thousand, $582 thousand, and $356 thousand for the years ended December 31, 2021,
2020 and 2019, respectively.
5. Patent License Agreement
On November 23, 2016, the Company entered into a license agreement with the Board of Trustees of the University of Illinois (“the University”), which
was amended on March 24, 2017. Pursuant to the license agreement, as amended, the University licensed patent rights to the Company, with rights of
sublicense, to make, have made, use, import, sell and offer for sale products covered by certain patent rights owned by the University. The rights licensed to
the Company are exclusive, worldwide, non-transferable rights, for all fields of use. Under the terms of the agreement the Company paid a one-time only,
non-refundable license issue fee in the amount of $0.5 million which was charged to research and development expense in the fourth quarter of 2016.
The Company is also obligated to pay annual maintenance fees to the University. All annual minimum payments are fully creditable against any royalty
payments made by the Company. Under the terms of the agreement, the Company must pay the University royalty percentage on all net sales of products
and a share of sublicensing revenues. In addition, the University is eligible to receive milestone payments of up to $2.6 million related to the initiation and
execution of clinical trials and the first commercial sale of a product in another country. To date, the Company has made milestone payments totaling $0.6
million, of which $0 was incurred during 2021. The Company will be responsible for any future patent prosecution costs that may arise.
F-15
The term of the license agreement will continue until the later of (i) the expiration of the last valid claim within the patent rights covering the product in
such country, (ii) the expiration of market exclusivity in such country and (iii) the 10th anniversary of the first commercial sale in such country. The
University may terminate the agreement in the event (i) the Company fails to pay any amount or make any report when required to be made and fails to
cure such failure within thirty (30) days after receipt of notice from the University, (ii) is in breach of any provision of the agreement and fails to remedy
within forty-five (45) days after receipt of notice, (iii) makes a report to the University under the agreement that is determined to be materially false,
(iv) declares insolvency or bankruptcy or (v) takes an action that causes patent rights or technical information to be subject to lien or encumbrance and fails
to remedy any such breach with in forty-five (45) days of receipt of notice from the University. The Company may terminate the agreement at any time on
written notice to the University at least ninety (90) days prior to the termination date specified in the notice. Upon expiration or termination of the
agreement, all rights revert to the University.
6. Accrued Expenses
Accrued expenses are comprised as follows (in thousands):
Accrued external research
Accrued professional fees and other
Accrued external clinical study costs
Accrued compensation expense
Accrued expenses
December 31, 2021
December 31, 2020
$
$
773 $
8,058
9,579
4,770
23,180 $
3,219
3,920
5,683
3,664
16,486
7. Leases
We adopted ASC 842 as of January 1, 2019. Prior period amounts have not been adjusted and continue to be reported in accordance with our historic
accounting under ASC 840.
Pursuant to a lease agreement dated January 10, 2014 (the “Lease”), on April 1, 2014, the Company leased office and lab space with a free rent period and
escalating rent payments; the Lease had an expiration date of July 31, 2017. The Lease was amended on January 27, 2016 to lease new larger office and lab
space beginning in August 2016 with a discounted rent period and escalating rent payments and the Lease term was extended to December 31, 2022. The
amendment also contained an option for a five-year renewal and a right of first refusal to lease adjacent office space. The Lease was further amended on
March 27, 2017 to lease additional office space beginning in August 2017 with a discounted rent period and escalating rent payments. The Lease was
amended again in January 2018 to lease additional adjacent office space beginning in August 2018 with a discounted rent period and escalating rent
payments. The term of the renewal option contained in the Lease, as amended, was not included in the measurement of the operating lease asset and
liability since exercise of the option was uncertain.
On March 20, 2020, the Lease was amended to surrender three of the office spaces previously entered into above, with a termination date of May 31, 2020
and in consideration of a termination fee to be paid. The lease payments and term for the remaining occupied space will remain the same. Due to these
changes in lease terms for the three office spaces, in March 2020 the Company modified the operating lease liabilities and operating lease assets of these
three office spaces to reflect the new terms.
In November 2018, the Company signed a new lease to secure approximately 60,000 square feet of laboratory and office space at 700 Park Offices Drive in
Research Triangle Park, NC (“700 Lease”). The 700 Lease commenced on September 2, 2019 and has an expiration date of September 30, 2027 for the
initial term with the Company having the option to renew for an additional 5 years. The term of the renewal option contained in the Lease was not included
in the measurement of the operating lease asset and liability since exercise of the option was uncertain. As part of the 700 Lease, the Company obtained a
standby letter of credit in the amount of $0.5 million related to the security deposit. This letter of credit is secured by money market funds at the financial
institution. Therefore, these funds are classified as restricted cash on the balance sheet. The letter of credit will be reduced ratably on each anniversary of
the commencement of the 700 Lease until the end of the lease term.
F-16
The tables below reflect the Company’s lease position and weighted-average lease terms and discount rates for our operating leases as of December 31,
2021. Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining lease term. In determining the
present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date.
Classification on the Balance Sheet
December 31, 2021
(in thousands)
Assets
Operating lease assets
Total lease assets
Liabilities
Current
Operating
Non-current
Operating
Total lease liabilities
Operating lease assets
Other current liabilities
Operating lease liabilities
Lease Term and Discount Rate
Weighted-average remaining lease term (years)
Operating leases
Weighted-average discount rate
Operating leases
The table below presents information related to the lease costs for operating leases (in thousands):
(in thousands)
Classification
$
$
$
$
7,035
7,035
1,115
6,750
7,865
December 31, 2021
5.7
8.0%
Year Ended December 31,
2020
2021
2019
Operating lease costs1
Total operating lease costs
1Includes variable lease costs which
are immaterial.
Research and development
Selling, general and administrative
$
799 $
955 $
870 1,191
$ 1,669 $ 2,146 $
609
368
977
The table below reconciles the undiscounted cash flow for each of the first five years and total of the remaining years to the operating lease liabilities
recorded on the balance sheet as of December 31, 2021 (in thousands):
Years ending December 31,
2022
2023
2024
2025
2026
Thereafter
Total future minimum lease payments
Less: present value adjustment
Total operating lease liabilities
Operating leases
1,703
1,634
1,679
1,725
1,773
1,357
9,871
(2,006)
7,865
$
$
$
Cash payments included in the measurement of our operating leases were $1,668 thousand for the twelve months ended December 31, 2021.
F-17
8. Loan Payable
On May 29, 2020, the Company entered into a loan and security agreement (the “Loan Agreement”) with Hercules Capital, Inc. (“Hercules”), under which
Hercules has agreed to lend the Company up to $100.0 million, to be made available in a series of tranches, subject to certain terms and conditions. The
first tranche totals $30.0 million, of which the Company received $20.0 million at closing. Upon initiation of the phase 3 trial of COSELA for metastatic
colorectal cancer and receiving FDA approval for COSELA for small cell lung cancer (“the Performance Milestone”), the second tranche of $20.0 million
became available to the Company for drawdown through December 15, 2021. The third tranche of $30.0 million will be available through December 31,
2022. The fourth tranche of $20.0 million will be available at Hercules’ approval through December 31, 2022. On March 31, 2021, the Company entered
into the First Amendment to Loan and Security Agreement (the “First Amendment”) with Hercules whereby the Company drew the remaining $10.0
million of the first tranche and the interest rate and financial covenants were amended. Unless loan advances exceeded $40.0 million, no financial
covenants were required.
Amounts borrowed under the Loan Agreement will bear an interest rate equal to the greater of either (i) (a) the prime rate as reported in The Wall Street
Journal, plus (b) 6.40%, and (ii) 9.65%. Based on original terms of the Loan Agreement, the Company will make interest only payments through June 1,
2022 and following the interest only period, the Company will repay the principal balance and interest of the advances in equal monthly installments
through June 1, 2024. Based on the original terms of the Loan Agreement, upon satisfaction of the Performance Mileston, the interest only period was
extended through January 1, 2023 and the maturity date was extended to June 1, 2025. Upon entering into the First Amendment on March 31, 2021, the
interest rate was amended to the greater of either (i) (a) the prime rate as reported in The Wall Street Journal, plus (b) 6.20%, and (ii) 9.45%.
The Company may prepay advances under the Loan Agreement, in whole or in part, at any time subject to a prepayment charge equal to (a) 3.0% of the
prepayment amount in the first year; (b) 2.0% of the prepayment amount in the second year; and (c) 1.0% of the prepayment amount in the third year.
Upon prepayment or repayment of all or any of the advances under the Loan Agreement, the Company will pay (in addition to the prepayment charge) an
end of term charge of 6.95% of the aggregate funded amount. With respect to the first tranche, the end of term charge of $2.1 million will be payable upon
any prepayment or repayment. To the extent that the Company is provided additional advances under the Loan Agreement, the 6.95% end of term charge
will be applied to such additional amounts. These amounts have been accrued over the term of the loan using effective-interest method.
On November 1, 2021, the Company entered into a Second Amendment to Loan and Security Agreement (the “Second Amendment”) under which
Hercules agreed to lend the Company up to $150.0 million, to be made available in a series of tranches, subject to certain terms and conditions. The first
tranche was increased to $100.0 million. At close of the Second Amendment, the Company borrowed an additional $45.0 million from Tranche 1 with
$25.0 million remaining to be borrowed through September 15, 2022. The second tranche of $20.0 million will become available to the Company upon
achievement of $50.0 million trailing six-month net product revenue of COSELA no later than June 30, 2023 and will be available through December 15,
2023. The third tranche of $15.0 million will become available upon achievement of certain development performance milestones and available through
December 15, 2023. The fourth tranche of $15.0 million will be available at Hercules’ approval through June 30, 2024.
Amounts borrowed under the Second Amendment will bear an interest rate equal to the greater of either (i) (a) the prime rate as reported in The Wall Street
Journal, plus (b) 5.90%, and (ii) 9.15%. The Company will make interest only payments through December 1, 2024 and may be extended through
December 1, 2025, in quarterly increments, subject to compliance with covenants of the Second Amendment. Following the interest only period, the
Company will repay the principal balance and interest of the advances in equal monthly installments through November 1, 2026.
The Company may prepay advances under the Second Amendment, in whole or in part, at any time subject to a prepayment charge equal to (a) 3.0% of the
prepayment amount in the first year from the closing of the Second Amendment; (b) 2.0% of the prepayment amount in the second year from the closing of
the Second Amendment; and (c) 1.0% of the prepayment amount in the third year from the closing of the Second Amendment.
Upon prepayment or repayment of all or any of the advances under the Second Amendment, the Company will pay (in addition to the prepayment charge)
an end of term charge of 6.75% of the aggregate amount funded. The Company will be required to make a final payment to Hercules in the amount of
6.75% of the amounts funded, less any amount previously paid. In addition, the Company will be required to make a payment to the lender for $2.1 million
on the earliest occurrence of (i) June 1, 2025, (ii) the date the Company repays the outstanding principal amount in full, or (iii) the date that the principal
amount becomes due and payable in full.
The Second Amendment is secured by substantially all of the Company’s assets, including intellectual property, subject to certain exemptions. The
Company out-licensed lerociclib as permitted in the Loan Agreement and the Company may out-license rintodestrant upon approval of the licensing terms
by Hercules.
The Second Amendment contains a minimum revenue covenant. Beginning August 15, 2022, with the reporting of the financial results for the second fiscal
quarter ended June 30, 2022, and tested monthly, the Company must have achieved net product revenue of COSELA of at least 65% of the amounts
projected in the Company’s forecast. Testing of the minimum revenue covenant shall be
F-18
waived at any time in which either (a) the Company’s market capitalization exceeds $750.0 million and the Company maintains unrestricted cash equal to
at least 50% of the total amounts funded, or (b) the Company maintains unrestricted cash equal to at least 100% of the total amounts funded.
The Company evaluated the Second Amendment under the guidance found in ASC 470-50 Modification and Extinguishment. The Company concluded
that the previous debt under the Loan Agreement was extinguished based on the difference in present value of the cash flows of the Loan Agreement and
the Second Amendment. Accordingly, the difference between the carrying value of the Loan Agreement as of November 1, 2021, including the
unamortized debt issuance costs, and the fair value of the Second Amendment was recorded as a $0.2 million loss on extinguishment of debt for the twelve
months ended December 31, 2021. Fees paid to third parties directly related to the funded portion of the Second Amendment have been capitalized as debt
issuance costs and will be amortized to interest expense over the life of the Second Amendment using the effective interest method. Fees paid that were
directly related to the unfunded portion is account for as a deferred financing charge and amortized to interest expense over the period the unfunded
portions are available. The end of term charges associated with the Second Amendment are being accreted through interest expense using the effective
interest method over the related term of the debt. During the twelve months ended December 31, 2021, the Company recognized $4.7 million of interest
expense related to the debt, inclusive of the loss on extinguishment, which is reflected in other income (expense), net on the statement of operations.
As of December 31, 2021 the future principal payments due under the Loan Agreement, excluding interest, are as follows:
2022
2023
2024
2025
2026
Total principal outstanding
End of term charge
Unamortized debt discount and debt issuance costs
Total
Amount
—
—
2,860
35,993
36,147
75,000
1,124
(934)
75,190
$
$
$
9. Stockholders’ Equity
Common stock
The Company’s common stock has a par value of $0.0001 per share and consists of 120,000,000 authorized shares as of December 31, 2021 and 2020,
respectively. Holders of common stock are entitled to one vote per share and are entitled to receive dividends, as if and when declared by the Company’s
Board of Directors.
On June 15, 2018, the Company entered into a sales agreement for “at the market offerings” with Cowen and Company, LLC (“Cowen”), which allowed
the Company to issue and sell shares of common stock pursuant to a shelf registration statement for total gross sales proceeds of up to $125.0 million from
time to time through Cowen, acting as its agent. Between January 14, 2021 and February 9, 2021, the Company sold 3,513,027 shares of common stock
pursuant to this agreement resulting in $86.4 million in net proceeds. As of February 9, 2021, the Company has used the entirety of the remaining
availability under the 2018 sales agreement with Cowen.
On July 2, 2021, the Company filed an automatic shelf registration statement on Form S-3 with the Securities and Exchange Commission (the “SEC”),
which became effective upon filing, pursuant to which the Company registered for sale an unlimited amount of any combination of its common stock,
preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that the Company may determine, so long as the
Company continued to satisfy the requirements of a “well-known seasoned issuer” under SEC rules (the “2021 Form S-3”).
In connection with the 2021 Form S-3, on July 2, 2021, the Company entered into a sales agreement for “at the market offerings” with Cowen, which
allowed the Company to issue and sell shares of common stock pursuant to the 2021 Form S-3 for total gross sales proceeds of up to $150.0 million from
time to time through Cowen, acting as its agent (the “2021 Sales Agreement”). The Company did not sell any shares of common stock under the 2021 Sales
Agreement.
F-19
On February 23, 2022, because the Company is no longer a “well-known seasoned issuer” as such term is defined in Rule 405 under the Securities Act of
1933, as amended, the Company filed an automatic post-effective amendment to the 2021 Form S-3 on Form POSASR, which became effective upon
filing, to register for sale up to $300.0 million of any combination of its common stock, preferred stock, debt securities, warrants, rights and/or units from
time to time and at prices and on terms that the Company may determine and, as required by SEC rules, will file another post-effective amendment to the
2021 Form S-3 on Form POS AM after the filing of this Form 10-K. Once the post-effective amendment to the 2021 Form S-3 on Form POS AM has been
declared effective by the SEC, the 2021 Form S-3 will remain in effect for up to three years from the date it originally became effective, which was July 2,
2021. The Company makes no assurances as to the continued effectiveness of the 2021 Form S-3 after the declaration of effectiveness of the post-effective
amendment to the 2021 Form S-3 on Form POS AM. The 2021 Form S-3 also includes a prospectus covering up to an aggregate of $100.0 million in
common stock that the Company may issue and sell from time to time, through Cowen acting as its sales agent, pursuant to that certain sales agreement that
the Company entered into with Cowen on February 23, 2022 (the “2022 Sales Agreement”). In connection with the Company entering into the 2022 Sales
Agreement with Cowen, the Company terminated the 2021 Sales Agreement.
Preferred stock
Upon completion of the IPO, all outstanding preferred stock was automatically converted into 18,933,053 shares of common stock. The Company is also
authorized to issue 5,000,000 shares of undesignated preferred stock in one or more series. As December 31, 2021, no shares of preferred stock were
issued or outstanding.
Shares Reserved for Future Issuance
The Company has reserved authorized shares of common stock for future issuance at December 31, 2021 and December 31, 2020 as follows:
Common stock options outstanding
RSUs outstanding
Options and RSUs available for grant under Equity Incentive Plans
December 31,
2021
December 31,
2020
6,701,727
414,991
1,771,635
8,888,353
6,644,780
-
932,051
7,576,831
10. Stock-Based Compensation
2011 Equity Incentive Plan
In March 2011, the Company adopted the 2011 Equity Incentive Plan (the “Plan”). As amended, 4,400,640 shares of common stock were reserved for
issuance under the 2011 Plan. Eligible plan participants included employees, directors, officers, consultants and advisors of the Company. The 2011 plan
permitted the granting of incentive stock options, nonqualified stock options and other stock- based awards. In connection with the adoption of the 2017
Plan (as defined below), the 2011 Plan was terminated and no further awards will be made under the 2011 Plan.
2017 Equity Incentive Plan
In May 2017, the Company adopted the 2017 Equity Incentive Plan (the “2017 Plan”). The 2017 Plan provided for the direct award or sale of the
Company’s common stock and for the grant of up to 1,932,000 stock options to employees, directors, officers, consultants and advisors of the
Company. The 2017 Plan provides for the grant of incentive stock options, non-statutory stock options or restricted stock. Effective January 1, 2021, and in
accordance with the “evergreen” provision of the 2017 plan, an additional 1,096,553 shares were made available for issuance.
F-20
Under both the 2011 Plan and the 2017 Plan, options to purchase the Company’s common stock may be granted at a price no less than the fair market value
of a share of common stock on the date of grant. The fair value shall be the closing sales price for a share as quoted on any established securities exchange
for such grant date or the last preceding date for which such quotation exists. Vesting terms of options issued are determined by the Board of Directors or
Compensation Committee of the Board. The Company’s stock options vest based on terms in the stock option agreements. Stock options have a maximum
term of ten years.
Beginning in January 2021, the Company began granting Restricted Stock Units (“RSUs”) under the 2017 Plan. RSUs are granted at the fair market value
of a share of common stock on the date of grant.
As of December 31, 2021, there were a total of 1,307,735 shares of common stock available for future issuance under the 2017 Plan.
2021 Inducement Equity Incentive Plan
In February 2021, the Company adopted the 2021 Inducement Equity Incentive Plan (the “2021 Inducement Plan”). The 2021 Inducement Plan provides
for the grant of up to 500,000 non-qualified options, stock grants, and stock-based awards to employees and directors of the Company. The 2021
Inducement Plan does not include an evergreen provision.
As of December 31, 2021, there were a total of 68,900 shares of common stock available for future issuance under the 2021 Inducement Plan.
2021 Sales Force Inducement Equity Incentive Plan
In September 2021, the Company adopted the 2021 Sales Force Inducement Equity Incentive Plan (the “2021 Sales Force Inducement Plan”). The 2021
Sales Force Inducement Plan provides for the grant of up to 500,000 non-qualified options, stock grants, and stock-based awards to sales force individuals
and support staff that were not previously employees or directors of the Company. The 2021 Sales Force Inducement Plan does not include an evergreen
provision.
As of December 31, 2021, there were a total of 395,000 shares of common stock available for future issuance under the 2021 Sales Force Inducement Plan.
Stock-based Compensation
The Company recognizes compensation costs related to stock options granted to employees based on the estimated fair value of the awards on the date of
grant, net of estimated forfeitures. The grant date fair value of the stock-based awards is generally recognized on a straight-line basis over the requisite
service period, which is generally the vesting period of the respective awards. Share-based awards granted to non-employee directors as compensation for
serving on the Company’s Board of Directors are accounted for in the same manner as employee share-based compensation awards.
The Company calculates the fair value of stock options using the Black-Scholes option pricing model. The Black-Scholes option-pricing model requires
the use of subjective assumptions, including the expected volatility of the Company’s common stock, the assumed dividend yield, the expected term of the
Company’s stock options and the fair value of the underlying common stock on the date of grant.
The Company also incurs stock-based compensation expense related to RSUs. The fair value of RSUs is determined by the closing market price of the
Company’s common stock on the date of grant and then recognized over the requisite service period of the award.
F-21
During the years ended December 31, 2021, 2020 and 2019, the Company recorded employee share-based compensation expense of $22,319, $18,770, and
$16,351, respectively. The Company recorded non-employee share-based compensation expense of $0, $0, and $98 during the years ended December 31,
2021, 2020 and 2019, respectively. Total share-based compensation expense included in the statements of operations is as follows:
Cost of goods sold
Research and development
Selling, general and administrative
Total stock-based compensation expense
Stock options – Black-Scholes inputs
2021
Year Ended December 31,
2020
in thousands
2019
$
$
252
4,811
17,256
22,319
$
$
—
6,902
11,868
18,770
$
$
—
6,261
10,188
16,449
The fair value of each option grant is estimated on the grant date using the Black-Scholes option-pricing model, using the following weighted average
assumptions:
Expected volatility
Weighted-average risk free rate
Dividend yield
Expected term (in years)
Weighted-average grant-date fair value per share
2021
76.8 - 79.6%
0.4-1.3%
—%
6.00
11.93
$
Year Ended December 31,
2020
74.8 - 81.0%
0.3-1.7%
—%
6.02
12.17
$
$
2019
74.2 - 82.1%
1.4 - 2.6%
—%
6.02
14.94
The expected term of stock options represents the weighted-average period the stock options are expected to remain outstanding and is based on the option
vesting term, contractual terms and industry peers as the Company did not have sufficient historical information to develop reasonable expectations about
future exercise patterns and post-vesting employment termination behavior.
The expected stock price volatility assumptions for the Company’s stock options were determined by examining the historical volatilities for industry peers
as the Company does not have sufficient history to estimate volatility using only its common stock. In 2019, the Company began incorporating its historical
stock price in conjunction with selected similar publicly traded companies. The Company plans to continue to use the guideline peer group volatility
information until the historical volatility of its common stock is sufficient to measure expected volatility for future option grants.
The risk-free interest rate assumption at the date of grant is based on the U.S. Treasury instruments whose term was consistent with the expected term of
the Company’s stock options.
The expected dividend assumption is based on the Company’s history and expectation of dividend payouts.
F-22
Stock Option Activity
The following table is a summary of stock option activity during 2021 is as follows:
Weighted average
Balance as of December 31, 2020
Granted
Cancelled
Exercised
Balance as of December 31, 2021
Exercisable at December 31, 2021
Vested at December 31, 2021 and expected to vest
Options
outstanding
6,644,780 $
2,168,053
(1,176,075)
(935,031)
6,701,727 $
3,660,578
6,701,727
16.91
17.77
21.40
6.25
17.88
16.72
17.88
7.2 $
5.9
7.2
10,427
10,422
10,427
Weighted
average
exercise
price
Remaining
contractual
for
life (Years)
Aggregate
intrinsic
value
(in thousands)
35,464
7.3 $
As of December 31, 2021, unrecognized compensation expense related to unvested stock options totaled $33.5 million, which is expected to be recognized
over a weighted-average period of approximately 2.4 years.
Prior to our initial public offering, the fair value of our common shares underlying our stock options was estimated on each grant date by our board of
directors. In order to determine the fair value of our common shares underlying granted stock options, our board of directors considered, among other
things, timely valuations of our common shares prepared by an unrelated third-party valuation firm in accordance with the guidance provided by the
American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held-Company Equity Securities Issued as Compensation.
Since the IPO, the board of directors has determined the fair value of each common share underlying share-based awards based on the closing price of the
common shares as reported by Nasdaq on the date of grant.
Restricted Stock Units
The Company’s restricted stock units (“RSUs”) are considered nonvested share awards and require no payment from the employee. For each RSU,
employees receive one common share at the end of the vesting period. Compensation cost is recorded based on the market price of the Company’s common
stock on the grant date and is recognized on a straight-line basis over the requisite service period.
The following table is a summary of the RSU activity for the twelve months ended December 31, 2021:
Balance as of December 31, 2020
Granted
Cancelled
Vested
Balance as of December 31, 2021
Number of
RSUs
Weighted - Average
Fair Value
per Share
— $
507,906
(92,915)
—
414,991 $
—
18.20
18.07
—
18.24
As of December 31, 2021, there was $5.2 million of total unrecognized compensation cost related to Company RSUs that are expected to vest. These costs
are expected to be recognized over a weighted-average period of approximately 2.4 years.
F-23
11. License Revenue
ARC License Agreement
On May 22, 2020, the Company entered into an exclusive license agreement with ARC Therapeutics, LLC (“ARC”), a company primarily owned by a
related party, whereby the Company granted to ARC an exclusive, worldwide, royalty-bearing license, with the right to sublicense, solely to make, have
made, use, sell, offer for sale, import, export, and commercialize products related to its cyclin dependent kinase 2 (“CDK2”) inhibitor compounds. At close,
the Company received consideration in the form of an upfront payment of $1.0 million and an equity interest in ARC equal to 10% of its issued and
outstanding units valued at $1.1 million. In addition, the Company may receive a future development milestone payment totaling $2.0 million and royalty
payments in the mid-single digits based on net sales of the licensed compound after commercialization. The Company has right of first negotiation to re-
acquire these assets.
The Company assessed the license agreement in accordance with ASC 606 and identified one performance obligation in the contract, which is the transfer
of the license, as ARC can benefit from the license using its own resources. The Company recognized $2.1 million in license revenue consisting of the
upfront payment and the 10% equity interest in ARC upon the effective date as the Company determined the license was a right to use the intellectual
property and the Company had provided all necessary information to ARC to benefit from the license.
The Company considers the future potential development milestones and sales-based royalties to be variable consideration. The development milestone is
excluded from the transaction price because it determined the payment to be fully constrained under ASC 606 due to the inherent uncertainty in the
achievement of such milestone due to factors outside of the Company’s control. As sales-based royalties are all related to the license of the intellectual
property, the Company will recognize revenue in the period when subsequent sales are made pursuant to the sales-based royalty exception. The Company
will re-evaluate the transaction price in each reporting period and as uncertain events are resolved or other changes in circumstances occur.
There was no revenue recognized during the twelve months ended December 31, 2021.
Genor License Agreement
On June 15, 2020, the Company entered into an exclusive license agreement with Genor Biopharma Co. Inc. (“Genor”) for the development and
commercialization of lerociclib in the Asia-Pacific region, excluding Japan (the “Genor Territory”). Under the license agreement, the Company granted to
Genor an exclusive, royalty-bearing, non-transferable license, with the right to grant sublicenses, to develop, obtain, hold and maintain regulatory approvals
for, and commercialize lerociclib, in the Genor Territory.
Under the license agreement, Genor agreed to pay the Company a non-refundable, upfront cash payment of $6.0 million with the potential to pay an
additional $40.0 million upon reaching certain development and commercial milestones. In addition, Genor will pay the Company tiered royalties ranging
from high single to low double-digits based on annual net sales of lerociclib in the Genor Territory. In September 2020, the Company transferred to Genor
the related technology and know-how that is necessary to develop, seek regulatory approval for, and commercialize lerociclib in the Genor Territory, which
resulted in the recognition of $6.0 million in revenue in accordance with ASC 606.
During the twelve months ended December 31, 2021, the Company recognized $3.0 million of revenue related to development milestones which occurred
during the year.
EQRx License Agreement
On July 22, 2020, the Company entered into an exclusive license agreement with EQRx, Inc. (“EQRx”) for the development and commercialization of
lerociclib in the U.S., Europe, Japan and all other global markets, excluding the Asia-Pacific region (except Japan) (the “EQRx Territory”). Under the
license agreement, the Company granted to EQRx an exclusive, royalty-bearing, non-transferable license, with the right to grant sublicenses, to develop,
obtain, hold and maintain regulatory approvals for, and commercialize lerociclib in the EQRx Territory.
Under the license agreement, EQRx agreed to pay the Company a non-refundable, upfront cash payment of $20.0 million with the potential to pay an
additional $290.0 million upon reaching certain development and commercial milestones. In addition, EQRx will pay the Company tiered royalties ranging
from mid-single digits to mid-teens based on annual net sales of lerociclib in the EQRx Territory. In September 2020, the Company transferred to EQRx the
related technology and know-how that is necessary to develop, seek regulatory approval for, and commercialize lerociclib in the EQRx Territory which
resulted in the recognition of $20.0 million in revenue in accordance with ASC 606. EQRx will be responsible for the development of the product in the
EQRx Territory. The Company will continue until completion, as the clinical trial sponsor, its two primary clinical trials at EQRx’s sole cost and expense.
EQRx will reimburse the Company for all of its out-of-pocket costs incurred after the effective date of the license agreement in connection with these
clinical trials. The Company will invoice EQRx within 30 days following the end of the quarter, and EQRx will pay within 30 days after its receipt of such
invoice.
F-24
For the twelve months ended December 31, 2021the Company recognized revenue of $4.8 million related to the delivery of clinical drug supply and
manufacturing services and $2.5 million for the reimbursement of costs associated with the two primary clinical trials for lerociclib. The amounts for
clinical drug supply and manufacturing services have been invoiced and paid. The amounts for clinical trial reimbursements that occurred during the
quarter are recognized as accounts receivable on the balance sheet as of December 31, 2021. No development and commercial milestones, as defined by the
agreement, have been achieved through December 31, 2021.
Simcere License Agreement
On August 3, 2020, the Company entered into an exclusive license agreement with Nanjing Simcere Dongyuan Pharmaceutical Co., Ltd (“Simcere”) for
the development and commercialization of trilaciclib in all indications in Greater China (mainland China, Hong Kong, Macau, and Taiwan) (the “Simcere
Territory”). Under the license agreement, the Company granted to Simcere an exclusive, royalty-bearing, non-transferable license, with the right to grant
sublicenses, to develop, obtain, hold and maintain regulatory approvals for, and commercialize trilaciclib in the Simcere Territory.
Under the license agreement, Simcere agreed to pay the Company a non-refundable, upfront cash payment of $14.0 million with the potential to pay an
additional $156.0 million upon reaching certain development and commercial milestones. In addition, Simcere will pay the Company tiered low double-
digit royalties on annual net sales of trilaciclib in the Simcere Territory. In accordance with ASC 606, the Company recognized the non-fundable, upfront
cash payment of $14.0 million (less applicable withholding taxes of $1.4 million) 2020 as the Company had transferred the license and related technology
and know-how to Simcere.
During the twelve months ended December 31, 2021 the Company recognized $8.0 million (less applicable withholding taxes of $0.8 million) related to
development milestones which were met during the period and $1.0 million for the reimbursement of clinical trial costs.
12. Net Loss per Common Share
Basic net loss per common share is computed using the weighted average number of common shares outstanding during the period including nominal
issuances of common stock warrants. Diluted net loss per common share is computed using the sum of the weighted average number of common shares
outstanding during the period and, if dilutive, the weighted average number of potential shares of common stock, including the assumed exercise of stock
options, stock warrants and unvested restricted common stock. For the years ended December 31, 2021, 2020 and 2019, the following potentially dilutive
securities have been excluded from the computations of diluted weighted-average shares outstanding because the effect would be anti-dilutive:
Stock options issued and outstanding
Unvested RSU
Total potential diluted shares
Amounts in the table above reflect the common stock equivalents of the noted instruments.
2021
Year Ended December 31,
2020
2019
7,056,745
451,138
7,507,883
6,576,688
—
6,576,688
5,443,730
—
5,443,730
13. Income Taxes
Income taxes are accounted for using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences
attributable to temporary differences between the financial statements carrying amounts of assets and liabilities and their respective tax bases, operating
loss carryforwards, and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the enactment date.
In accordance with FASB ASC 740, Accounting for Income Taxes, the Company reflects in the financial statements the benefit of positions taken in a
previously filed tax return or expected to be taken in a future tax return only when it is considered ‘more-likely-than-not’ that the position taken will be
sustained by a taxing authority. As of December 31, 2021 and 2020, the Company had no unrecognized income tax benefits and correspondingly there is no
impact on the Company’s effective income tax rate associated with these items. The Company’s policy for recording interest and penalties relating to
uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of operations. As of December 31,
2021 and 2020, the Company had no such accruals.
F-25
The components of income tax expense (benefit) attributable to continuing operations are as follows:
Current Expense:
Federal
State
Foreign
Deferred Expense:
Federal
State
Foreign
Year ended December 31,
2020
2021
2019
$
$
— $
—
925
925
—
—
—
925 $
— $
—
1,410
1,410
—
—
—
1,410 $
—
—
—
—
—
—
—
—
The differences between the company’s income tax expense attributable to continuing operations and the expense computed at the 21% U.S. statutory
income tax rate were as follows (in thousands):
Federal income tax benefit at statutory rate:
Increase (reduction) in income tax resulting from:
State Income Taxes
Increase in Valuation Allowance
Write off Sec. 382 Limited Carryforwards
Stock Compensation
Research and Development Credit
NC Tax Rate Change
Foreign Withholding Tax
Other
Year ended December 31,
2020
(20,547) $
2021
(30,960) $
$
2019
(25,714)
(1,923)
27,618
—
108
(3,030)
8,359
925
(172)
925 $
(1,779)
23,782
—
1,341
(3,091)
—
1,410
294
1,410 $
(2,369)
29,499
1,858
461
(3,529)
—
—
(206)
—
$
F-26
On November 18, 2021, North Carolina enacted the 2021 Appropriations Act, which included a gradual corporate income tax rate decrease from the
current 2.5% to 0% by 2030. The Company is in a cumulative loss position and does not have significant deferred tax liabilities that can be utilized as a
source of taxable income in the future. Therefore, the Company has reduced its North Carolina deferred tax assets, including the NOLs, to zero, as no
benefit is expected to be realized from these deferred tax assets prior to 2030 when there would be no income tax in North Carolina. The reduction in the
value of the deferred tax assets resulted in $8.4 million of tax expense, which was offset fully by the reduction in the corresponding valuation allowance. If
the Company becomes profitable prior to 2030, the Company will recognize an income tax benefit related to the portion of its North Carolina deferred tax
assets utilized.
The tax effects of temporary differences and operating loss carryforwards that gave rise to significant portions of the deferred tax assets and deferred tax
liabilities were as follows at December 31, 2021 and 2020 (in thousands):
Deferred tax assets
Accrued expenses
Operating lease liabilities
Stock compensation
R&D credits
Net operating loss carryforwards
Other
Deferred tax assets
Deferred tax liabilities
Operating lease assets
Other
Deferred tax liabilities
Valuation allowance
Net deferred tax assets
Year ended December 31,
2020
2021
$
2,633 $
1,730
9,037
16,995
108,489
191
139,075
(1,548)
(127)
(1,675)
(137,400)
$
— $
2,863
2,034
7,147
13,965
85,842
20
111,871
(1,844)
(245)
(2,089)
(109,782)
—
At December 31, 2021 and December 31, 2020, the Company evaluated all significant available positive and negative evidence, including the existence of
losses in recent years and management’s forecast of future taxable income, and, as a result, determined it was more likely than not that federal and state
deferred tax assets, including benefits related to net operating loss carryforwards, would not be realized. The valuation allowance increased $27.6 million
from $109.8 million at December 31, 2020 to $137.4 million at December 31, 2021. The increase in valuation allowance was due primarily to the increase
in net operating loss carryforwards and income tax credits.
The table below summarizes changes in the deferred tax valuation allowance (in thousands):
Balance at beginning of year
Charges to costs and expenses
Write-offs1
Balance at end of year
1Includes impact of NC enacted tax rate change
2021
109,782 $
35,961
(8,343)
137,400 $
$
$
2020
2019
86,000 $
25,170
(1,388)
109,782 $
56,501
31,357
(1,858)
86,000
At December 31, 2021, the Company has federal net operating loss carryforwards (“NOLs”) of approximately $510.0 million, which are available to offset
future taxable income. Of the $510.0 million available, $95.4 million will begin to expire in 2029. The remaining $414.6 million has an indefinite
carryforward period. Under the Tax Cuts and Jobs Act (“Tax Act”), federal NOLs arising after December 31, 2017 may be carried forward indefinitely.
However, for NOLs arising after December 31, 2017, NOL carryforwards will be limited to 80% of taxable income. The Company’s NOLs generated in
2017 and in prior years will not be subject to the 80% limitation under the Tax Act. In addition, the Company has state net operating loss carryforwards
totaling approximately $332.7 million, which are available to offset future state taxable income. The state net operating loss carryforwards are inclusive of
North Carolina net operating losses, which are recorded at zero benefit, as discussed in this footnote. State net operating losses begin to expire in 2024.
Because the Company has incurred cumulative net operating losses since inception, all tax years remain open to examination by U.S. federal and state
income tax authorities. As of December 31, 2021, the Company also had federal
F-27
research and development (R&D) credit carryforwards of approximately $17.0 million available to offset future income tax which begin to expire in 2035.
In accordance with FASB ASC 740, Accounting for Income Taxes, the Company reflects in the financial statements the benefit of positions taken in a
previously filed tax return or expected to be taken in a future tax return only when it is considered ‘more-likely-than-not’ that the position taken will be
sustained by a taxing authority. As of December 31, 2021 and 2020, the Company had no unrecognized income tax benefits and correspondingly there is no
impact on the Company’s effective income tax rate associated with these items. The Company’s policy for recording interest and penalties relating to
uncertain income tax positions is to record them as a component of income tax expense in the accompanying statements of income. As of December 31,
2021 and 2020, the Company had no such accruals.
Section 382 Limitation
The Company’s ability to utilize its net operating loss and research and development credit carryforwards may be substantially limited due to ownership
changes that may have occurred or that could occur in the future, as required by Section 382 of the Internal Revenue Code of 1986, as amended (the Code),
as well as similar state provisions. These ownership changes may limit the amount of NOL and R&D credit carryforwards that can be utilized annually to
offset future taxable income and tax, respectively. In general, an “ownership change,” as defined by Section 382 of the Code, results from a transaction or
series of transactions over a three-year period resulting in an ownership change of more than 50 percent of the outstanding stock of a company by certain
stockholders or public groups.
In April 2019, the Company completed an evaluation study as to whether an “ownership change” had occurred and determined that the limitation would be
approximately $8.0 million on federal net operating loss carryforwards, $1.2 million on state net operating loss carryforwards, and $0.1 million on R&D
tax credit carryforwards. The carryforward amounts reported above have already been reduced for these limitations. The Company continues to maintain a
valuation allowance on the remaining NOLs as it believes that it is more likely than not that all of the deferred tax asset associated with the NOLs will not
be realized regardless of whether an “ownership change” has occurred.
14. Related Party Transactions
The Company maintained a consulting agreement with a Seth A. Rudnick, M.D., a member of the Board of Directors, for scientific advisory services
outside of his role on the Board of Directors that expired on June 30, 2021. Under this agreement with the member of the Board of Directors, the Company
paid $3,000, $6,000, and $6,000 for the years ended December 31, 2021, 2020, and 2019, respectively. Effective July 1, 2021, the Company renewed its
agreement with Dr. Rudnick for scientific, clinical and regulatory advisory services outside of his role on the Board of Directors through June 30, 2022.
Pursuant to the terms of the agreement, Dr. Rudnick will receive $50,000 annually, paid in equal semi-annual installments, for his services. The first
payment of $25,000 was accrued for as of December 31, 2021. On October 13, 2021, Dr. Rudnick notified the Company of his decision to resign from the
Board of Directors of the Company effectively immediately as of October 13, 2021.
The Company entered into a senior advisor agreement on September 29, 2020 with Mark A. Velleca, M.D., Ph.D., a member of the Board of Directors,
with an effective date of January 1, 2021. Pursuant to the terms of the agreement, Dr. Velleca will receive $200,000 annually, paid in equal quarterly
installments, for his services. The senior advisory agreement will expire on December 31, 2023.
F-28
15. Quarterly Results of Operations (Unaudited)
The following table contains quarterly financial information for 2021 and 2020. The Company believes that the following information reflects all normal
recurring adjustments necessary for a fair statement of the information for the periods presented. The operating results for any quarter are not necessarily
indicative of results for any future period.
Three Months Ended
(unaudited)
(in thousands, except share and per share amounts)
March 31,
June 30,
September 30,
December 31,
2021
2021
2021
2021
Total revenues
Total operating expenses
Loss from operations
Total other income (expense), net
Loss before income taxes
Income tax expense
Net loss
Net loss per share, basic and diluted
Weighted average common shares outstanding, basic and diluted
Total revenues
Total operating expenses
Loss from operations
Total other income (expense), net
Loss before income taxes
Income tax expense
Net loss
Net loss per share, basic and diluted
Weighted average common shares outstanding, basic and diluted
F-29
$
$
14,218 $
39,753
(25,535)
(769)
(26,304)
138
(26,442) $
(0.65) $
$
40,700,827
6,604 $
44,796
(38,192)
(1,010)
(39,202)
220
(39,422) $
(0.94) $
4,858 $
46,002
(41,144)
(1,003)
(42,147)
321
(42,468) $
5,796
43,382
(37,586)
(2,188)
(39,774)
246
(40,020)
(1.00) $
(0.94)
42,544,321
42,119,850
42,383,573
March 31,
June 30,
September 30,
December 31,
2020
2020
2020
2020
$
$
— $
31,821
(31,821)
798
(31,023)
—
(31,023) $
(0.82) $
$
37,659,722
2,140 $
32,962
(30,822)
(388)
(31,210)
—
(31,210) $
(0.83) $
26,599 $
36,344
(9,745)
(998)
(10,743)
931
(11,674) $
16,546
40,634
(24,088)
(780)
(24,868)
479
(25,347)
(0.31) $
(0.67)
38,053,609
37,786,208
38,009,204
DESCRIPTION OF THE REGISTRANT’S SECURITIES
REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
Exhibit 4.2
General
The following description of our capital stock and provisions of our amended and restated certificate of incorporation and amended and restated by-laws
are summaries of material terms and provisions and are qualified by reference to our amended and restated certificate of incorporation and amended and
restated by-laws, copies of which have been filed with the SEC as exhibits to the registration statement of which this prospectus is a part.
Our authorized capital stock consists of 120,000,000 shares of common stock, par value $0.0001 per share, and 5,000,000 shares of preferred stock, par
value $0.0001 per share, all of which are undesignated. Only share of our common stock are and no shares of preferred stock outstanding.
Common stock
We are authorized to issue one class of common stock. Holders of our common stock are entitled to one vote for each share of common stock held of record
for the election of directors and on all matters submitted to a vote of stockholders. Holders of our common stock are entitled to receive dividends ratably, if
any, as may be declared by our board of directors out of legally available funds, subject to any preferential dividend rights of any preferred stock then
outstanding. Upon our dissolution, liquidation or winding up, holders of our common stock are entitled to share ratably in our net assets legally available
after the payment of all our debts and other liabilities, subject to the preferential rights of any preferred stock then outstanding. Holders of our common
stock have no preemptive, subscription, redemption or conversion rights. The rights, preferences and privileges of holders of common stock are subject to,
and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that we may designate and issue in the future. Except as
described under the “—Anti-Takeover Effects of Delaware Law, Our Amended and Restated Certificate of Incorporation and Our Amended and Restated
By-Laws” section below, a majority vote of the holders of common stock is generally required to take action under our amended and restated certificate of
incorporation and amended and restated by-laws.
Preferred stock
Our board of directors is authorized, without action by the stockholders, to designate and issue up to an aggregate of 5,000,000 shares of preferred stock in
one or more series. Our board of directors can designate the rights, preferences and privileges of the shares of each series and any of its qualifications,
limitations or restrictions. Our board of directors may authorize the issuance of preferred stock with voting or conversion rights that could adversely affect
the voting power or other rights of the holders of common stock. The issuance of preferred stock, while providing flexibility in connection with possible
future financings and acquisitions and other corporate purposes could, under certain circumstances, have the effect of restricting dividends on our common
stock, diluting the voting power of our common stock, impairing the liquidation rights of our common stock, or delaying, deferring or preventing a
change in control of our company, which might harm the market price of our common stock. See also the “—Anti-Takeover Effects of Delaware Law, Our
Amended and Restated Certificate of Incorporation and Our Amended and Restated By-Laws” section below.
Our board of directors will make any determination to issue such shares based on its judgment as to our company’s best interests and the best interests of
our stockholders. We have no shares of preferred stock outstanding.
Warrants
There are no warrants outstanding.
Anti-takeover effects of Delaware law, our amended and restated certificate of incorporation and our amended and restated by-laws
Our amended and restated certificate of incorporation and amended and restated by-laws include a number of provisions that may have the effect of
encouraging persons considering unsolicited tender offers or other unilateral takeover proposals to negotiate with our board of directors rather than pursue
non-negotiated takeover attempts. These provisions include the items described below.
Board composition and filling vacancies
In accordance with our amended and restated certificate of incorporation, our board of directors is divided into three classes serving three-year terms, with
one class being elected each year. Our amended and restated certificate of incorporation also provides that directors may be removed only for cause and
then only by the affirmative vote of the holders of 75% or more of the shares then entitled to vote at an election of directors. Furthermore, any vacancy on
our board of directors, however occurring, including a vacancy resulting from an increase in the size of our board of directors, may only be filled by the
affirmative vote of a majority of our directors then in office, even if less than a quorum.
No written consent of stockholders
Our amended and restated certificate of incorporation provides that all stockholder actions are required to be taken by a vote of the stockholders at an
annual or special meeting, and that stockholders may not take any action by written consent in lieu of a meeting.
Meetings of stockholders
Our amended and restated by-laws provide that only a majority of the members of our board of directors then in office may call special meetings of
stockholders and only those matters set forth in the notice of the special meeting may be considered or acted upon at a special meeting of stockholders. Our
amended and restated by-laws limit the business that may be conducted at an annual meeting of stockholders to those matters properly brought before the
meeting.
Advance notice requirements
Our amended and restated by-laws establish advance notice procedures with regard to stockholder proposals relating to the nomination of candidates for
election as directors or new business to be brought before meetings of our stockholders. These procedures provide that notice of stockholder proposals must
be timely given in writing to our corporate secretary prior to the meeting at which the action is to be taken. Generally, to be timely, notice must be received
at our principal executive offices not less than 90 days or more than 120 days prior to the first anniversary date of the annual meeting for the preceding
year. The notice must contain certain information specified in the amended and restated by-laws. These provisions may have the effect of precluding the
conduct of certain business at a meeting if the proper procedures are not followed. These provisions may also discourage or deter a potential acquirer from
conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company.
Amendment to by-laws and certificate of incorporation
As required by the Delaware General Corporation Law, any amendment of our amended and restated certificate of incorporation must first be approved by
a majority of our board of directors and, if required by law or our amended and restated certificate of incorporation, thereafter be approved by a majority of
the outstanding shares entitled to vote on the amendment, and a majority of the outstanding shares of each class entitled to vote thereon as a class, except
that the amendment of the provisions relating to stockholder action, directors, limitation of liability, exclusive jurisdiction of Delaware Courts and the
amendment of our amended and restated by-laws and amended and restated certificate of incorporation must be approved by not less than 75% of the
outstanding shares entitled to vote on the amendment, and not less than 75% of the outstanding shares of each class entitled to vote thereon as a class. Our
amended and restated by-laws may be amended by the affirmative vote of a majority of the directors then in office, subject to any limitations set forth in the
amended and restated by-laws; and may also be amended by the affirmative vote of at least 75% of the outstanding shares
entitled to vote on the amendment, or, if the board of directors recommends that the stockholders approve the amendment, by the affirmative vote of the
majority of the outstanding shares entitled to vote on the amendment, in each case voting together as a single class.
Blank check preferred stock
Our amended and restated certificate of incorporation provides for 5,000,000 authorized shares of preferred stock. The existence of authorized but unissued
shares of preferred stock may enable our board of directors to render more difficult or to discourage an attempt to obtain control of us by means of a
merger, tender offer, proxy contest or otherwise. For example, if in the due exercise of its fiduciary obligations, our board of directors were to determine
that a takeover proposal is not in the best interests of us or our stockholders, our board of directors could cause shares of preferred stock to be issued
without stockholder approval in one or more private offerings or other transactions that might dilute the voting or other rights of the proposed acquirer or
insurgent stockholder or stockholder group. In this regard, our amended and restated certificate of incorporation grants our board of directors broad power
to establish the rights and preferences of authorized and unissued shares of preferred stock. The issuance of shares of preferred stock could decrease the
amount of earnings and assets available for distribution to holders of shares of common stock. The issuance may also adversely affect the rights and
powers, including voting rights, of these holders and may have the effect of delaying, deterring or preventing a change in control of us.
Section 203 of the Delaware General Corporation Law
We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly-held Delaware
corporation from engaging in a “business combination” with an “interested stockholder” for a three-year period following the time that this stockholder
becomes an interested stockholder, unless the business combination is approved in a prescribed manner. A “business combination” includes, among other
things, a merger, asset or stock sale or other transaction resulting in a financial benefit to the interested stockholder. An “interested stockholder” is a person
who, together with affiliates and associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of
the corporation’s voting stock.
Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it satisfies one of the following
conditions:
•
•
•
before the stockholder became interested, the board of directors approved either the business combination or the transaction that resulted in the
stockholder becoming an interested stockholder;
upon consummation of the transaction that resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at
least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding for purposes of determining the
voting stock outstanding, shares owned by persons who are directors and also officers, and employee stock plans, in some instances; or
at or after the time the stockholder became interested, the business combination was approved by the board of directors of the corporation and
authorized at an annual or special meeting of the stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock that is
not owned by the interested stockholder.
A Delaware corporation may “opt out” of these provisions with an express provision in its original certificate of incorporation or an express provision in its
amended and restated certificate of incorporation or by-laws resulting from a stockholders’ amendment approved by at least a majority of the outstanding
voting shares. We have not opted out of these provisions. As a result, mergers or other takeover or change in control attempts of us may be discouraged or
prevented.
Exclusive jurisdiction of certain actions
Our amended and restated certificate of incorporation requires, to the fullest extent permitted by law, that derivative actions brought in our name, actions
against our directors, officers and employees for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the
State of Delaware, unless we otherwise consent. Although we believe this provision benefits us by providing increased consistency in the application of
Delaware law in the types of lawsuits to which it applies, the provision may have the effect of discouraging lawsuits against our directors and officers.
Nasdaq Global Select Market Listing
Our common stock is listed on The Nasdaq Global Select Market under the trading symbol “GTHX.”
CERTAIN CONFIDENTIAL PORTIONS OF THIS EXHIBIT HAVE BEEN OMITTED AND REPLACED WITH “[* * *]”. SUCH IDENTIFIED
INFORMATION HAS BEEN EXCLUDED FROM THIS EXHIBIT BECAUSE IT IS (I) NOT MATERIAL AND (II) WOULD LIKELY CAUSE
COMPETITIVE HARM TO THE COMPANY IF DISCLOSED.
Exhibit 10.7
MUTUAL TERMINATION, RELEASE, AND SETTLEMENT AGREEMENT
by and between
G1 THERAPEUTICS, INC.
and
BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.
December 15, 2021
MUTUAL TERMINATION, RELEASE, AND SETTLEMENT AGREEMENT
This Mutual Termination, Release, and Settlement Agreement (“Termination Agreement”), effective as of December
15, 2021 (“Termination Agreement Effective Date”), by and between G1 Therapeutics, Inc. (“G1”), and Boehringer Ingelheim
Pharmaceuticals, Inc. (“BI”), sets forth the mutual understanding and agreement of the Parties regarding the mutual termination of
the Co-Promotion Agreement, dated June 29, 2020, entered into by and between G1 and BI (the “Co-Promotion
Agreement”). G1 and BI are each referred to herein as a “Party” and together as the “Parties”. Capitalized terms used in this
Termination Agreement and not defined herein shall have the respective meanings ascribed to such terms in the Co-Promotion
Agreement. If there is a conflict between the terms of this Termination Agreement and the Co-Promotion Agreement, the terms
of this Termination Agreement will govern.
As discussed, G1 and BI have decided to mutually terminate the Co-Promotion Agreement under certain agreed terms,
all as detailed below:
1.
Termination. Notwithstanding any provisions of the Co-Promotion Agreement to the contrary (including Section
11.2 therein), the Co-Promotion Agreement is hereby terminated effective as of March 2, 2022 at 11:59 p.m. Eastern Standard Time
(the “Termination Effective Date”). The Parties agree that the termination will be characterized as a mutual termination, not a
termination for cause or convenience under Section 11.2 of the Co-Promotion Agreement.
2.
Payment Obligations Upon Termination. The provisions of Section 11.3 of the Co-Promotion Agreement shall
apply to the effect of termination of the Co-Promotion Agreement pursuant to this Termination Agreement; provided, however, that
Section 11.3.3 and Section 11.3.4 of the Co-Promotion Agreement shall not apply to the termination of the Co-Promotion Agreement
pursuant to this Termination Agreement, and instead, the following payment terms upon termination shall apply:
(a) Within [* * *] days after the Termination Effective Date, G1 will make the final Annual Floor True-Up
payment to BI for the Contract Year ending on the Termination Effective Date. For the avoidance of doubt,
this payment shall be in an amount sufficient to ensure that, between the Sales Payments made on a quarterly
basis and this final Annual Floor True-Up, BI has been paid a total of at least [* * *] in connection with the
first Contract Year. Other than the payment pursuant to this Section 2(a) of this Termination Agreement, G1’s
Annual Floor payment obligations shall end as of the Termination Effective Date.
(b) G1 will pay BI [* * *] of the Annual SCLC Net Sales during the period [* * *] through [* * *].
(c) G1 will pay BI [* * *] of the Annual SCLC Net Sales during the period [* * *] through [* * *].
For purposes of Section 2(b) and Section 2(c) above, G1 will provide [* * *] reports and make [* * *] payments to BI in a manner
consistent with the timing terms set forth in Section 6.4.1 of the Co-Promotion Agreement, but, for the avoidance of doubt, G1 will
have no obligation
2
to provide [* * *] estimates of Net Sales as set forth in Section 6.4.2, which obligation will terminate as of the Termination Effective
Date. For the avoidance of doubt, the Parties agree that the payments described in Section 2 of this Termination Agreement are the
only amounts that G1 shall be obligated to pay to BI under the Co-Promotion Agreement after the Termination Effective Date, and no
additional amounts will be payable by G1 to BI under or in connection with the Co-Promotion Agreement, including as a result of the
termination thereof.
3.
Wire Instructions and Late Payments: All payments made pursuant to this Termination Agreement shall be made
by wire transfer in accordance with the following instructions:
Boehringer Ingelheim Pharmaceuticals Inc.
[* * *]
New York, NY
Account No.: [* * *]
ABA No. [* * *]
SWIFT Code: [* * *]
If BI does not receive payment of any sum due to it on or before 5:00 p.m. (Eastern Standard Time) on the due date, interest shall
thereafter accrue in accordance with Section 6.4.6 of the Co-Promotion Agreement until the remaining amount plus accrued interest is
paid in full. For the avoidance of doubt, any failure to pay any sum due under this Termination Agreement on or before 5:00 p.m.
(Eastern Standard Time) on the due date shall be considered a material breach of this Termination Agreement, unless prior to the due
date the Party that owes the sum in good faith submits the question of the amount of the sum owed to dispute resolution in accordance
with the procedures described in Section 11.
4.
Mutual Waiver of Audit Rights. G1 agrees to waive and not to exercise its rights of inspection pursuant to Section
4.2.2 of the Co-Promotion Agreement. BI agrees to waive and not to exercise its rights of inspection pursuant to Section 6.7 of the Co-
Promotion Agreement for the Contract Year ending [* * *]. For the avoidance of doubt, BI retains and may exercise all rights of
inspection pursuant to Section 6.7 of the Co-Promotion Agreement for the period from [* * *] to [* * *].
5.
Transition Plan; Wind-Down.
5.1.
Notwithstanding Section 11.3.6 of the Co-Promotion Agreement, commencing upon the
Termination Agreement Effective Date, the Parties will work diligently and in good faith to (a) wind-down BI’s performance of
the Promotion Services and the Promotion Plan, and (b) develop a written transition plan that facilitates an organized and
efficient transition of the Promotion Services or other activities performed by BI under the Co-Promotion Agreement so
that G1 and/or its designee may seamlessly take over such activities within the transition period provided in such plan
(“2022 Transition Plan”) and BI will be relieved of promotional duties with respect to accounts that are transitioned from BI to
G1. The 2022 Transition Plan shall, without limitation,
3
include the introduction of key customers to G1 and an orientation briefing on customers and accounts by the
Oncology Sales Consultants in the Territory. The Parties shall agree upon the 2022 Transition Plan no later than [* *
*], and the Parties shall commence implementation and performance of the 2022 Transition Plan no later than [* * *]. The 2022
Transition Plan shall be designed to minimize disruption of the ongoing Promotion Services and commercialization of the
Product in the Territory, each Party shall work diligently and in good faith to perform its obligations under the 2022 Transition
Plan and act in accordance with the 2022 Transition Plan, and each Party shall be responsible for its own costs and expenses
incurred in connection therewith.
5.2.
The Parties acknowledge, and the 2022 Transition Plan shall take into account, that G1
has begun to hire its own salesforce to promote COSELATM and that this added salesforce may impact BI’s ability to
meet any particular sales targets. To the extent such G1 activities impair BI’s ability to meet its obligations under the
2022 Transition Plan, BI’s obligations to do so shall be waived. For the avoidance of doubt, the obligations set forth in this
Section 5 and the 2022 Transition Plan supersede and render moot the Parties’ obligations with respect to the obligations set forth
in Section 4.1 of the Co-Promotion Agreement, including, without limitation, the Promotion Services, the Promotion Plan
(including the Sales Plan and the Market Access Plan), and the Transition Plan set forth in the Co-Promotion Agreement. In
addition, the Parties acknowledge and agree that BI will take no steps to reduce the size or composition of the Oncology
Personnel before [* * *] unless otherwise set forth in the 2022 Transition Plan. For the avoidance of doubt, the voluntary
resignation or termination for cause of any Oncology Personnel shall not constitute a failure to perform under the 2022
Transition Plan or a breach of the any contractual or other obligation of BI, including without limitation this Termination
Agreement. The Parties also acknowledge and agree that BI will set compensation for its Oncology Sales Consultants in
accordance with Section 4.1.4 of the Co-Promotion Agreement until the Termination Effective Date, or as otherwise set forth in
the 2022 Transition Plan.
The Alliance Managers shall coordinate the Parties’ performance of the 2022 Transition Plan,
and the JPC shall monitor and oversee, and provide a forum for discussing, the 2022 Transition Plan and BI’s wind-down and
transition activities.
5.3.
6.
Surviving Rights and Obligations. Except as provided in Sections 2 and 5 above and in Section 9 below, the
Parties are not relieved of their surviving obligations set forth in the second sentence of Section 11.3.5 of the Co-Promotion
Agreement (the “Surviving Rights and Obligations”) after the Termination Effective Date.
7.
Pharmacovigilance Agreement. The Parties hereby terminate, as of the Termination Effective Date, the
Pharmacovigilance Agreement entered into by them dated [* * *].
4
8.
Public Statements or Disclosures; Press Release.
8.1.
This Termination Agreement and its terms shall be deemed to be Confidential Information of
both Parties, and each Party agrees not to disclose any of them without the prior written consent of the other Party, except that
each Party may disclose any of them in accordance with the provisions of Article 8 of the Co-Promotion Agreement and Section
8.2 and Section 8.3 of this Termination Agreement.
8.2.
Without limiting either Party’s obligation to comply with the terms of Article 8 of the
Co-Promotion Agreement, each Party agrees that it will not issue any press release or other public statement with
respect to the Co-Promotion Agreement or this Termination Agreement that disparages the other Party in any manner
reasonably likely to be harmful to the other Party; provided that each Party may make such disclosures regarding the
Co-Promotion Agreement and this Termination Agreement as such Party believes, with the advice of counsel, are
reasonably necessary to comply with Applicable Laws, including regulations promulgated by applicable
Governmental Authorities, securities exchanges, court order, administrative subpoena, or other legal process. In
addition, each Party hereby represents, warrants and covenants to the other Party that such Party will [* * *].
8.3.
As of the Termination Agreement Effective Date, (a) the Parties will work diligently and in good
faith to develop a mutually acceptable press release, or (b) if elected by either Party, the Parties may issue separate press releases, in
each case with respect to the termination of the Co-Promotion Agreement; provided that the content of any such press releases must
be consented to by the other Party prior to the issuance thereof, such consent not to be unreasonably withheld or delayed. For clarity,
the Parties agree that after a press release is issued pursuant to this Section 8.3, the Parties may subsequently make public disclosures
of the same content without having to again follow the consent procedures herein; provided such content remains accurate as of such
time. Each Party agrees that it shall cooperate fully with the other Party with respect to all disclosures regarding this Termination
Agreement to the Securities and Exchange Commission and any other Governmental Authorities, including requests for confidential
treatment of proprietary information of either Party included in any such disclosure. In all other cases, each Party agrees not to, and
agrees to cause its Affiliates not to, issue any additional press release or make any other public statement or disclosure regarding this
Termination Agreement, the activities hereunder, or the transactions contemplated hereby, except in accordance with Article 8 of the
Co-Promotion Agreement.
9.
Mutual Release.
9.1.
Each Party, for itself and its past and present Affiliates and its and their respective successors and
assigns, and the officers, directors, employees, shareholders, members and other equity owners of each of the foregoing
(collectively, the “Releasors”), hereby irrevocably waives, relinquishes, and fully and forever releases and discharges the other
Party, and its past and present Affiliates and its and their respective successors and assigns, and the officers, directors, employees,
shareholders, members and
5
other equity owners and licensees and agents of each of the foregoing (collectively, the “Released Parties”), from any and all
past, existing or future potential actions, claims, liabilities, rights, demands, suits, matters, liens, obligations, damages, losses,
remedies of any kind, and causes of action of every nature and description, kind, or character that could have been, or can now or
hereafter be asserted, whether known or unknown, foreseeable or unforeseeable, and whether arising at common law, including
breach of contract, breach of the implied covenant of good faith and fair dealing, fraud or negligent misrepresentation, in equity,
or under or by virtue of any local, state or federal statute, order or regulation, or otherwise, and whether filed in a federal or state
court, in an arbitration proceeding, administratively, or otherwise, that the Releasors ever had, could have had, now have or
hereafter in the future can, shall, or may have against any Released Parties, for, upon, by reason of, or related to or arising from
the Co-Promotion Agreement, the transactions contemplated thereby, or the termination or expiration thereof. This Section 9.1
shall not apply to (a) the Parties’ obligations set forth in this Termination Agreement; or (b) any breaches or failure of the Parties
to satisfy the Surviving Rights and Obligations of the Co-Promotion Agreement as set forth in Section 6 above that occur after
the Termination Agreement Effective Date.
9.2.
Each Party hereby represents and warrants to the other Party that, solely for purposes of this
Section 9 of this Termination Agreement, (a) it is entering into this Termination Agreement on behalf of it and its other
Releasors, (b) it has the authority to cause its other Releasors to comply with the terms and conditions of this Section 9 of this
Termination Agreement and there are no other persons or entities whose consent or joinder in this Termination Agreement is
necessary to make fully effective the provisions of this Section 9 of this Termination Agreement that obligate, burden, or bind it
and its other Releasors, and (c) it has not transferred, assigned, or pledged to any Affiliate or any Third Party, the right to bring,
pursue or settle any actions, claims, liabilities, rights, demands, suits, matters, liens, obligations, damages, or losses, related to or
arising from the Co-Promotion Agreement, the transactions contemplated thereby, or the termination or expiration thereof.
10.
Limitation of Liability. IN NO EVENT SHALL G1 (OR ITS AFFILIATES) OR BI (OR ITS AFFILIATES) BE
LIABLE TO THE OTHER OR ANY OF THE OTHER PARTY’S AFFILIATES FOR ANY [* * *]SUFFERED OR INCURRED BY
SUCH OTHER PARTY OR ITS AFFILIATES THAT ARISE OUT OF OR RELATE TO THIS TERMINATION AGREEMENT OR
IN CONNECTION WITH A BREACH OR ALLEGED BREACH OF THIS TERMINATION AGREEMENT, WHETHER IN
CONTRACT, TORT, STRICT LIABILITY OR OTHERWISE, AND REGARDLESS OF ANY NOTICE OF THE POSSIBILITY OF
SUCH DAMAGES. FOR THE AVOIDANCE OF DOUBT, THE FOREGOING SENTENCE SHALL NOT LIMIT (1) THE
OBLIGATIONS [* * *], OR (2) DAMAGES AVAILABLE FOR A PARTY’S BREACH OF [* * *] AGREEMENT AND THE [* * *].
11.
Dispute Resolution. If a dispute arises between the Parties in connection with or relating to this Termination
Agreement or any document or instrument delivered in connection herewith (a “Dispute”), then the Parties shall first attempt in good
faith to resolve the Dispute,
6
including through discussions between the Senior Officers of the Parties. Unless otherwise agreed to at the time, if these good-faith
efforts fail to resolve any such Dispute within [* * *] days of the initiation of the discussions related to the Dispute, then the Dispute
shall be submitted to and finally settled by binding arbitration by JAMS under its Comprehensive Arbitration Rules and Procedures. A
Dispute settled by an arbitrator shall be conducted by [* * *] arbitrators, each having ten years of experience in the pharmaceutical
industry and also shall have served as an arbitrator at least three times prior to their service as an arbitrator in this arbitration. Within [*
* *] of commencement of an arbitration each Party shall select [* * *] arbitrator and together select a [* * *] arbitrator who shall serve as
a neutral arbitrator. The [* * *] designated arbitrators shall select a [* * *] neutral arbitrator within [* * *] of their selection if the Parties
cannot agree on the [* * *] arbitrator. If the [* * *] arbitrators cannot agree on selection of a [* * *] arbitrator within [* * *] of their
appointment, JAMS shall do so in accordance with its rules. The fees of the arbitrator(s) and JAMS shall be paid by the losing Party,
which shall be designated by the arbitrator(s). If the arbitrator(s) is unable to designate a losing Party, it shall so state and the fees shall
be split equally by the Parties. The arbitrator(s) is hereby empowered to award any monetary remedy allowed by Applicable Law,
including money damages, prejudgment interest and attorneys’ fees, and to grant final, complete, interim or interlocutory relief,
provided the arbitrator(s) shall not be permitted to award any equitable remedies, including injunctive relief. Notwithstanding any
provision of this Agreement to the contrary, the Parties reserve the right to (a) pursue actions of equitable remedies, including injunctive
relief, exclusively in the federal and state courts located in Wilmington, Delaware, including actions for the purposes of an order to
compel arbitration, for preliminary relief in aid of arbitration and for injunctive or equitable relief to maintain the status quo or prevent
irreparable harm prior to the appointment of the arbitrators, and (b) to pursue actions for the enforcement of any monetary remedy
issued pursuant to this Section 11 in any court of competent jurisdiction in the Territory.
12.
No Admission of Liability. Each of the Parties agrees and acknowledges that nothing in this Termination
Agreement and no act of any Party shall be treated in any way as an admission of liability as to any claim, contention or
cause of action, and that this Termination Agreement is governed by Rule 408 of the Federal Rules of Evidence and similar
state law.
13.
Miscellaneous: The terms of this Termination Agreement and the Co-Promotion Agreement constitute the sole
and entire agreement between the Parties with respect to the subject matter contained herein and supersede all prior and
contemporaneous understandings, agreements, representations, and warranties. In addition, this Termination Agreement will be
governed by, enforced, and construed in accordance with the laws of Delaware without regard to any conflicts of law provisions. This
Termination Agreement may be executed in counterparts with the same effect as if all Parties had signed the same document. All such
counterparts will be deemed an original, will be construed together, and will constitute one and the same instrument. Any such
counterpart, to the extent delivered by means of a fax machine or by .pdf, .tif, .gif, .jpeg or similar attachment to electronic mail (any
such delivery, an “Electronic Delivery”) will be treated in all respects as an original executed counterpart and will be considered to have
the same binding legal effect as if it were the original signed version thereof delivered in person. No Party will raise the use of
Electronic Delivery to deliver a
7
signature or the fact that any signature or agreement or instrument was transmitted or communicated through the use of Electronic
Delivery as a defense to the formation of a contract, and each Party forever waives any such defense, except to the extent that such
defense relates to lack of authenticity. This Termination Agreement may be amended, or any term hereof modified or waived, only by a
written instrument duly executed by authorized representatives of the Parties. This Termination Agreement shall be binding upon
and shall inure to the benefit of the heirs, executors, administrators, trustees, beneficiaries, successors, representatives and
assigns of the undersigned Parties. If any provision of this Termination Agreement or the application thereof is held invalid,
the invalidity shall not affect other provisions or applications of this Termination Agreement which can be given effect
without the invalid provisions or application, and to this end, the provisions of this Termination Agreement are declared to
be severable.
[signature page follows]
8
IN WITNESS WHEREOF, the Parties have executed this Termination Agreement as of the Effective Date.
G1 THERAPEUTICS, INC.
By:
James Stillman Hanson
Name: James Stillman Hanson
Title: General Counsel
/s/
BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.
By:
Kelli J. Moran
Name: Kelli J. Moran
Title: SVP Specialty Care
/s/
BOEHRINGER INGELHEIM PHARMACEUTICALS, INC.
By:
Yew Looi Liew
Name: Yew Looi Liew
Title: President
/s/
9
EAST\188323058.5
G1 THERAPEUTICS, INC.
Cowen and Company, LLC
599 Lexington Avenue
New York, NY 10022
Ladies and Gentlemen:
COMMON STOCK
(par value $0.0001 per share)
SALES AGREEMENT
Exhibit 10.29
Execution Version
February 23, 2022
G1 Therapeutics, Inc., a Delaware corporation (the “Company”), confirms its agreement (this “Agreement”) with Cowen and Company, LLC
(“Cowen”), as follows:
1. Issuance and Sale of Shares. The Company agrees that, from time to time during the term of this Agreement, on the terms and subject to the
conditions set forth herein, it may issue and sell through Cowen, acting as agent and/or principal, shares (the “Placement Shares”) of the Company’s
common stock, par value $0.0001 per share (the “Common Stock”), having an aggregate offering price of up to $100,000,000. Notwithstanding anything
to the contrary contained herein, the parties hereto agree that compliance with the limitation set forth in this Section 1 on the number of shares of Common
Stock issued and sold under this Agreement shall be the sole responsibility of the Company, and Cowen shall have no obligation in connection with such
compliance. The issuance and sale of Common Stock through Cowen will be effected pursuant to the Registration Statement (as defined below) to be filed
by the Company and after such Registration Statement has been declared effective under the Securities Act (as defined below) with the Securities and
Exchange Commission (the “Commission”), although nothing in this Agreement shall be construed as requiring the Company to use the Registration
Statement (as defined below) to issue the Placement Shares. The Registration Statement will be a “shelf” registration statement and the Placement Shares
have been and remain eligible for registration by the Company on such shelf registration statement.
The Company has filed, in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively, the “Securities Act”), with the Commission a registration statement on Form S-3ASR (File No. 333-257640), including a base prospectus,
relating to certain securities, including the Common Stock, to be issued from time to time by the Company, and which incorporates by reference documents
that the Company has filed or will file in accordance with the provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder (collectively, the “Exchange Act”). Such registration statement and an automatic post-effective amendment thereto on Form POSASR filed on
February 23, 2022 became effective on filing, and a post-effective amendment to such registration statement on Form POS AM requesting that the
registration statement be converted to a non-automatic shelf registration statement was filed on February 23, 2022. The Company has prepared a prospectus
or a prospectus supplement to the base prospectus included as part of the registration statement, which prospectus or prospectus supplement relates to the
Placement Shares to be issued from time to time by the Company (the “Prospectus Supplement”). The Company will file a final form of such Prospectus
Supplement pursuant to Rule 424(b) under the Securities Act. Following the date that such registration statement is declared effective, the Company will
furnish to Cowen, for use by Cowen, copies of the prospectus included as part of such registration statement, as supplemented by the Prospectus
Supplement, relating to the Placement Shares. Except where the context otherwise requires, such registration statement, and any post-effective amendment
thereto, as amended when it becomes effective, including all documents filed as part thereof or incorporated by reference therein, and including any
information contained in a Prospectus (as defined below) subsequently filed with the Commission pursuant to Rule 424(b) under the Securities Act
Regulations or deemed to be a part of such registration statement pursuant to Rule 430B or 462(b) of the Securities Act, or any subsequent registration
statement on Form S-3 filed pursuant to Rule 415(a)(6) under the Securities Act by the Company with respect to the Placement Shares, of the Securities
Act, is herein called the “Registration Statement.” The base prospectus, including all documents incorporated therein by reference, included in the
Registration Statement, as it may be supplemented by the Prospectus Supplement, in the form in which such prospectus and/or Prospectus
Supplement have most recently been filed by the Company with the Commission pursuant to Rule 424(b) under the Securities Act Regulations, together
with any “issuer free writing prospectus,” as defined in Rule 433 under the Securities Act (“Rule 433”), relating to the Placement Shares that (i) is
consented to by Cowen, hereinafter referred to as a “Permitted Free Writing Prospectus,” (ii) is required to be filed with the Commission by the
Company or (iii) is exempt from filing pursuant to Rule 433(d)(5)(i), in each case in the form filed or required to be filed with the Commission or, if not
required to be filed, in the form retained in the Company’s records pursuant to Rule 433(g), is herein called the “Prospectus.” Any reference herein to the
Registration Statement, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by
reference therein, and any reference herein to the terms “amend,” “amendment” or “supplement” with respect to the Registration Statement or the
Prospectus shall be deemed to refer to and include the filing after the execution hereof of any document with the Commission deemed to be incorporated
by reference therein. For purposes of this Agreement, all references to the Registration Statement, the Prospectus or to any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission pursuant to the Electronic Data Gathering Analysis and Retrieval System
(“EDGAR”).
2. Placements. Each time that the Company wishes to issue and sell the Placement Shares hereunder (each, a “Placement”), it will notify Cowen
by email notice (or other method mutually agreed to in writing by the parties) (a “Placement Notice”) containing the parameters in accordance with which
it desires the Placement Shares to be sold, which shall at a minimum include the number of Placement Shares to be issued, the time period during which
sales are requested to be made, any limitation on the number of Placement Shares that may be sold in any one Trading Day (as defined in Section 3) and
any minimum price below which sales may not be made, a form of which containing such minimum sales parameters necessary is attached hereto as
Schedule 1. The Placement Notice shall originate from any of the individuals from the Company set forth on Schedule 2 (with a copy to each of the other
individuals from the Company listed on such schedule), and shall be addressed to each of the individuals from Cowen set forth on Schedule 2, as such
Schedule 2 may be amended from time to time. The Placement Notice shall be effective upon receipt by Cowen unless and until (i) in accordance with the
notice requirements set forth in Section 4, Cowen declines to accept the terms contained therein for any reason, in its sole discretion, (ii) the entire amount
of the Placement Shares have been sold, (iii) in accordance with the notice requirements set forth in Section 4, the Company suspends or terminates the
Placement Notice for any reason in its sole discretion, (iv) the Company issues a subsequent Placement Notice with parameters superseding those on the
earlier dated Placement Notice, or (v) this Agreement has been terminated under the provisions of Section 11. The amount of any discount, commission or
other compensation to be paid by the Company to Cowen in connection with the sale of the Placement Shares shall be calculated in accordance with the
terms set forth in Schedule 3. It is expressly acknowledged and agreed that neither the Company nor Cowen will have any obligation whatsoever with
respect to a Placement or any Placement Shares unless and until the Company delivers a Placement Notice to Cowen and Cowen does not decline such
Placement Notice pursuant to the terms set forth above, and then only upon the terms specified therein and herein. In the event of a conflict between the
terms of this Agreement and the terms of a Placement Notice, the terms of the Placement Notice will control.
3. Sale of Placement Shares by Cowen. Subject to the terms and conditions herein set forth, upon the Company’s delivery of a Placement Notice,
and unless the sale of the Placement Shares described therein has been declined, suspended, or otherwise terminated in accordance with the terms of this
Agreement, Cowen, for the period specified in the Placement Notice, will use its commercially reasonable efforts consistent with its normal trading and
sales practices and applicable state and federal laws, rules and regulations and the rules of the Nasdaq Global Select Market LLC (“Nasdaq”) to sell such
Placement Shares up to the amount specified in the Placement Notice, and otherwise in accordance with the terms of such Placement Notice. Cowen will
provide written confirmation to the Company (including by email correspondence to each of the individuals of the Company set forth on Schedule 2, if
receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other than via auto-reply) no later than the
opening of the Trading Day (as defined below) immediately following the Trading Day on which it has made sales of Placement Shares hereunder setting
forth the number of Placement Shares sold on such day, the volume-weighted average price of the Placement Shares sold, and the Net Proceeds (as defined
below) payable to the Company. In the event the Company engages Cowen for a sale of Placement Shares that would constitute a “block” within the
meaning of Rule 10b-18(a)(5) under the Exchange Act (a “Block Sale”), the Company will provide Cowen, at Cowen’s request and upon reasonable
advance notice to the Company, on or prior to the Settlement Date (as defined below), the opinions of counsel, accountants’ letter and officers’ certificates
set forth in Section 8 hereof, each dated the Settlement Date, and such other documents and information as Cowen
shall reasonably request. Cowen may sell Placement Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule
415 of the Securities Act, including without limitation sales made through Nasdaq or on any other existing trading market for the Common Stock.
Notwithstanding the provisions of Section 6(ii), Cowen shall not purchase Placement Shares for its own account as principal unless expressly authorized to
do so by the Company in a Placement Notice. The Company acknowledges and agrees that (i) there can be no assurance that Cowen will be successful in
selling Placement Shares, and (ii) Cowen will incur no liability or obligation to the Company or any other person or entity if it does not sell Placement
Shares for any reason other than a failure by Cowen to use its commercially reasonable efforts consistent with its normal trading and sales practices to sell
such Placement Shares as required under this Section 3. For the purposes hereof, “Trading Day” means any day on which the Company’s Common Stock
is purchased and sold on Nasdaq.
Notwithstanding any other provision of this Agreement, the Company shall not offer, sell or deliver, or request the offer or sale of, any Placement
Shares pursuant to this Agreement and, by notice to Cowen given by telephone (confirmed promptly by email), shall cancel any instructions for the offer or
sale of any Placement Shares, and Cowen shall not be obligated to offer or sell any Placement Shares, (i) during any period in which the Company is, or
could be deemed to be, in possession of material non-public information, or (ii) at any time from and including the date on which the Company shall issue a
press release containing, or shall otherwise publicly announce, its earnings, revenues or other results of operations (an “Earnings Announcement”)
through and including the time that the Company files a Quarterly Report on Form 10-Q or an Annual Report on Form 10-K that includes consolidated
financial statements as of and for the same period or periods, as the case may be, covered by such Earnings Announcement.
4. Suspension of Sales.
(a) The Company or Cowen may, upon notice to the other party in writing (including by email correspondence to each of the individuals of the
other party set forth on Schedule 2, if receipt of such correspondence is actually acknowledged by any of the individuals to whom the notice is sent, other
than via auto-reply) or by telephone (confirmed immediately by verifiable facsimile transmission or email correspondence to each of the individuals of the
other party set forth on Schedule 2), suspend any sale of Placement Shares; provided, however, that such suspension shall not affect or impair either party’s
obligations with respect to any Placement Shares sold hereunder prior to the receipt of such notice. Each of the parties agrees that no such notice under this
Section 4 shall be effective against the other unless it is made to one of the individuals named on Schedule 2 hereto, as such schedule may be amended in
writing from time to time.
(b) If either Cowen or the Company has reason to believe that the exemptive provisions set forth in Rule 101(c)(1) of Regulation M under the
Exchange Act are not satisfied with respect to the Common Stock, it shall promptly notify the other party, and Cowen may, at its sole discretion, suspend
sales of the Placement Shares under this Agreement.
(c) Notwithstanding any other provision of this Agreement, during any period in which the Registration Statement is no longer effective under the
Securities Act, the Company shall promptly notify Cowen, the Company shall not request the sale of any Placement Shares, and Cowen shall not be
obligated to sell or offer to sell any Placement Shares.
5. Settlement.
(a) Settlement of Placement Shares. Unless otherwise specified in the applicable Placement Notice, settlement for sales of Placement Shares will
occur on the second (2nd) Trading Day (or such earlier day as is industry practice for regular-way trading) following the date on which such sales are made
(each, a “Settlement Date” and the first such settlement date, the “First Delivery Date”). The amount of proceeds to be delivered to the Company on a
Settlement Date against receipt of the Placement Shares sold (the “Net Proceeds”) will be equal to the aggregate sales price received by Cowen at which
such Placement Shares were sold, after deduction for (i) Cowen’s commission, discount or other compensation for such sales payable by the Company
pursuant to Section 2 hereof, (ii) any other amounts due and payable by the Company to Cowen hereunder pursuant to Section 7(g) (Expenses) hereof, and
(iii) any transaction fees imposed by any governmental or self-regulatory organization in respect of such sales.
(b) Delivery of Placement Shares. On or before each Settlement Date, the Company will, or will cause its transfer agent to, electronically transfer
the Placement Shares being sold by crediting Cowen’s or its designee’s account (provided Cowen shall have given the Company written notice of such
designee at least one Trading Day prior to the Settlement Date) at The Depository Trust Company through its Deposit and Withdrawal at Custodian System
or by such other means of delivery as may be mutually agreed upon by the parties hereto which in all cases shall be freely tradeable, transferable, registered
shares in good deliverable form. On each Settlement Date, Cowen will deliver the related Net Proceeds in same day funds to an account designated by the
Company on, or prior to, the Settlement Date. The Company agrees that if the Company, or its transfer agent (if applicable), defaults in its obligation to
deliver duly authorized Placement Shares on a Settlement Date, through no fault of Cowen, the Company agrees that in addition to and in no way limiting
the rights and obligations set forth in Section 9(a) (Indemnification and Contribution) hereto, it will (i) hold Cowen harmless against any loss, claim,
damage, or reasonable and documented expense (including reasonable and documented legal fees and expenses), as incurred, arising out of or in
connection with such default by the Company and (ii) pay to Cowen (without duplication) any commission, discount, or other compensation to which it
would otherwise have been entitled absent such default.
6. Representations and Warranties of the Company. Except as disclosed in the Registration Statement or the Prospectus, the Company represents
and warrants to, and agrees with, Cowen that as of the date of this Agreement, unless such representation or warranty specifies a different time, each
Representation Date (as defined in Section 6(m)), each date on which a Placement Notice is given, and any date on which Placement Shares are sold
hereunder:
(a) Compliance with Registration Requirements. The Registration Statement and any Rule 462(b) Registration Statement shall have been declared
effective by the Commission under the Securities Act. The Company has complied, to the Commission’s satisfaction, with all requests of the Commission
for additional or supplemental information. No stop order suspending the effectiveness of the Registration Statement or any Rule 462(b) Registration
Statement is in effect and no proceedings for such purpose have been instituted or are pending or, to the best knowledge of the Company, contemplated or
threatened by the Commission. The Company meets the requirements for use of Form S-3 under the Securities Act. The sale of the Placement Shares
hereunder meets the requirements of General Instruction I.B.1 of Form S-3.
(b) No Misstatement or Omission. The Prospectus when filed, complied and, as amended or supplemented, if applicable, will comply in all material
respects with the Securities Act. Each of the Registration Statement, any Rule 462(b) Registration Statement, the Prospectus and any post-effective
amendments or supplements thereto, at the time it was declared effective or its date, as applicable, complied and as of each of the Settlement Dates, if any,
complied and will comply in all material respects with the Securities Act and did not and, as of each Settlement Date, if any, did not and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not
misleading. The Prospectus, as amended or supplemented, as of its date, did not and, as of each of the Settlement Dates, if any, did not and will not contain
any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties set forth in the two immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with the Agent’s Information (as defined below). There
are no contracts or other documents required to be described in the Prospectus or to be filed as exhibits to the Registration Statement which have not been
described or filed as required.
(c) Offering Materials Furnished to Cowen. The Company has delivered to Cowen one complete copy of the Registration Statement and a copy of
each consent and certificate of experts filed as a part thereof, and conformed copies of the Registration Statement (without exhibits) and the Prospectus, as
amended or supplemented, in such quantities and at such places as Cowen has reasonably requested. The Registration Statement, the Prospectus and any
Permitted Free Writing Prospectus (to the extent any such Permitted Free Writing Prospectus was required to be filed with the Commission) delivered to
Cowen for use in connection with the public offering of the Placement Shares contemplated herein have been and will be identical to the versions of such
documents transmitted to the Commission for filing via EDGAR, except to the extent permitted by Regulation S-T.
(d) Not an Ineligible Issuer. The Company currently is not an “ineligible issuer,” as defined in Rule 405 promulgated under the Securities Act. The
Company agrees to notify Cowen promptly if it becomes an “ineligible issuer.”
(e) Distribution of Offering Material By the Company. The Company has not distributed and will not distribute, prior to the completion of Cowen’s
distribution of the Placement Shares pursuant to this Agreement, any offering material in connection with the offering and sale of the Placement Shares
other than the Prospectus or the Registration Statement.
(f) The Sales Agreement. This Agreement has been duly authorized, executed and delivered by, and is a valid and binding agreement of, the
Company, enforceable in accordance with its terms, except as rights to indemnification hereunder may be limited by applicable law and except as the
enforcement hereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles.
(g) Authorization of the Placement Shares. The Placement Shares, when issued and delivered, will be duly authorized for issuance and sale
pursuant to this Agreement and, when issued and delivered by the Company against payment therefor pursuant to this Agreement, will be duly authorized,
validly issued, fully paid and non-assessable, free and clear of any pledge, lien, encumbrance, security interest or other claim, and the issuance and sale of
the Placement Shares by the Company is not subject to preemptive or other similar rights, in each case arising by operation of law, under the organizational
documents of the Company or under any agreement to which the Company or any subsidiary is a party.
(h) No Applicable Registration or Other Similar Rights. There are no persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included in the offering contemplated by this Agreement, except for such rights as have
been duly waived.
(i) No Material Adverse Change. Except as otherwise disclosed in the Prospectus, subsequent to the respective dates as of which information is
given in the Prospectus: (i) there has been no material adverse change, or any development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business, operations or prospects, whether or not arising from transactions in the
ordinary course of business, of the Company and its subsidiaries, considered as one entity (any such change is called a “Material Adverse Change”); (ii)
the Company and its subsidiaries, considered as one entity, have not incurred any material liability or obligation, indirect, direct or contingent, not in the
ordinary course of business nor entered into any material transaction or agreement not in the ordinary course of business: and (iii) there has been no
dividend or distribution of any kind declared, paid or made by the Company or, except for regular quarterly dividends publicly announced by the Company
or dividends paid to the Company or other subsidiaries, by any of its subsidiaries on any class of capital stock or repurchase or redemption by the Company
or any of its subsidiaries of any class of capital stock, except for repurchases of unvested Common Shares from terminated employees or consultants.
(j) Independent Accountants. PricewaterhouseCoopers LLP, who has expressed its opinion with respect to the financial statements (which term as
used in this Agreement includes the related notes thereto) filed with the Commission or incorporated by reference as a part of the Registration Statement
and included in the Prospectus, is an independent registered public accounting firm as required by the Securities Act and the Exchange Act.
(k) Preparation of the Financial Statements. The financial statements filed with the Commission as a part of or incorporated by reference in the
Registration Statement and included in the Prospectus present fairly, in all material respects, the consolidated financial position of the Company and its
subsidiaries as of and at the dates indicated and the results of their operations and cash flows for the periods specified. The supporting schedules included
in or incorporated in the Registration Statement present fairly the information required to be stated therein. Such financial statements and supporting
schedules have been prepared in conformity with generally accepted accounting principles as applied in the United States applied on a consistent basis
throughout the periods involved, except as may be expressly stated in the related notes thereto. No other financial statements or supporting schedules are
required to be included in or incorporated in the Registration Statement.
(l) XBRL. The interactive data in eXtensible Business Reporting Language included or incorporated by reference in the Registration Statement
fairly presents the information called for in all material respects and has been prepared in accordance with the Commission’s rules and guidelines
applicable thereto.
(m) Incorporation and Good Standing of the Company. The Company has been duly incorporated and is validly existing as a corporation in good
standing under the laws of the State of Delaware and has corporate power and authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its obligations under this Agreement. The Company has no significant subsidiaries as defined
in Rule 1-02(w) of Regulation S-X of the Exchange Act. The Company is duly qualified as a foreign corporation to transact business and is in good
standing in the State of North Carolina and each other jurisdiction in which such qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions (other than the State of North Carolina) where the failure to so qualify or to be in good
standing would not, individually or in the aggregate, result in a Material Adverse Change. The Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the subsidiaries listed in Exhibit 21.1 to the Company’s Annual Report on Form 10-K for the most
recently ended fiscal year and other than (i) those subsidiaries not required to be listed on Exhibit 21.1 by Item 601 of Regulation S-K under the Exchange
Act and (ii) those subsidiaries formed since the last day of the most recently ended fiscal year.
(n) Capital Stock Matters. The Common Stock conforms in all material respects to the description thereof contained in the Prospectus. All of the
issued and outstanding shares of Common Stock have been duly authorized and validly issued, are fully paid and non-assessable and have been issued in
compliance with federal and state securities laws. None of the outstanding shares of Common Stock were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or purchase securities of the Company. There are no authorized or outstanding options,
warrants, preemptive rights, rights of first refusal or other rights to purchase, or equity or debt securities convertible into or exchangeable or exercisable for,
any capital stock of the Company or any of its subsidiaries other than those accurately described in all material respects in the Prospectus. The description
of the Company’s stock option, stock bonus and other stock plans or arrangements, and the options or other rights granted thereunder, set forth in the
Prospectus accurately and fairly presents in all material respects the information required to be shown with respect to such plans, arrangements, options and
rights.
(o) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required. Neither the Company nor any of its subsidiaries
is in violation of its charter or by-laws or is in default (or, with the giving of notice or lapse of time, would be in default) (“Default”) under any indenture,
mortgage, loan or credit agreement, note, contract, franchise, lease or other instrument to which the Company or any of its subsidiaries is a party or by
which it or any of them may be bound, or to which any of the property or assets of the Company or any of its subsidiaries is subject (each, an “Existing
Instrument”), except for such Defaults as would not, individually or in the aggregate, result in a Material Adverse Change. The Company’s execution,
delivery and performance of this Agreement and consummation of the transactions contemplated hereby and by the Prospectus (i) have been duly
authorized by all necessary corporate action and will not result in any violation of the provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach of, or Default under, or result in the creation or imposition of any lien, charge or encumbrance
upon any property or assets of the Company or any of its subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument,
except for such conflicts, breaches, Defaults, liens, charges or encumbrances as would not, individually or in the aggregate, result in a Material Adverse
Change and (iii) will not result in any violation of any law, administrative regulation or administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of, or registration or filing with, any court or other governmental or regulatory authority or
agency, is required for the Company’s execution, delivery and performance of this Agreement and consummation of the transactions contemplated hereby
and by the Prospectus, except such as have been obtained or made by the Company and are in full force and effect under the Securities Act, applicable state
securities or blue sky laws and from the Financial Industry Regulatory Authority (“FINRA”) or Nasdaq.
(p) No Material Actions or Proceedings. Except as disclosed in the Prospectus, there are no legal or governmental actions, suits or proceedings
pending or, to the best of the Company’s knowledge, threatened against or affecting the Company or any of its subsidiaries, where in any such case (A)
there is a reasonable possibility that such action, suit or proceeding might be determined adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would reasonably be expected to result in a Material Adverse
Change or adversely affect the consummation of the transactions contemplated by this Agreement. No material labor dispute with the employees of the
Company or any of its subsidiaries exists or, to the Company’s knowledge, is threatened or imminent.
(q) Licenses or Permits. The Company possesses all licenses, certificates, authorizations and permits issued by, and have made all declarations and
filings with, the appropriate local, state, federal or foreign governmental or regulatory agencies or bodies including, without limitation, those administered
by the United States Food and Drug Administration of the U.S. Department of Health and Human Services (“FDA”) or by any foreign, federal, state or
local governmental or regulatory authority performing functions similar to those performed by the FDA) that are necessary for the ownership or lease of its
properties or the conduct of its business as described in the Prospectus (collectively, the “Governmental Permits”) except where any failures to possess or
make the same would not, singularly or in the aggregate, have a Material Adverse Change. The Company is in compliance with all such Governmental
Permits; all such Governmental Permits are valid and in full force and effect, except where the validity or failure to be in full force and effect would not,
singularly or in the aggregate, have a Material Adverse Change. All such Governmental Permits are free and clear of any restriction or condition that are in
addition to, or materially different from those normally applicable to similar licenses, certificates, authorizations and permits. The Company has not
received notification of any revocation, modification, suspension, termination or invalidation (or proceedings related thereto) of any such Governmental
Permit and no event has occurred that allows or results in, or after notice or lapse of time or both would allow or result in, revocation, modification,
suspension, termination or invalidation (or proceedings related thereto ) of any such Governmental Permit and the Company has no reason to believe that
any such Governmental Permit will not be renewed.
(r) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all necessary federal, state and foreign income, property and
franchise tax returns (or have properly requested extensions thereof) and have paid all taxes required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any of them except as may be being contested in good faith and by appropriate proceedings.
The Company has made adequate charges, accruals and reserves in the applicable financial statements referred to in Section 1(i) above in respect of all
federal, state and foreign income, property and franchise taxes for all periods as to which the tax liability of the Company or any of its consolidated
subsidiaries has not been finally determined.
(s) Company Not an “Investment Company”. The Company has been advised of the rules and requirements under the Investment Company Act of
1940, as amended (the “Investment Company Act”). The Company is not, and after receipt of payment for the Placement Shares will not be, an
“investment company” within the meaning of Investment Company Act.
(t) Insurance. Except as otherwise described in the Prospectus, each of the Company and its subsidiaries are insured by insurers of recognized
financial responsibility with policies in such amounts and with such deductibles and covering such risks as are generally deemed prudent and customary for
the business for which it is engaged. The Company has no reason to believe that it or any subsidiary will not be able (i) to renew its existing insurance
coverage as and when such policies expire or (ii) to obtain comparable coverage from similar institutions as may be necessary or appropriate to conduct its
business as now conducted and at a cost that would not result in a Material Adverse Change.
(u) No Price Stabilization or Manipulation. The Company has not taken and will not take, directly or indirectly, any action designed to or that
might be reasonably expected to cause or result in stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of
the Placement Shares.
(v) Related Party Transactions. There are no business relationships or related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus which have not been described as required.
(w) Exchange Act Compliance. The documents incorporated or deemed to be incorporated by reference in the Prospectus, at the time they were or
hereafter are filed with the Commission, complied and will comply in all material respects with the requirements of the Exchange Act, and, when read
together with the other information in the Prospectus, at the Settlement Dates, will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the fact required to be stated therein or necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
(x) No Unlawful Contributions or Other Payments. Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge, any director,
officer, employee, agent, affiliate or other person acting on behalf of the Company or any subsidiary has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government officials or employees, political parties or campaigns, political party officials, or candidates for political office from corporate funds;
(iii) violated or is in violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or any applicable anti-corruption laws, rules,
or regulations of any other jurisdiction in which the Company or any subsidiary conducts business; or (iv) made any other unlawful bribe, rebate, payoff,
influence payment, kickback or other unlawful payment to any person.
(y) Compliance with Money Laundering Laws. The operations of the Company and its subsidiaries are and have been conducted at all times in
compliance with all applicable financial recordkeeping and reporting requirements, including those of the U.S. Bank Secrecy Act, as amended by Title III
of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act),
and the applicable anti-money laundering statutes of jurisdictions where the Company and its subsidiaries conduct business, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or enforced by any governmental agency (collectively, the “Anti-
Money Laundering Laws”), and no action, suit or proceeding by or before any court or governmental agency, authority, body or any arbitrator involving
the Company or any of its subsidiaries with respect to Anti-Money Laundering Laws is pending, or to the knowledge of the Company, threatened.
(z) Compliance with OFAC.
(i)
(ii)
(iii)
Neither the Company nor any of its subsidiaries, nor any director, officer or employee thereof, nor to the Company’s knowledge, any
agent, affiliate, representative, or other person acting on behalf of the Company or any of its subsidiaries, is an individual or entity
(“Person”) that is, or is owned or controlled by a Person that is: (i) the subject of any sanctions administered or enforced by the U.S.
Department of Treasury’s Office of Foreign Assets Control (“OFAC”), the United Nations Security Council (“UNSC”), the European
Union (“EU”), Her Majesty’s Treasury (“HMT”), or other relevant sanctions authority (collectively, “Sanctions”), nor (ii) located,
organized, or resident in a country or territory that is the subject of a U.S. government embargo (including, without limitation, Cuba,
Iran, North Korea, Sudan, Syria and the Crimea).
The Company will not, directly or indirectly, use the Net Proceeds, or lend, contribute or otherwise make available such Net Proceeds
to any subsidiary, joint venture partner or other Person: (i) to fund or facilitate any activities or business of or with any Person that, at
the time of such funding or facilitation, is the subject of Sanctions, or in any country or territory that, at the time of such funding or
facilitation, is the subject of a U.S. government embargo; or (ii) in any other manner that will result in a violation of Sanctions by any
Person (including Cowen).
For the past five (5) years, the Company and its subsidiaries have not knowingly engaged in, are not now knowingly engaged in, and
will not engage in, any direct or indirect dealings or transactions with any Person that at the time of the dealing or transaction is or was
the subject of Sanctions or any country or territory that, at the time of the dealing or transaction is or was the subject of a U.S.
government embargo.
(aa) Company’s Accounting System. The Company maintains a system of “internal control over financial reporting” (as such term is defined in
Rule 13a-15(f) of the General Rules and Regulations under the Exchange Act (the “Exchange Act Rules”)) that complies with the requirements of the
Exchange Act and has been designed by their respective principal executive and principal financial officers, or under their supervision, to provide
reasonable assurances that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded
as necessary to permit preparation of financial statements in conformity with U.S. GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv) the recorded accountability for assets is compared with existing
assets at
reasonable intervals and appropriate action is taken with respect to any differences. The Company’s internal control over financial reporting is effective.
Except as described in the Prospectus, since the end of the Company’s most recent audited fiscal year, there has been (A) no material weakness in the
Company’s internal control over financial reporting (whether or not remediated) and (B) no change in the Company’s internal control over financial
reporting that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
(bb) Disclosure Controls. The Company maintains disclosure controls and procedures (as such is defined in Rule 13a-15(e) of the Exchange Act
Rules) that comply with the requirements of the Exchange Act; such disclosure controls and procedures have been designed to ensure that information
required to be disclosed by the Company in reports that it files or submit under the Exchange Act is recorded, processed, summarized and reported within
the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated
and communicated to the Company’s management to allow timely decisions regarding disclosures. The Company has conducted evaluations of the
effectiveness of its disclosure controls as required by Rule 13a-15 of the Exchange Act.
(cc) Compliance with Environmental Laws. Except as otherwise described in the Prospectus, and except as would not, individually or in the
aggregate, result in a Material Adverse Change (i) neither the Company nor any of its subsidiaries is in violation of any federal, state, local or foreign law
or regulation relating to pollution or protection of human health or the environment, wastes, toxic substances, hazardous substances, pollutants or
contaminants (collectively, “Environmental Laws”),; (ii) there is no claim, action or cause of action filed with a court or governmental authority, no
investigation with respect to which the Company has received written notice, and no written notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs, natural resources damages, property damages, personal injuries, attorneys’ fees or
penalties arising out of, based on or resulting from violation of Environmental Laws (collectively, “Environmental Claims”), pending or, to the
Company’s knowledge, threatened against the Company or any of its subsidiaries or any person or entity whose liability for any Environmental Claim the
Company or any of its subsidiaries has retained or assumed either contractually or by operation of law.
(dd) Intellectual Property. The Company owns or possesses the valid right to use all (i) valid and enforceable patents, patent applications,
trademarks, trademark registrations, service marks, service mark registrations, Internet domain name registrations, copyrights, copyright registrations,
licenses, trade secret rights (“Intellectual Property Rights”) and (ii) inventions, software, works of authorships, trademarks, service marks, trade names,
databases, formulae, know how, Internet domain names and other intellectual property (including trade secrets and other unpatented and/or unpatentable
proprietary confidential information, systems, or procedures) (collectively, “Intellectual Property Assets”) necessary to conduct its business as currently
conducted, and as proposed to be conducted and described in the Prospectus. The Company has not received any opinion from its legal counsel concluding
that any activities of its business infringe, misappropriate, or otherwise violate, valid and enforceable Intellectual Property Rights of any other person, and
has not received written notice of any challenge, which is to the Company’s knowledge still pending, by any other person to the rights of the Company with
respect to any Intellectual Property Rights or Intellectual Property Assets owned or used by the Company. To the Company’s knowledge, the Company’s
business as now conducted does not give rise to any infringement of, any misappropriation of, or other violation of, any valid and enforceable Intellectual
Property Rights of any other person. All licenses for the use of the Intellectual Property Rights described in the Prospectus are valid, binding upon, and
enforceable in all material respects by or against the parties thereto in accordance to its terms. The Company has complied in all material respects with, and
is not in breach nor has received any asserted or threatened claim of breach of any Intellectual Property license, and the Company has no knowledge of any
breach or anticipated breach by any other person to any Intellectual Property license. Except as described in the Prospectus, no claim has been made against
the Company alleging the infringement by the Company of any patent, trademark, service mark, trade name, copyright, trade secret, license in or other
intellectual property right or franchise right of any person. The Company has taken all reasonable steps to protect, maintain and safeguard its Intellectual
Property Rights, including the execution of appropriate nondisclosure and confidentiality agreements. The consummation of the transactions contemplated
by this Agreement will not result in the loss or impairment of or payment of any additional amounts with respect to, nor require the consent of any other
person in respect of, the Company’s right to own, use, or hold for use any of the Intellectual Property Rights as owned, used or held for use in the conduct
of the business as currently conducted. With respect to the use of the software in the Company’s business as it is currently conducted,
the Company has not experienced any material defects in such software including any material error or omission in the processing of any transactions other
than defects which have been corrected, and to the Company’s knowledge, no such software contains any device or feature designed to disrupt, disable, or
otherwise impair the functioning of any software or is subject to the terms of any “open source” or other similar license that provides for the source code of
the software to be publicly distributed or dedicated to the public.
(ee) Listing. The Company is subject to and in compliance in all material respects with the reporting requirements of Section 13 or Section 15(d) of
the Exchange Act. The Common Stock is registered pursuant to Section 12(b) or Section 12(g) of the Exchange Act and is listed on the Nasdaq, and the
Company has taken no action designed to, or reasonably likely to have the effect of, terminating the registration of the Common Stock under the Exchange
Act or delisting the Common Stock from the Exchange, nor has the Company received any notification that the Commission or Nasdaq is contemplating
terminating such registration or listing. The Company has taken all necessary actions to ensure that, upon and at all times after the Nasdaq shall have
approved the Placement Shares for listing, it will be in compliance with all applicable corporate governance requirements set forth in the Nasdaq’s listing
rules that are then in effect.
(ff) Brokers. Except for Cowen, there is no broker, finder or other party that is entitled to receive from the Company any brokerage or finder’s fee
or other fee or commission as a result of any transactions contemplated by this Agreement.
(gg) No Outstanding Loans or Other Indebtedness. Except as described in the Prospectus, there are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or guarantees or indebtedness by the Company to or for the benefit of any of the officers
or directors of the Company or any of the members of any of them.
(hh) No Reliance. The Company has not relied upon Cowen or legal counsel for Cowen for any legal, tax or accounting advice in connection with
the offering and sale of the Placement Shares.
(ii) Cowen Purchases. The Company acknowledges and agrees that Cowen has informed the Company that Cowen may, to the extent permitted
under the Securities Act and the Exchange Act, purchase and sell shares of Common Stock for its own account while this Agreement is in effect, provided,
that (i) no such purchase or sales shall take place while a Placement Notice is in effect (except to the extent Cowen may engage in sales of Placement
Shares purchased or deemed purchased from the Company as a “riskless principal” or in a similar capacity) and (ii) the Company shall not be deemed to
have authorized or consented to any such purchases or sales by Cowen.
(jj) Compliance with Laws. The Company has not been advised, and has no reason to believe, that it and each of its subsidiaries are not conducting
business in compliance with all applicable laws, rules and regulations of the jurisdictions in which it is conducting business, except where failure to be so in
compliance would not result in a Material Adverse Change.
(kk) Regulatory Matters.
(i) The Company has not received any FDA Form 483, notice of adverse filing, warning letter, untitled letter or other correspondence or notice
from the FDA, or any other court or arbitrator or federal, state, local, supranational or foreign governmental or regulatory authority, alleging or asserting
noncompliance with the Federal Food, Drug and Cosmetic Act (21 U.S.C. § 301 et seq.) (the “FDCA”). The Company and its directors, officers,
employees and agents are and have been in compliance with applicable health care laws, including without limitation, the FDCA, the federal Anti-
Kickback Statute (42 U.S.C. § 1320a-7b(b)), the civil False Claims Act (31 U.S.C. § 3729 et seq.), the criminal False Claims Law (42 U.S.C. § 1320a-
7b(a)), the Civil Monetary Penalties Law (42 U.S.C. § 1320a-7a), the Health Insurance Portability and Accountability Act of 1996 (42 U.S.C. § 1320d et
seq.), as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (42 U.S.C. § 17921 et seq.) the exclusion laws (42
U.S.C. § 1320a-7), Medicare (Title XVIII of the Social Security Act), Medicaid (Title XIX of the Social Security Act), and the Patient Protection and
Affordable Care Act of 2010, as amended by the Health Care and Education Affordability Reconciliation Act of 2010, including, without limitation, the
Physician Payments Sunshine Act (42 U.S.C. § 1320a-7h), and the regulations promulgated pursuant to such laws, and comparable state laws, and all other
local, state, federal, national, supranational, and foreign laws, manual
provisions, policies and administrative guidance relating to the regulation of the Company (collectively, “Health Care Laws”). The Company has not,
either voluntarily or involuntarily, initiated, conducted or issued or caused to be initiated, conducted or issued, any recall, market withdrawal or
replacement, safety alert, post sale warning, “dear doctor” letter, or other notice or action relating to the alleged lack of safety or efficacy of any product or
any alleged product defect or violation and, to the knowledge of the Company, no third-party has initiated or conducted any such notice or action. Neither
the Company nor any of its officers, directors, employees, or agents has been or is currently excluded from participation in the Medicare and Medicaid
programs or any other state or federal health care program.
(ii) The studies, tests and preclinical or clinical trials conducted by or on behalf of the Company that are described in the Prospectus (the
“Company Studies and Trials”) were and, if still pending, are being, conducted in all material respects in accordance with experimental protocols,
procedures and controls pursuant to applicable Health Care Laws, including FDA’s current good clinical practice regulations and guidance, and accepted
professional scientific standards; the descriptions of the results of the Company Studies and Trials contained in the Prospectus are accurate in all material
respects; the Company has no knowledge of any other studies or trials not described in the Prospectus, the results of which are inconsistent with or call into
question the results described or referred to in the Prospectus; and the Company has not received any notices or correspondence with the FDA or any
foreign, state or local governmental body exercising comparable authority requiring the termination, suspension or material modification of any Company
Studies or Trials that termination, suspension or material modification would reasonably be expected to have a Material Adverse Change and, to the
Company’s knowledge, there are no reasonable grounds for the same. The Company has obtained (or caused to be obtained) informed consent by or on
behalf of each human subject who participated in the Company Studies and Trials. In using or disclosing patient information received by the Company in
connection with the Company Studies and Trials, the Company has complied in all material respects with all applicable Health Care Laws and regulatory
rules or requirements. To the Company’s knowledge, none of the Company Studies and Trials involved any investigator who has been suspended, debarred
or disqualified from conducting clinical trials or as a clinical investigator, or has been found by the FDA to have engaged in scientific misconduct.
(iii) The manufacture of the Company’s product and product candidates by or on behalf of the Company is being conducted in compliance in all
material respects with applicable Health Care Laws, including, without limitation, the FDA’s current good manufacturing practice regulations at 21 CFR
Parts 210 and 211, and to the extent applicable, the respective counterparts thereof promulgated by governmental authorities in countries outside the United
States. The Company has not had any manufacturing site (whether Company-owned or that of a third party manufacturer for the Company’s product and
product candidates) subject to a governmental authority (including FDA) shutdown or import or export prohibition, nor received any FDA or other
governmental authority requests to make material changes to the Company’s products and product candidates, processes or operations, or similar
correspondence or notice from the FDA or other governmental authority. To the knowledge of the Company, neither the FDA or any other governmental
authority is considering such action.
(iv) The Company has filed with the FDA all required and material filings, including required submissions in support of the Company’s new drug
application (“NDA”), any NDA post-marketing commitments, and drug safety reports or similar required reports of adverse drug events. All such filings
were in material compliance with all applicable Health Care Laws when filed, and no deficiencies have been asserted in writing by the FDA or similar
regulatory authority with respect to any such filings.
(v) Neither the Company nor, to the knowledge of the Company, any of its directors, officers, or employees have (a) made an untrue statement of a
material fact or fraudulent statement to the FDA or any other comparable regulatory authority or (b) failed to disclose a material fact required to be
disclosed to the FDA or any other comparable regulatory authority, in each case regarding the Company. Neither the Company, nor any of its directors,
officers, or employees are the subject of any pending or threatened investigation by the FDA under the FDA Fraud Policy, or the subject of any similar
investigation by any other comparable regulatory authority that, assuming such investigations were determined or resolved adversely, would reasonably be
expected to result in a Material Adverse Change.
(mm) FINRA Exemption. To enable Cowen to rely on Rule 5110(b)(7)(C)(i) of FINRA, the Company represents that the Company (i) has a non-
affiliate, public common equity float of at least $150 million or a non-affiliate, public common equity float of at least $100 million and annual trading
volume of at least three million shares and (ii) has been subject to the Exchange Act reporting requirements for a period of at least 36 months.
(nn) IT Systems. (i)(x)There has been no security breach or attack or other compromise of or relating to any of the Company’s and its subsidiaries’
information technology and computer systems, networks, hardware, software, data (including the data of their respective customers, employees, suppliers,
vendors and any third party data maintained by or on behalf of them), equipment or technology (“IT Systems and Data”), and (y) the Company and its
subsidiaries have not been notified of, and have no knowledge of any event or condition that would reasonably be expected to result in any security breach,
attack or compromise to their IT Systems and Data, (ii) the Company and each of its subsidiaries have materially complied, and are presently in material
compliance with, all applicable laws, statutes or any judgment, order, rule or regulation of any court or arbitrator or governmental or regulatory authority
and all internal policies and contractual obligations relating to the privacy and security of IT Systems and Data and to the protection of such IT Systems
and Data from unauthorized use, access, misappropriation, or modification and (iii) the Company and each of its subsidiaries have implemented backup and
disaster recovery technology consistent with industry standards and practice.
(oo) Privacy Laws. The Company and each of its subsidiaries are, and at all prior times were, in material compliance with all applicable data
privacy and security laws and regulations, including, without limitation, the Health Insurance Portability and Accountability Act (“HIPAA”), as amended
by the Health Information Technology for Economic and Clinical Health Act (the “HITECH Act”) (42 U.S.C. Section 17921 et seq.); and the Company
and each its subsidiaries have taken all necessary actions to comply with the European Union General Data Protection Regulation (“GDPR”) (EU
2016/679) (collectively, “Privacy Laws”). To ensure compliance with the Privacy Laws, the Company and each of its subsidiaries have in place, comply
with, and take appropriate steps reasonably designed to ensure compliance in all material respects with their policies and procedures relating to data privacy
and security and the collection, storage, use, disclosure, handling and analysis of Personal Data (the “Policies”). The Company provides accurate notice of
its Policies to its customers, employees, third party vendors and representatives. The Policies provide accurate and sufficient notice of the Company’s then-
current privacy practices relating to its subject matter and such Policies do not contain any material omissions of the Company’s then-current privacy
practices. “Personal Data” means (i) a natural persons’ name, street address, telephone number, email address, photograph, social security number, bank
information, or customer or account number; (ii) any information which would qualify as “personally identifying information” under the Federal Trade
Commission Act, as amended; (iii) Protected Health Information as defined by HIPAA; (iv) “personal data” as defined by GDPR; and (v) any other piece
of information that allows the identification of such natural person, or his or her family, or permits the collection or analysis of any data related to an
identified person’s health or sexual orientation. None of such disclosures made or contained in any of the Policies have been inaccurate, misleading,
deceptive or in violation of any Privacy Laws or Policies in any material respect. The execution, delivery and performance of this Agreement or any other
agreement referred to in this Agreement will not result in a breach of any Privacy Laws or Policies. Neither the Company nor any of its subsidiaries, (i) has
received notice of any actual or potential liability under or relating to, or actual or potential violation of, any of the Privacy Laws, and has no knowledge of
any event or condition that would reasonably be expected to result in any such notice; (ii) is currently conducting or paying for, in whole or in part, any
investigation, remediation or other corrective action pursuant to any Privacy Law; or (iii) is a party to any order, decree, or agreement that imposed any
obligation or liability under any Privacy Law.
(pp) No Associated Persons; FINRA Matters. Neither the Company nor any of its affiliates (within the meaning of FINRA Rule 5121(f)(1))
directly or indirectly controls, is controlled by, or is under common control with, or is an associated person (within the meaning of Article I, Section 1(ee)
of the By-laws of FINRA) of, any member firm of FINRA. The Company qualifies as an “experienced issuer” (within the meaning of FINRA Conduct
Rule 5110(j)(6)) for purposes of the exemption from filing under FINRA Conduct Rule 5110(h)(1)(C).
The Company acknowledges that Cowen and, for purposes of the opinions to be delivered pursuant to Section 7 hereof, counsel to the
Company and counsel to Cowen, will rely upon the accuracy and truthfulness of the foregoing representations and hereby consents to such reliance. Any
certificate signed by an officer of the Company and delivered to Cowen or to counsel for Cowen in connection with this Agreement shall be deemed to be a
representation and warranty by the Company to Cowen as to the matters set forth therein.
7. Covenants of the Company. The Company covenants and agrees with Cowen that:
(a) Registration Statement Amendments. After the date of this Agreement and during any period in which a Prospectus relating to any Placement
Shares is required to be delivered by Cowen under the Securities Act (including in circumstances where such requirement may be satisfied pursuant to Rule
172 under the Securities Act), (i) the Company will notify Cowen promptly of the time when any subsequent amendment to the Registration Statement,
other than documents incorporated by reference, has been filed with the Commission and/or has become effective or any subsequent supplement to the
Prospectus has been filed and of any request by the Commission for any amendment or supplement to the Registration Statement or Prospectus or for
additional information (insofar as it relates to the transactions contemplated hereby), (ii) the Company will prepare and file with the Commission, promptly
upon Cowen’s reasonable request, any amendments or supplements to the Registration Statement or Prospectus that, in Cowen’s reasonable opinion, may
be necessary or advisable in connection with the distribution of the Placement Shares by Cowen (provided, however, that the failure of Cowen to make
such request shall not relieve the Company of any obligation or liability hereunder, or affect Cowen’s right to rely on the representations and warranties
made by the Company in this Agreement; and provided, further, that the only remedy Cowen shall have with respect to the failure to make such filing will
be to cease making sales under this Agreement until such amendment or supplement is filed); (iii) the Company will not file any amendment or supplement
to the Registration Statement or Prospectus, other than documents incorporated by reference, relating to the Placement Shares or a security convertible into
the Placement Shares unless a copy thereof has been submitted to Cowen within a reasonable period of time before the filing and Cowen has not reasonably
objected in writing thereto (provided, however, that (A) the failure of Cowen to make such objection shall not relieve the Company of any obligation or
liability hereunder, or affect Cowen’s right to rely on the representations and warranties made by the Company in this Agreement and (B) the only remedy
Cowen shall have with respect to the failure by the Company to provide Cowen with such copy of the filing of such amendment or supplement despite
Cowen’s objection shall be to cease making sales under this Agreement) and the Company will furnish to Cowen at the time of filing thereof a copy of any
document that upon filing is deemed to be incorporated by reference into the Registration Statement or Prospectus, except for those documents available
via EDGAR; (iv) the Company will cause each amendment or supplement to the Prospectus, other than documents incorporated by reference, to be filed
with the Commission as required pursuant to the applicable paragraph of Rule 424(b) of the Securities Act, and (v) prior to the termination of this
Agreement, the Company will notify Cowen if at any time the Registration Statement shall no longer be effective as a result of the passage of time pursuant
to Rule 415 under the Securities Act or otherwise.
(b) Notice of Commission Stop Orders. The Company will advise Cowen, promptly after it receives notice or obtains knowledge thereof, of the
issuance or threatened issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement, of the suspension of the
qualification of the Placement Shares for offering or sale in any jurisdiction, or of the initiation or threatening of any proceeding for any such purpose; and
it will promptly use its commercially reasonable efforts to prevent the issuance of any stop order or to obtain its withdrawal if such a stop order should be
issued.
(c) Delivery of Prospectus; Subsequent Changes. During any period in which a Prospectus relating to the Placement Shares is required to be
delivered by Cowen under the Securities Act with respect to a pending sale of the Placement Shares, (including in circumstances where such requirement
may be satisfied pursuant to Rule 172 under the Securities Act), the Company will comply with all requirements imposed upon it by the Securities Act, as
from time to time in force, and to file on or before their respective due dates (taking into account any extensions available under the Exchange Act) all
reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Sections 13(a), 13(c), 14,
15(d) or any other provision of or under the Exchange Act. If during such period any event occurs as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit to state a material fact necessary to make the statements therein, in the light of
the circumstances then existing, not misleading, or if during such period it is necessary to amend or supplement the Registration Statement or Prospectus to
comply with the Securities Act, the Company will promptly notify Cowen to suspend the offering of Placement Shares during such period and the
Company will promptly amend or supplement the Registration Statement or Prospectus (at the reasonable expense of the Company) so as to correct such
statement or omission or effect such compliance; provided, however, that the Company may delay the filing of any amendment or supplement, if in the
judgment of the Company, it is in the best interests of the Company. Until such time as the Company shall have corrected such statement or omission or
effected such compliance, the Company shall not request that Cowen resume the offering of Placement Shares.
(d) Listing of Placement Shares. During any period in which the Prospectus relating to the Placement Shares is required to be delivered by Cowen
under the Securities Act with respect to a pending sale of the Placement Shares (including in circumstances where such requirement may be satisfied
pursuant to Rule 172 under the Securities Act), the Company will use its commercially reasonable efforts to cause the Placement Shares to be listed on
Nasdaq and to qualify the Placement Shares for sale under the securities laws of such jurisdictions as Cowen reasonably designates and to continue such
qualifications in effect so long as required for the distribution of the Placement Shares; provided, however, that the Company shall not be required in
connection therewith to qualify as a foreign corporation or dealer in securities or file a general consent to service of process in any jurisdiction.
(e) Delivery of Registration Statement and Prospectus. The Company will furnish to Cowen and its counsel (at the reasonable expense of the
Company) copies of the Registration Statement, the Prospectus (including all documents incorporated by reference therein) and all amendments and
supplements to the Registration Statement or Prospectus that are filed with the Commission during any period in which a Prospectus relating to the
Placement Shares is required to be delivered under the Securities Act (including all documents filed with the Commission during such period that are
deemed to be incorporated by reference therein), in each case as soon as reasonably practicable and in such quantities as Cowen may from time to time
reasonably request and, at Cowen’s request, will also furnish copies of the Prospectus to each exchange or market on which sales of the Placement Shares
may be made; provided, however, that the Company shall not be required to furnish any document (other than the Prospectus) to Cowen to the extent such
document is available on EDGAR.
(f) Earnings Statement. The Company will make generally available to its security holders as soon as practicable, via filing on EDGAR, but in any
event not later than 15 months after the end of the Company’s current fiscal quarter, an earnings statement covering a 12-month period that satisfies the
provisions of Section 11(a) and Rule 158 of the Securities Act.
(g) Expenses. The Company, whether or not the transactions contemplated hereunder are consummated or this Agreement is terminated, in
accordance with the provisions of Section 11 hereunder, will pay the following expenses all incident to the performance of its obligations hereunder,
including, but not limited to, expenses relating to (i) the preparation, printing and filing of the Registration Statement and each amendment and supplement
thereto, of each Prospectus and of each amendment and supplement thereto, (ii) the preparation, issuance and delivery of the Placement Shares, (iii) the
qualification of the Placement Shares under securities laws in accordance with the provisions of Section 7(d) of this Agreement, including filing fees
(provided, however, that any fees or disbursements of counsel for Cowen in connection therewith shall be paid by Cowen except as set forth in (vii) below),
(iv) the printing and delivery to Cowen of copies of the Prospectus and any amendments or supplements thereto, and of this Agreement, (v) the fees and
expenses incurred in connection with the listing or qualification of the Placement Shares for trading on Nasdaq, (vi) the filing fees and expenses, if any, of
the Commission, (vii) the filing fees and associated legal expenses of Cowen’s outside counsel for filings with the FINRA Corporate Financing
Department, if any, such legal expense reimbursement not to exceed $10,000 and (viii) the reasonable fees and disbursements of Cowen’s counsel in an
amount not to exceed $50,000.
(h) Use of Proceeds. The Company will use the Net Proceeds as described in the Prospectus in the section entitled “Use of Proceeds.”
(i) Notice of Other Sales. During the pendency of any Placement Notice given hereunder, and for five (5) trading days following the termination of
any Placement Notice given hereunder, the Company shall provide Cowen notice as promptly as reasonably possible before it offers to sell, contracts to
sell, sells, grants any option to sell or otherwise disposes of any shares of Common Stock (other than Placement Shares offered pursuant to the provisions
of this Agreement) or securities convertible into or exchangeable for Common Stock, warrants or any rights to purchase or acquire Common Stock;
provided, that such notice shall not be required in connection with the (i) issuance, grant or sale of Common Stock, options to purchase shares of Common
Stock or Common Stock issuable upon the exercise of options or other equity awards pursuant to the any stock option, stock bonus or other stock plan or
arrangement described in the Prospectus, (ii) the issuance of securities in connection with an acquisition, merger or sale or purchase of assets or (iii) the
issuance or sale of Common Stock pursuant to any dividend reinvestment plan that the Company may adopt from time to time provided the implementation
of such is disclosed to Cowen in advance or (iv) any shares of common stock issuable upon the exchange, conversion or redemption of securities or the
exercise of warrants, options or other rights in effect or outstanding.
(j) Change of Circumstances. The Company will, at any time during a fiscal quarter in which the Company intends to tender a Placement Notice or
sell Placement Shares, advise Cowen promptly after it shall have received notice or obtained knowledge thereof, of any information or fact that would alter
or affect in any material respect any opinion, certificate, letter or other document provided to Cowen pursuant to this Agreement.
(k) Due Diligence Cooperation. During the term of this Agreement, the Company will cooperate with any reasonable due diligence review
conducted by Cowen or its agents in connection with the transactions contemplated hereby, including, without limitation, providing information and
making available documents and senior corporate officers, during regular business hours and at the Company’s principal offices, as Cowen may reasonably
request.
(l) Required Filings Relating to Placement of Placement Shares. The Company agrees that on such dates as the Securities Act shall require, the
Company will (i) file a prospectus supplement with the Commission under the applicable paragraph of Rule 424(b) under the Securities Act (each and
every filing under Rule 424(b), a “Filing Date”), which prospectus supplement will set forth, within the relevant period, the amount of Placement Shares
sold through Cowen, the Net Proceeds to the Company and the compensation payable by the Company to Cowen with respect to such Placement Shares,
and (ii) deliver such number of copies of each such prospectus supplement to each exchange or market on which such sales were effected as may be
required by the rules or regulations of such exchange or market. The Company shall disclose in its quarterly reports on Form 10-Q and in its annual report
on Form 10-K, the number of the Placement Shares sold through Cowen under this Agreement, and the gross proceeds and Net Proceeds to the Company
from the sale of the Placement Shares and the compensation paid by the Company with respect to sales of the Placement Shares pursuant to this Agreement
during the relevant quarter or, in the case of an Annual Report on Form 10-K, during the fiscal year covered by such Annual Report and the fourth quarter
of such fiscal year.
(m) Representation Dates; Certificate. During the term of this Agreement, on or prior to the First Delivery Date and each time the Company (i) files
the Prospectus relating to the Placement Shares or amends or supplements the Registration Statement or the Prospectus relating to the Placement Shares
(other than a prospectus supplement filed in accordance with Section 7(l) of this Agreement) by means of a post-effective amendment, sticker, or
supplement but not by means of incorporation of document(s) by reference to the Registration Statement or the Prospectus relating to the Placement
Shares; (ii) files an annual report on Form 10-K under the Exchange Act; (iii) files its quarterly reports on Form 10-Q under the Exchange Act; or (iv) files
a current report on Form 8-K containing amended financial information (other than information “furnished” pursuant to Items 2.02 or 7.01 of Form 8-K)
under the Exchange Act (each date of filing of one or more of the documents referred to in clauses (i) through (iv) shall be a “Representation Date”); the
Company shall furnish Cowen with a certificate, in the form attached hereto as Exhibit 7(m) within three (3) Trading Days of any Representation Date if
requested by Cowen. The requirement to provide a certificate under this Section 7(m) shall be automatically waived for any Representation Date occurring
at a time at which no Placement Notice is pending, which waiver shall continue until the earlier to occur of the date the Company delivers a Placement
Notice hereunder (which for such calendar quarter shall be considered a Representation Date) and the next occurring Representation Date; provided,
however, that such waiver shall not apply for any Representation Date on which the Company files its annual report on Form 10-K. Notwithstanding the
foregoing, if the Company subsequently decides to sell Placement Shares following a Representation Date when the Company relied on such waiver and
did not provide Cowen with a certificate under this Section 7(m), then before the Company delivers the Placement Notice or Cowen sells any Placement
Shares, the Company shall provide Cowen with a certificate, in the form attached hereto as Exhibit 7(m), dated the date of the Placement Notice.
(n) Legal Opinion. On or prior to the First Delivery Date and within three (3) Trading Days of each Representation Date with respect to which
the Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause to
be furnished to Cowen a written opinion of Mintz, Levin Cohn, Ferris, Glovsky and Popeo, P.C. (“Company Counsel”), or other counsel satisfactory to
Cowen, in form and substance satisfactory to Cowen and its counsel, dated the date that the opinion is required to be delivered, modified, as necessary, to
relate to the Registration Statement and the Prospectus as then amended or supplemented; provided, however, that in lieu of such opinions for subsequent
Representation Dates, Company Counsel may furnish Cowen with a letter (a “Reliance Letter”) to the effect that Cowen may rely on a prior opinion
delivered under this Section 7(n) to the same extent as if it were dated the date of such letter (except
that statements in such prior opinion shall be deemed to relate to the Registration Statement and the Prospectus as amended or supplemented at such
Representation Date).
(o) Comfort Letter. On or prior to the First Delivery Date and within three (3) Trading Days of each Representation Date with respect to which the
Company is obligated to deliver a certificate in the form attached hereto as Exhibit 7(m) for which no waiver is applicable, the Company shall cause its
independent accountants to furnish Cowen a letter (the “Comfort Letter”), dated the date the Comfort Letter is delivered, in form and substance
reasonably satisfactory to Cowen, (i) confirming that they are an independent registered public accounting firm within the meaning of the Securities Act
and the PCAOB, (ii) stating, as of such date, the conclusions and findings of such firm with respect to the financial information and other matters ordinarily
covered by accountants’ “comfort letters” to Cowen in connection with registered public offerings (the first such letter, the “Initial Comfort Letter”) and
(iii) updating the Initial Comfort Letter with any information that would have been included in the Initial Comfort Letter had it been given on such date and
modified as necessary to relate to the Registration Statement and the Prospectus, as amended and supplemented to the date of such letter.
(p) Market Activities. The Company will not, directly or indirectly, (i) take any action designed to cause or result in, or that constitutes or might
reasonably be expected to constitute, the stabilization or manipulation of the price of any security of the Company to facilitate the sale or resale of the
Placement Shares or (ii) sell, bid for, or purchase the Placement Shares to be issued and sold pursuant to this Agreement, or pay anyone any compensation
for soliciting purchases of the Placement Shares other than Cowen; provided, however, that the Company may bid for and purchase shares of its common
stock in accordance with Rule 10b-18 under the Exchange Act.
(q) Insurance. The Company and its subsidiaries shall maintain, or cause to be maintained, insurance in such amounts and covering such risks as is
reasonable and customary for the business for which it is engaged.
(r) Compliance with Laws. The Company and each of its subsidiaries shall maintain, or cause to be maintained, all material environmental permits,
licenses and other authorizations required by federal, state and local law in order to conduct their businesses as described in the Prospectus, and the
Company and each of its subsidiaries shall conduct their businesses, or cause their businesses to be conducted, in substantial compliance with such permits,
licenses and authorizations and with applicable environmental laws, except where the failure to maintain or be in compliance with such permits, licenses
and authorizations could not reasonably be expected to result in a Material Adverse Change.
(s) Investment Company Act. The Company will conduct its affairs in such a manner so as to reasonably ensure that neither it nor its subsidiaries
will be or become, at any time prior to the termination of this Agreement, an “investment company,” as such term is defined in the Investment Company
Act, assuming no change in the Commission’s current interpretation as to entities that are not considered an investment company.
(t) Securities Act and Exchange Act. The Company will use its best efforts to comply with all requirements imposed upon it by the Securities Act
and the Exchange Act as from time to time in force, so far as necessary to permit the continuance of sales of, or dealings in, the Placement Shares as
contemplated by the provisions hereof and the Prospectus.
(u) No Offer to Sell. Other than the Prospectus or a Permitted Free Writing Prospectus approved in advance by the Company and Cowen in its
capacity as principal or agent hereunder, neither Cowen nor the Company (including its agents and representatives, other than Cowen in its capacity as
such) will make, use, prepare, authorize, approve or refer to any written communication (as defined in Rule 405 under the Securities Act), required to be
filed with the Commission, that constitutes an offer to sell or solicitation of an offer to buy Placement Shares hereunder.
(v) Sarbanes-Oxley Act. The Company and its subsidiaries will use their best efforts to comply with all effective applicable provisions of the
Sarbanes-Oxley Act.
(w) Affirmation. Each Placement Notice delivered by the Company to Cowen shall be deemed to be (i) an affirmation that the representations,
warranties and agreements of the Company herein contained and contained in any certificate delivered to Cowen pursuant hereto are true and correct at the
time of delivery of such Placement Notice, and (ii) an undertaking that such representations, warranties and agreements will be true and correct on any
applicable Time of Sale and Settlement Date, as though made at and as of each such time (it being understood that such representations, warranties and
agreements shall relate to the Registration Statement and the Prospectus as amended and supplemented to the time of such Placement Notice acceptance).
(x) Renewal. If immediately prior to the third anniversary (the “Renewal Deadline”) of the initial effective date of the Registration Statement, the
aggregate gross sales price of Placement Shares sold by the Company is less than $100,000,000 and this Agreement has not expired or been terminated, the
Company may elect to file, prior to the Renewal Deadline, if it has not already done so and is eligible to do so, a new shelf registration statement relating to
the Placement Shares, in a form satisfactory to Cowen, and, if not automatically effective, will use its commercially reasonable efforts to cause such
registration statement to be declared effective within 60 days after the Renewal Deadline. The Company will take all other action necessary or appropriate
to permit the issuance and sale of the Placement Shares to continue as contemplated in the expired registration statement relating to the Placement Shares.
References herein to the Registration Statement shall include such new shelf registration statement.
8. Conditions to Cowen’s Obligations. The obligations of Cowen hereunder with respect to a Placement will be subject to the continuing accuracy
and completeness of the representations and warranties made by the Company herein, to the due performance by the Company of its obligations hereunder,
to the completion by Cowen of a due diligence review satisfactory to Cowen in its reasonable judgment, and to the continuing satisfaction (or waiver by
Cowen in its sole discretion) of the following additional conditions:
(a) Registration Statement Effective. The Registration Statement shall be effective and shall be available for (i) all sales of Placement Shares issued
pursuant to all prior Placement Notices and (ii) the sale of all Placement Shares contemplated to be issued by any Placement Notice.
(b) No Material Notices. None of the following events shall have occurred and be continuing: (i) receipt by the Company or any of its subsidiaries
of any request for additional information from the Commission or any other federal or state governmental authority during the period of effectiveness of the
Registration Statement, the response to which would require any post-effective amendments or supplements to the Registration Statement or the
Prospectus; (ii) the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose; (iii) receipt by the Company of any notification with respect to the suspension
of the qualification or exemption from qualification of any of the Placement Shares for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; or (iv) the occurrence of any event that makes any material statement made in the Registration Statement or the Prospectus or
any material document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires the making of any
changes in the Registration Statement, related Prospectus or such documents so that, in the case of the Registration Statement, it will not contain any
materially untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not
misleading and, that in the case of the Prospectus, it will not contain any materially untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading.
(c) No Misstatement or Material Omission. Cowen shall not have advised the Company that the Registration Statement or Prospectus, or any
amendment or supplement thereto, contains an untrue statement of fact that in Cowen’s reasonable opinion is material, or omits to state a fact that in
Cowen’s opinion is material and is required to be stated therein or is necessary to make the statements therein not misleading.
(d) Material Changes. Except as contemplated in the Prospectus, or disclosed in the Company’s reports filed with the Commission, there shall not
have been any Material Adverse Change, on a consolidated basis, in the authorized capital stock of the Company or any Material Adverse Change or any
development that could reasonably be expected to result in a Material Adverse Change, or any downgrading in or withdrawal of the rating assigned to any
of the Company’s securities (other than asset backed securities) by any rating organization or a public announcement by any rating organization that it has
under surveillance or review its rating of any of the Company’s securities (other than asset backed securities), the effect of which, in the case of any such
action by a rating organization described above, in the reasonable judgment of Cowen (without relieving the Company of any
obligation or liability it may otherwise have), is so material as to make it impracticable or inadvisable to proceed with the offering of the Placement Shares
on the terms and in the manner contemplated in the Prospectus.
(e) Company Counsel Legal Opinion. Cowen shall have received the opinion of Company Counsel required to be delivered pursuant to Section
7(n) on or before the date on which such delivery of such opinion is required pursuant to Section 7(n).
(f) Cowen Counsel Legal Opinion. Cowen shall have received from DLA Piper LLP (US), counsel for Cowen, such opinion or opinions, on or
before the date on which the delivery of the Company Counsel legal opinion is required pursuant to Section 7(n), with respect to such matters as Cowen
may reasonably require, and the Company shall have furnished to such counsel such documents as they request for enabling them to pass upon such
matters.
(g) Comfort Letter. Cowen shall have received the Comfort Letter required to be delivered pursuant to Section 7(o) on or before the date on which
such delivery of such Comfort Letter is required pursuant to Section 7(o).
(h) Representation Certificate. Cowen shall have received the certificate required to be delivered pursuant to Section 7(m) on or before the date on
which delivery of such certificate is required pursuant to Section 7(m).
(i) Secretary’s Certificate. On or prior to the First Delivery Date, Cowen shall have received a certificate, signed on behalf of the Company by its
corporate Secretary, in form and substance satisfactory to Cowen and its counsel.
(j) No Suspension. Trading in the Common Stock shall not have been suspended on Nasdaq.
(k) Other Materials. On each date on which the Company is required to deliver a certificate pursuant to Section 7(m), the Company shall have
furnished to Cowen such appropriate further information, certificates and documents as Cowen may have reasonably requested. All such opinions,
certificates, letters and other documents shall have been in compliance with the provisions hereof. The Company will furnish Cowen with such conformed
copies of such opinions, certificates, letters and other documents as Cowen shall have reasonably requested.
(l) Securities Act Filings Made. All filings with the Commission required by Rule 424 under the Securities Act to have been filed prior to the
issuance of any Placement Notice hereunder shall have been made within the applicable time period prescribed for such filing by Rule 424.
(m) Approval for Listing. The Placement Shares shall either have been (i) approved for listing on Nasdaq, subject only to notice of issuance, or (ii)
the Company shall have filed an application for listing of the Placement Shares on Nasdaq at, or prior to, the issuance of any Placement Notice.
(n) No Termination Event. There shall not have occurred any event that would permit Cowen to terminate this Agreement pursuant to Section
11(a).
9. Indemnification and Contribution.
(a) Company Indemnification. The Company agrees to indemnify and hold harmless Cowen, the directors, officers, partners, employees and agents
of Cowen and each person, if any, who (i) controls Cowen within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, or (ii)
is controlled by or is under common control with Cowen (a “Cowen Affiliate”) from and against any and all losses, claims, liabilities, reasonable and
documented expenses and damages (including, but not limited to, any and all reasonable and documented investigative, legal and other expenses incurred
in connection with, and any and all amounts paid in settlement (in accordance with Section 9(c)) of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified party and any third party, or otherwise, or any claim asserted), as and when
incurred, to which Cowen, or any such person, may become subject under the Securities Act, the Exchange Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims, liabilities, expenses or damages arise out of or are based, directly or indirectly, on
(x) any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus or any amendment or
supplement to the Registration Statement or the Prospectus or in any free writing
prospectus or in any application or other document executed by or on behalf of the Company or based on written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify the Common Stock under the securities laws thereof or filed with the Commission, (y) the
omission or alleged omission to state in any such document a material fact required to be stated in it or necessary to make the statements in it not
misleading or (z) any breach by any of the indemnifying parties of any of their respective representations, warranties and agreements contained in this
Agreement; provided, however, that this indemnity agreement shall not apply to the extent that such loss, claim, liability, expense or damage arises from the
sale of the Placement Shares pursuant to this Agreement and is caused directly or indirectly by an untrue statement or omission made in reliance upon and
in conformity with the Agent’s Information. This indemnity agreement will be in addition to any liability that the Company might otherwise have.
(b) Cowen Indemnification. Cowen agrees to indemnify and hold harmless the Company and its directors and each officer of the Company that
signed the Registration Statement, and each person, if any, who (i) controls the Company within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act or (ii) is controlled by or is under common control with the Company (a “Company Affiliate”) against any and all loss, liability,
claim, damage and expense described in the indemnity contained in Section 9(a), as incurred, but only with respect to untrue statements or omissions, or
alleged untrue statements or omissions, made in the Registration Statement (or any amendments thereto) or the Prospectus (or any amendment or
supplement thereto) in reliance upon and in conformity with the Agent’s Information.
(c) Procedure. Any party that proposes to assert the right to be indemnified under this Section 9 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to be made against an indemnifying party or parties under this Section 9,
notify each such indemnifying party in writing of the commencement of such action, enclosing a copy of all papers served, but the omission so to notify
such indemnifying party will not relieve the indemnifying party from (i) any liability that it might have to any indemnified party otherwise than under this
Section 9 and (ii) any liability that it may have to any indemnified party under the foregoing provision of this Section 9 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the indemnifying party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving notice of the commencement of the action from the indemnified party, jointly
with any other indemnifying party similarly notified, to assume the defense of the action, with counsel reasonably satisfactory to the indemnified party, and
after notice from the indemnifying party to the indemnified party of its election to assume the defense, the indemnifying party will not be liable to the
indemnified party for any legal or other expenses except as provided below and except for the reasonable and documented costs of investigation
subsequently incurred by the indemnified party in connection with the defense. The indemnified party will have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel will be at the expense of such indemnified party unless (1) the employment of counsel
by the indemnified party has been authorized in writing by the indemnifying party, (2) the indemnified party has reasonably concluded (based on advice of
counsel) that there may be legal defenses available to it or other indemnified parties that are different from or in addition to those available to the
indemnifying party, (3) a conflict or potential conflict exists (based on advice of counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have the right to direct the defense of such action on behalf of the indemnified party) or
(4) the indemnifying party has not in fact employed counsel to assume the defense of such action within a reasonable time after receiving notice of the
commencement of the action, in each of which cases the reasonable fees, disbursements and other charges of counsel will be at the expense of the
indemnifying party or parties. It is understood that the indemnifying party or parties shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable and documented fees, disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly after the indemnifying party receives a written invoice relating to fees, disbursements and other charges. An indemnifying
party will not, in any event, be liable for any settlement of any action or claim effected without its written consent. No indemnifying party shall, without the
prior written consent of each indemnified party, settle or compromise or consent to the entry of any judgment in any pending or threatened claim, action or
proceeding relating to the matters contemplated by this Section 9 (whether or not any indemnified party is a party thereto), unless such settlement,
compromise or consent includes an unconditional release of each indemnified party from all liability arising or that may arise out of such claim, action or
proceeding.
(d) Contribution. In order to provide for just and equitable contribution in circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 9 is applicable in accordance with its terms but for any reason is held to be unavailable from the Company or Cowen, the
Company and Cowen will contribute to the total losses, claims, liabilities, reasonable and documented expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amount paid in settlement of, any action, suit or proceeding or any claim asserted,
but after deducting any contribution received by the Company from persons other than Cowen, such as persons who control the Company within the
meaning of the Securities Act, officers of the Company who signed the Registration Statement and directors of the Company, who also may be liable for
contribution) to which the Company and Cowen may be subject in such proportion as shall be appropriate to reflect the relative benefits received by the
Company on the one hand and Cowen on the other. The relative benefits received by the Company on the one hand and Cowen on the other hand shall be
deemed to be in the same proportion as the total Net Proceeds from the sale of the Placement Shares (before deducting expenses) received by the Company
bear to the total compensation received by Cowen from the sale of Placement Shares on behalf of the Company. If, but only if, the allocation provided by
the foregoing sentence is not permitted by applicable law, the allocation of contribution shall be made in such proportion as is appropriate to reflect not
only the relative benefits referred to in the foregoing sentence but also the relative fault of the Company, on the one hand, and Cowen, on the other, with
respect to the statements or omission that resulted in such loss, claim, liability, expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or omission or alleged omission to state a material fact relates to information supplied by the Company or
Cowen, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such statement or omission. The
Company and Cowen agree that it would not be just and equitable if contributions pursuant to this Section 9(d) were to be determined by pro rata allocation
or by any other method of allocation that does not take into account the equitable considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, liability, expense, or damage, or action in respect thereof, referred to above in this Section 9(d) shall be
deemed to include, for the purpose of this Section 9(d), any documented legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim to the extent consistent with Section 9(c) hereof. Notwithstanding the foregoing
provisions of this Section 9(d), Cowen shall not be required to contribute any amount in excess of the commissions received by it under this Agreement and
no person found guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 9(d), any person who controls a party to this Agreement
within the meaning of the Securities Act, and any officers, directors, partners, employees or agents of Cowen, will have the same rights to contribution as
that party, and each officer and director of the Company who signed the Registration Statement will have the same rights to contribution as the Company,
subject in each case to the provisions hereof. Any party entitled to contribution, promptly after receipt of notice of commencement of any action against
such party in respect of which a claim for contribution may be made under this Section 9(d), will notify any such party or parties from whom contribution
may be sought, but the omission to so notify will not relieve that party or parties from whom contribution may be sought from any other obligation it or
they may have under this Section 9(d) except to the extent that the failure to so notify such other party materially prejudiced the substantive rights or
defenses of the party from whom contribution is sought. Except for a settlement entered into pursuant to the last sentence of Section 9(c) hereof, no party
will be liable for contribution with respect to any action or claim settled without its written consent if such consent is required pursuant to Section 9(c)
hereof.
10. Representations and Agreements to Survive Delivery. The indemnity and contribution agreements contained in Section 9 of this Agreement and
all representations and warranties of the Company herein or in certificates delivered pursuant hereto shall survive, as of their respective dates, regardless of
(i) any investigation made by or on behalf of Cowen, any controlling persons, or the Company (or any of their respective officers, directors or controlling
persons), (ii) delivery and acceptance of the Placement Shares and payment therefor or (iii) any termination of this Agreement.
11. Termination.
(a) Cowen shall have the right by giving written notice as hereinafter specified at any time to terminate this Agreement if (i) any Material Adverse
Change, or any development that could reasonably be expected to result in a Material Adverse Change has occurred that, in the reasonable judgment of
Cowen, may materially impair the ability of Cowen to sell the Placement Shares hereunder, (ii) the Company shall have failed, refused or been unable to
perform any agreement on its part to be performed hereunder; provided, however, in the case of any failure of the Company to deliver (or cause another
person to deliver) any certification, opinion, or letter required under Sections 7(m), 7(n), or 7(o), Cowen’s right to terminate shall not arise unless such
failure to deliver (or cause to be delivered) continues for more than thirty (30) days from the date such delivery was required; or (iii) any other condition of
Cowen’s obligations hereunder is not fulfilled, or (iv), any suspension or limitation of trading in the Placement Shares or in securities generally on Nasdaq
shall have occurred. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g) (Expenses),
Section 9 (Indemnification and Contribution), Section 10 (Representations and Agreements to Survive Delivery), Section 16 (Applicable Law; Consent to
Jurisdiction) and Section 17 (Waiver of Jury Trial) hereof shall remain in full force and effect notwithstanding such termination. If Cowen elects to
terminate this Agreement as provided in this Section 11(a), Cowen shall provide the required notice as specified in Section 12 (Notices).
(b) The Company shall have the right, by giving ten (10) days written notice as hereinafter specified to terminate this Agreement in its sole
discretion at any time after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the
provisions of Section 7(g), Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
(c) Cowen shall have the right, by giving ten (10) days’ notice as hereinafter specified to terminate this Agreement in its sole discretion at any time
after the date of this Agreement. Any such termination shall be without liability of any party to any other party except that the provisions of Section 7(g),
Section 9, Section 10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
(d) Unless earlier terminated pursuant to this Section 11, this Agreement shall automatically terminate upon the issuance and sale of all of the
Placement Shares through Cowen on the terms and subject to the conditions set forth herein; provided that the provisions of Section 7(g), Section 9, Section
10, Section 16 and Section 17 hereof shall remain in full force and effect notwithstanding such termination.
(e) This Agreement shall remain in full force and effect unless terminated pursuant to Sections 11(a), (b), (c), or (d) above or otherwise by mutual
agreement of the parties; provided, however, that any such termination by mutual agreement shall in all cases be deemed to provide that Section 7(g),
Section 9, Section 10, Section 16 and Section 17 shall remain in full force and effect.
(f) Any termination of this Agreement shall be effective on the date specified in such notice of termination; provided, however, that such
termination shall not be effective until the close of business on the date of receipt of such notice by Cowen or the Company, as the case may be. If such
termination shall occur prior to the Settlement Date for any sale of Placement Shares, such Placement Shares shall settle in accordance with the provisions
of this Agreement.12. Notices. All notices or other communications required or permitted to be given by any party to any other party pursuant to the terms
of this Agreement shall be in writing, unless otherwise specified in this Agreement, and if sent to Cowen, shall be delivered to Cowen at Cowen and
Company, LLC, 599 Lexington Avenue, New York, NY 10022, fax no. 646-562-1124, Attention: General Counsel, with a copy to DLA Piper LLP (US),
fax no. 212-884-8645, Attention: Michael Maline; or if sent to the Company, shall be delivered to G1 Therapeutics, Inc., fax no. 919-741-5830, Attention:
President with a copy to Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C., fax no. 617-542-2241, Attention: Megan N. Gates. Each party to this
Agreement may change such address for notices by sending to the parties to this Agreement written notice of a new address for such purpose. Each such
notice or other communication shall be deemed given (i) when delivered personally or by verifiable facsimile transmission (with an original to follow) on
or before 4:30 p.m., New York City time, on a Business Day (as defined below), or, if such day is not a Business Day on the next succeeding Business Day,
(ii) on the next Business Day after timely delivery to a nationally-recognized overnight courier,(iii) on the Business Day actually received if deposited in
the U.S. mail (certified or registered mail, return receipt requested, postage prepaid), and (vi) when delivered by electronic communication (“Electronic
Notice”), at the time the party sending Electronic Notice receives verification of receipt by the receiving party, other than via auto reply. For purposes of
this Agreement, “Business
Day” shall mean any day on which the Nasdaq and commercial banks in the City of New York are open for business.
13. Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the Company and Cowen and their respective
successors and the affiliates, controlling persons, officers and directors referred to in Section 9 hereof. References to any of the parties contained in this
Agreement shall be deemed to include the successors and permitted assigns of such party. Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective successors and permitted assigns any rights, remedies, obligations or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement. Neither party may assign its rights or obligations under this Agreement
without the prior written consent of the other party; provided, however, that Cowen may assign its rights and obligations hereunder to an affiliate of Cowen
without obtaining the Company’s consent.
14. Adjustments for Share Splits. The parties acknowledge and agree that all share-related numbers contained in this Agreement shall be adjusted
to take into account any share split, share dividend or similar event effected with respect to the Common Stock.
15. Entire Agreement; Amendment; Severability. This Agreement (including all schedules and exhibits attached hereto and Placement Notices
issued pursuant hereto) constitutes the entire agreement and supersedes all other prior and contemporaneous agreements and undertakings, both written and
oral, among the parties hereto with regard to the subject matter hereof. Neither this Agreement nor any term hereof may be amended except pursuant to a
written instrument executed by the Company and Cowen. In the event that any one or more of the provisions contained herein, or the application thereof in
any circumstance, is held invalid, illegal or unenforceable as written by a court of competent jurisdiction, then such provision shall be given full force and
effect to the fullest possible extent that it is valid, legal and enforceable, and the remainder of the terms and provisions herein shall be construed as if such
invalid, illegal or unenforceable term or provision was not contained herein, but only to the extent that giving effect to such provision and the remainder of
the terms and provisions hereof shall be in accordance with the intent of the parties as reflected in this Agreement.
16. Applicable Law; Consent to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the internal laws of the State
of New York without regard to the principles of conflicts of laws. Each party hereby irrevocably submits to the non-exclusive jurisdiction of the state and
federal courts sitting in the City of New York, borough of Manhattan, for the adjudication of any dispute hereunder or in connection with any transaction
contemplated hereby, and hereby irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is brought in an inconvenient forum or that the venue of such suit, action or
proceeding is improper. Each party hereby irrevocably waives personal service of process and consents to process being served in any such suit, action or
proceeding by mailing a copy thereof (certified or registered mail, return receipt requested) to such party at the address in effect for notices to it under this
Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
17. Waiver of Jury Trial. The Company and Cowen each hereby irrevocably waives any right it may have to a trial by jury in respect of any claim
based upon or arising out of this Agreement or any transaction contemplated hereby.
18. Absence of Fiduciary Relationship. The Company acknowledges and agrees that:
(a) Cowen has been retained solely to act as an arm’s length contractual counterparty to the Company in connection with the sale of the Placement
Shares contemplated hereby and that no fiduciary, advisory or agency relationship between the Company and Cowen has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether Cowen has advised or is advising the Company on other matters;
(b) the Company is capable of evaluating and understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement;
(c) the Company has been advised that Cowen and its affiliates are engaged in a broad range of transactions which may involve interests that differ
from those of the Company and that Cowen has no obligation to disclose such interests and transactions to the Company by virtue of any fiduciary,
advisory or agency relationship; and
(d) the Company waives, to the fullest extent permitted by law, any claims it may have against Cowen, for breach of fiduciary duty or alleged
breach of fiduciary duty in connection with the sale of the Placement Shares under this Agreement and agrees that Cowen shall have no liability (whether
direct or indirect) to the Company in respect of such a fiduciary claim or to any person asserting a fiduciary duty claim on behalf of or in right of the
Company, including stockholders, partners, employees or creditors of the Company.
19. Counterparts. This Agreement may be executed in two or more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. Delivery of an executed Agreement by one party to the other may be made by facsimile or electronic
transmission.
20. Recognition of the U.S. Special Resolution Regimes.
In the event that Cowen is a Covered Entity and becomes subject to a proceeding under a U.S. Special Resolution Regime, the transfer from
Cowen of this Agreement, and any interest and obligation in or under this Agreement, will be effective to the same extent as the transfer would be effective
under the U.S. Special Resolution Regime if this Agreement, and any such interest and obligation, were governed by the laws of the United States or a state
of the United States.
In the event that Cowen is a Covered Entity or a BHC Act Affiliate (as defined below) of Cowen becomes subject to a proceeding under a U.S.
Special Resolution Regime, Default Rights under this Agreement that may be exercised against Cowen are permitted to be exercised to no greater extent
than such Default Rights could be exercised under the U.S. Special Resolution Regime if this Agreement were governed by the laws of the United States or
a state of the United States.
For purposes of this Section 16, a “BHC Act Affiliate” has the meaning assigned to the term “affiliate” in, and shall be interpreted in
accordance with, 12 U.S.C. § 1841(k). “Covered Entity” means any of the following: (i) a “covered entity” as that term is defined in, and interpreted in
accordance with, 12 C.F.R. § 252.82(b); (ii) a “covered bank” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 47.3(b); or (iii) a
“covered FSI” as that term is defined in, and interpreted in accordance with, 12 C.F.R. § 382.2(b). “Default Right” has the meaning assigned to that term in,
and shall be interpreted in accordance with, 12 C.F.R. §§ 252.81, 47.2 or 382.1, as applicable. “U.S. Special Resolution Regime” means each of (i) the
Federal Deposit Insurance Act and the regulations promulgated thereunder and (ii) Title II of the Dodd-Frank Wall Street Reform and Consumer Protection
Act and the regulations promulgated thereunder.
20. Definitions. As used in this Agreement, the following terms have the meanings set forth below:
(a) “Applicable Time” means each of the date of this Agreement, each Representation Date, the date on which a Placement Notice is given, and any
date on which Placement Shares are sold hereunder.
(b) “Agent’s Information” means, solely the following information in the Prospectus: the fifth paragraph under the caption “Plan of Distribution” in
the Prospectus.
[Remainder of Page Intentionally Blank]
If the foregoing correctly sets forth the understanding between the Company and Cowen, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between the Company and Cowen.
Very truly yours,
COWEN AND COMPANY, LLC
/s/ Michael Murphy
By:
Name: Michael Murphy
Title: Managing Director
ACCEPTED as of the date first-above written:
G1 THERAPEUTICS, INC.
/s/ John E. Bailey, Jr.
By:
Name: John E. Bailey, Jr.
Title: President and Chief Executive Officer
FORM OF PLACEMENT NOTICE
SCHEDULE 1
From:
Cc:
To:
Subject:
[ ]
[ ]
[ ]
Cowen at the Market Offering—Placement Notice
Gentlemen:
Pursuant to the terms and subject to the conditions contained in the Sales Agreement between G1 Therapeutics, Inc., a Delaware corporation (the
“Company”), and Cowen and Company, LLC (“Cowen”) dated [ ] (the “Agreement”), I hereby request on behalf of the Company that Cowen
sell up to [ ] shares of the Company’s common stock, par value 0.0001 per share, at a minimum market price of $_______ per share. Sales
should begin on the date of this Notice and shall continue until [DATE] [all shares are sold] [the aggregate sales price of the shares reaches $[ ]].
[The Company may include such other sales parameters as it deems appropriate, subject to the terms and conditions of the Agreement.]
The Company represents and warrants that each representation, warranty, covenant and other agreement of the Company contained in the Agreement is true
and correct on the date hereof, and that the Prospectus, including the documents incorporated by reference therein, and any applicable issuer free writing
prospectus, as of the date hereof, do not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading.
G1 Therapeutics, Inc.
John E. Bailey, Jr. (Chief Executive Officer)
Jennifer Moses (Chief Financial Officer)
Cowen and Company, LLC
Michael Murphy (Managing Director)
William Follis (Managing Director)
SCHEDULE 2
Cowen shall be paid compensation up to 3% of the gross proceeds from the sales of Placement Shares pursuant to the terms of this Agreement.
Compensation
SCHEDULE 3
OFFICER’S CERTIFICATE
Exhibit 7(m)
The undersigned, the duly qualified and elected _______________________, of G1 Therapeutics, Inc., a Delaware corporation (“Company”), does hereby
certify in such capacity and on behalf of the Company, pursuant to Section 7(m) of the Sales Agreement dated February 23, 2022 (the “Sales Agreement”)
between the Company and Cowen and Company, LLC, that to the best of the knowledge of the undersigned.
(i) The representations and warranties of the Company in Section 6 of the Sales Agreement (A) to the extent such representations and warranties
are subject to qualifications and exceptions contained therein relating to materiality or Material Adverse Change, are true and correct on and as of the date
hereof with the same force and effect as if expressly made on and as of the date hereof, except for those representations and warranties that speak solely as
of a specific date and which were true and correct as of such date, and (B) to the extent such representations and warranties are not subject to any
qualifications or exceptions, are true and correct in all material respects as of the date hereof as if made on and as of the date hereof with the same force and
effect as if expressly made on and as of the date hereof except for those representations and warranties that speak solely as of a specific date and which
were true and correct as of such date; and
(ii) The Company has complied with all agreements and satisfied all conditions on its part to be performed or satisfied pursuant to the Sales
Agreement at or prior to the date hereof.
Capitalized terms used but not defined herein shall have the meanings ascribed to them in the Sales Agreement.
By:
Name:
Title:
Date:
Exhibit 23.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos. 333-254705, 333-236229, 333-232106, 333-226701,
and 333-218468) and Form S-3 (Nos. 333-257640, 333-225678) of G1 Therapeutics, Inc. of our report dated February 23, 2022 relating to the financial
statements and the effectiveness of internal control over financial reporting, which appears in this Form 10-K.
/s/ PricewaterhouseCoopers LLP
Raleigh, North Carolina
February 23, 2022
Exhibit 31.1
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, John E. Bailey, Jr., certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of G1 Therapeutics, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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: February 23, 2022
By:
/s/ John E. Bailey, Jr.
John E. Bailey, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Exhibit 31.2
CERTIFICATION PURSUANT TO
RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,
AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Jennifer K. Moses, certify that:
1.
2.
3.
4.
I have reviewed this Annual Report on Form 10-K of G1 Therapeutics, Inc.;
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;
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;
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)
(b)
(c)
(d)
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;
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;
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
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)
(b)
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
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: February 23, 2022
By:
/s/ Jennifer K. Moses
Jennifer K. Moses
Chief Financial Officer
(Principal Financial and Accounting Officer)
CERTIFICATION UNDER SECTION 906
Exhibit 32.1
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), the undersigned officer of G1 Therapeutics, Inc., a Delaware corporation (the “Company”), does hereby certify, to such
officer’s knowledge, that:
The Annual Report for the year ended December 31, 2021 (the “Form 10-K”) of the Company fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all
material respects, the financial condition and results of operations of the Company.
Date: February 23, 2022
/s/ John E. Bailey, Jr.
John E. Bailey, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
CERTIFICATION UNDER SECTION 906
Exhibit 32.2
Pursuant to section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United
States Code), the undersigned officer of G1 Therapeutics, Inc., a Delaware corporation (the “Company”), does hereby certify, to such
officer’s knowledge, that:
The Annual Report for the year ended December 31, 2021 (the “Form 10-K”) of the Company fully complies with the requirements
of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, and the information contained in the Form 10-K fairly presents, in all
material respects, the financial condition and results of operations of the Company.
Date: February 23, 2022
/s/ Jennifer K. Moses
Jennifer K. Moses
Chief Financial Officer
(Principal Financial and Accounting Officer)