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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020
Commission file number 001-36177
GlycoMimetics, Inc.
(Exact name of Registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
9708 Medical Center Drive
Rockville, Maryland
(Address of principal executive offices)
06-1686563
(IRS Employer
Identification No.)
20850
(Zip Code)
Registrant’s telephone number, including area code: (240) 243-1201
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class:
Common Stock, $0.001 par value
Trading Symbol:
GLYC
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 Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit
such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company
or emerging growth company. See 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
☐
☒
Accelerated Filer
Smaller Reporting Company
Emerging Growth Company
☐
☒
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with
any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
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. ☐
As of June 30, 2020, the last business day of the registrant’s last completed second quarter, the aggregate market value of the Common Stock held
by non-affiliates of the registrant was approximately $137.8 million based on the closing price of the registrant’s Common Stock, as reported by the
Nasdaq Global Market, on such date.
At February 26, 2021, 51,493,571 shares of GlycoMimetics, Inc.’s Common Stock, $0.001 par value per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of GlycoMimetics, Inc.’s definitive proxy statement, to be filed pursuant to Regulation 14A under the Securities Exchange Act of 1934,
for its 2021 Annual Meeting of Stockholders are incorporated by reference in Part III of this Form 10-K.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or this Annual Report, contains forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, or the Exchange Act, that involve substantial risks and uncertainties. The forward-looking statements are
contained principally in Part I, Item 1. “Business,” Part I, Item 1A. “Risk Factors,” and Part II, Item 7. “Management’s
Discussion and Analysis of Financial Condition and Results of Operations,” but are also contained elsewhere in this
Annual Report. In some cases, you can identify forward-looking statements by the words “may,” “might,” “will,” “could,”
“would,” “should,” “expect,” “intend,” “plan,” “objective,” “anticipate,” “believe,” “estimate,” “predict,” “project,”
“potential,” “continue” and “ongoing,” or the negative of these terms, or other comparable terminology intended to identify
statements about the future. These statements involve known and unknown risks, uncertainties and other factors that may
cause our actual results, levels of activity, performance or achievements to be materially different from the information
expressed or implied by these forward-looking statements. Although we believe that we have a reasonable basis for each
forward-looking statement contained in this Annual Report, we caution you that these statements are based on a
combination of facts and factors currently known by us and our expectations of the future, about which we cannot be
certain. Forward-looking statements include statements about:
● our plans to develop and commercialize our glycomimetic drug candidates;
● our and our collaborators’ ongoing and planned clinical trials for our drug candidates uproleselan and GMI-
1359, including the timing of initiation of and enrollment in the trials, the timing of availability of data from the
trials and the anticipated results of the trials;
● the timing of and our ability to obtain and maintain regulatory approvals for our drug candidates;
● the clinical utility of our drug candidates;
● our plans with respect to the potential development of our drug candidate, rivipansel, to which we reacquired the
development and commercialization rights in 2020;
● our commercialization, marketing and manufacturing capabilities and strategy;
● our intellectual property position;
● our ability to identify additional drug candidates with significant commercial potential that are consistent with
our commercial objectives;
● our estimates regarding future revenues, expenses and needs for additional financing; and
● our beliefs about our capital expenditure requirements and that our capital resources will be sufficient to meet
our anticipated cash requirements into the fourth quarter of 2022.
You should refer to Item 1A. “Risk Factors” section of this Annual Report for a discussion of important factors that
may cause our actual results to differ materially from those expressed or implied by our forward-looking statements. As a
result of these factors, we cannot assure you that the forward-looking statements in this Annual Report will prove to be
accurate. Furthermore, if our forward-looking statements prove to be inaccurate, the inaccuracy may be material. In light of
the significant uncertainties in these forward-looking statements, you should not regard these statements as a representation
or warranty by us or any other person that we will achieve our objectives and plans in any specified time frame, or at all.
We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information,
future events or otherwise, except as required by law. You should, therefore, not rely on these forward-looking statements
as representing our views as of any date subsequent to the date of this Annual Report.
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RISK FACTOR SUMMARY
Our business is subject to numerous risks. You should carefully consider the following risks, as well as general
economic and business risks, and all of the other information contained in this Annual Report, together with any other
documents we file with the SEC. Any of the following risks could have a material adverse effect on our business, operating
results and financial condition and cause the trading price of our common stock to decline.
Among these important risks are the following:
● We have incurred significant losses since our inception. We expect to continue to incur losses over the next
several years and may never achieve or maintain profitability.
● Our business could be adversely affected by the effects of health epidemics or pandemics, including the ongoing
COVID-19 pandemic, in regions where we or third parties on whom we rely have significant manufacturing
facilities, clinical trial sites or other business operations.
● We will need substantial additional funding to pursue our business objectives. If we are unable to raise capital
when needed, we could be forced to delay, reduce or eliminate our drug development programs or potential
commercialization efforts.
● Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to
relinquish rights to our drug candidates.
● We have only two drug candidates that are in active clinical trials. All of our other drug candidates other than
rivipansel are still in preclinical development. If we or our collaborators are unable to commercialize our drug
candidates or experience significant delays in doing so, our business will be materially harmed.
● 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
commercialization of our drug candidates.
● If we or our collaborators experience delays or difficulties in the enrollment of patients in clinical trials, or
obtaining data on the patients enrolled, our receipt of necessary regulatory approvals could be delayed or
prevented.
● If serious adverse or unacceptable side effects are identified during the development of our drug candidates, we
may need to abandon or limit the development of some of our drug candidates.
● We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize on
drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.
● Our success depends in part on current and future collaborations. If we are unable to maintain any of these
collaborations, or if these collaborations are not successful, our business could be adversely affected.
● We expect to rely on third parties to conduct our future clinical trials for drug candidates, and those third parties
may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.
● We contract with third parties for the manufacturing of our drug candidates for preclinical and clinical testing
and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we
will not have sufficient quantities of our drug candidates or drugs, or such quantities at an acceptable cost, which
could delay, prevent or impair our development or commercialization efforts.
● We, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of our drug
candidates in sufficient quality and quantity, which would delay or prevent us from conducting our ongoing and
planned clinical trials and developing our drug candidates.
● Even if any of our drug candidates receives marketing approval, it 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.
● We face substantial competition, which may result in others discovering, developing or commercializing drugs
before or more successfully than we do.
● If we are unable to obtain and maintain patent protection for our drug candidates, or if the scope of the patent
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protection obtained is not sufficiently broad, our competitors could develop and commercialize drug candidates
similar or identical to ours, and our ability to successfully commercialize our drug candidates may be impaired.
● If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would
be harmed.
● If we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory
approvals, we or they will not be able to commercialize our drug candidates and our ability to generate revenue
will be materially impaired.
● Even though we have obtained orphan drug designation for several of our drug candidates, we may not be able
to obtain orphan drug marketing exclusivity for these or any of our other drug candidates.
● The FDA fast track designation and additional breakthrough therapy designation for uproleselan may not
actually lead to a faster development or regulatory review or approval process.
● Failure to obtain marketing approval in international jurisdictions would prevent our drug candidates from being
marketed abroad.
● A variety of risks associated with developing and marketing our drug candidates internationally could hurt our
business.
● Any drug candidate for which we obtain marketing approval could be subject to post-marketing restrictions or
recall or withdrawal from the market, and we may therefore be subject to penalties if we fail to comply with
regulatory requirements or if we experience unanticipated problems with our drug candidates, when and if any
of them are approved.
● Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval
of and commercialize our drug candidates and affect the prices we may obtain.
● Governments outside the United States tend to impose strict price controls, which may adversely affect our
revenue, if any.
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PART I
TABLE OF CONTENTS
Page
BUSINESS
ITEM 1.
ITEM 1A. RISK FACTORS
ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 2.
ITEM 3.
ITEM 4. MINE SAFETY DISCLOSURES
PROPERTIES
LEGAL PROCEEDINGS
PART II
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
ITEM 6.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
SELECTED FINANCIAL DATA
RESULTS OF OPERATIONS
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
ITEM 8.
ITEM 9.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9B. OTHER INFORMATION
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 11. EXECUTIVE COMPENSATION
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
AND RELATED STOCKHOLDER MATTERS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 16. FORM 10-K SUMMARY
SIGNATURES
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ITEM 1.
BUSINESS
Company Overview
PART I
We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic
drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. We are
developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates
involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play
in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide
range of diseases. We are focusing our efforts on drug candidates for diseases that we believe will qualify for orphan drug
designation.
Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding
of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex
carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions
with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins,
which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory
component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular
disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to
chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive
approach for therapeutic intervention. The ability to successfully develop drug-like compounds that inhibit binding with
selectins, known as selectin antagonists, has historically been limited by the complexities of carbohydrate chemistry. We
believe our expertise in carbohydrate chemistry and our understanding of carbohydrate protein binding interactions enable
us to design selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain
carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.
Overview of Our Drug Candidates
Our current drug candidates are summarized below. We have retained the worldwide development and
commercialization rights to each of our drug candidates, except that with respect to uproleselan and GMI-1687, we have
exclusively licensed development and commercialization rights to these drug candidates to Apollomics (Hong Kong)
Limited, or Apollomics, for Mainland China, Hong Kong, Macau and Taiwan, which are collectively referred to as Greater
China.
Uproleselan
We are developing uproleselan, a specific E-selectin inhibitor, to be used in combination with chemotherapy to treat
patients with acute myeloid leukemia, or AML, a life-threatening hematologic cancer, and potentially other hematologic
cancers. Uproleselan has been granted Breakthrough Therapy designation by the U.S. Food and Drug Administration, or
FDA, for the treatment of adults with relapsed or refractory AML. In addition, uproleselan has received orphan drug
designation from the FDA and the European Commission for the treatment of AML.
E-selectin plays a critical role in binding cancer cells within vascular niches in the bone marrow, which prevents the
cells from entering circulation where they can be more readily killed by chemotherapy. In animal studies, uproleselan
mobilized AML cancer cells out of the bone marrow, making them more sensitive to chemotherapy. In these studies, tumor
burden was significantly reduced in the animals treated with a combination of chemotherapy and uproleselan as compared
to animals treated with chemotherapy alone. In addition, the combination of uproleselan with chemotherapy resulted in
improved survival rates for the treated animals compared to chemotherapy alone. In other animal studies, uproleselan
appeared to also protect normal cells from some of the side effects of chemotherapy. Common side effects of chemotherapy
include bone marrow toxicity resulting in neutropenia, which is an abnormally low number of neutrophils, the white blood
cells that serve as the primary defense against infection, and mucositis, which is the inflammation and sloughing of the
mucous membranes lining the digestive tract. Animals treated with uproleselan and chemotherapy had less severe
neutropenia and mucositis and lower bone marrow toxicity as compared to animals treated with chemotherapy alone. We
believe that treatment with uproleselan results in lower bone marrow toxicity due to its inhibition of E-selectin, which
inhibition makes stem cells in the bone marrow divide less frequently, thereby protecting them from chemotherapy agents
that target rapidly dividing cells.
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We completed an initial Phase 1 trial in healthy volunteers for uproleselan and in 2017 we completed enrollment in a
Phase 1/2 clinical trial in patients with either relapsed/refractory or de novo/secondary AML. At the 2018 annual meeting
of the American Society of Hematology, or ASH, we presented final clinical data from the Phase 1/2 trial that showed high
remission rates, improved overall survival and improved event-free survival, all compared to historical controls derived
from third-party clinical trials evaluating treatment with standard chemotherapy. In 2018, we dosed the first patient in a
Phase 3 clinical trial to evaluate uproleselan in adults with relapsed/refractory AML. We also entered into an agreement
with the National Cancer Institute, or NCI, to further evaluate uproleselan in a separate clinical trial for the treatment of
AML in previously untreated older adults who are eligible for intensive chemotherapy. The first patient in this Phase 2/3
NCI-sponsored trial was dosed in April 2019 and the trial is ongoing.
GMI-1359
We are also developing a drug candidate, GMI-1359, that simultaneously targets both E-selectin and a chemokine
receptor known as CXCR4. Since E-selectin and CXCR4 are implicated in the retention of cancer cells in the bone and
bone marrow, we believe that targeting both E-selectin and CXCR4 with a single compound could improve efficacy in the
treatment of cancers that affect the bone and bone marrow, including solid tumors that have a propensity to metastasize to
bone, such as breast and prostate cancer. We completed a Phase 1 randomized, double-blind, placebo-controlled, single-
dose escalation trial of GMI-1359 in healthy volunteers. In this trial, volunteer participants received a single injection of
either GMI-1359 or placebo, after which they were evaluated for safety, tolerability and pharmacokinetics, or PK. This trial
was conducted at a single site in the United States. GMI-1359 was generally well tolerated in this trial, with no participants
experiencing serious adverse events. In the fourth quarter of 2019, we initiated a Phase 1b trial of GMI-1359 in hormone
receptor positive, or HR+, breast cancer patients whose tumors have spread to bone in the fourth quarter of 2019, and the
first patient was dosed in January 2020. The trial is being conducted at Duke University and will evaluate dose escalation
as well as safety, PK and pharmacodynamics, or PD, markers of biologic activity in these patients. In January 2020, the
FDA granted GMI-1359 Orphan Drug designation and Rare Pediatric Disease designation for the treatment of
osteosarcoma, a rare cancer affecting approximately 900 adolescents each year in the United States.
Rivipansel
We previously developed a glycomimetic drug candidate, rivipansel, a pan-selectin antagonist for the potential
treatment of vaso-occlusive crisis, or VOC. Rivipansel received fast track designation from the FDA as well as Orphan
Drug designation from the FDA in the United States and from the European Medicines Agency, or EMA, in the European
Union. In 2011, we entered into an exclusive license agreement with Pfizer Inc., or the Pfizer Agreement, for Pfizer to
further develop, obtain regulatory approval and potentially commercialize rivipansel worldwide. Pfizer conducted a pivotal
Phase 3 clinical trial to evaluate the efficacy and safety of rivipansel in patients aged six and older with sickle cell disease,
or SCD who were hospitalized for VOC and required treatment with intravenous opioids. The clinical trial did not meet its
primary or key secondary efficacy endpoints. Pfizer terminated the Pfizer Agreement effective as of April 2020, resulting
in the transfer of worldwide development and commercialization rights, including the IND application for rivipansel, back
to the Company.
In June 2020, the Foundation for Sickle Cell Disease Research, or FSCDR, released an abstract that presented new
data from a post hoc analysis of the Phase 3 clinical trial data set. The abstract showed that patients experiencing acute
VOC requiring hospitalization who were treated with rivipansel within approximately 26 hours of the onset of pain in their
crisis experienced a statistically significant improvement in the primary efficacy endpoint of time to readiness for
discharge. Specifically, the analysis showed a median improvement in time to readiness for discharge compared to placebo
of 56.3 hours (p=0.03, 0.58 HR). The data were presented at the September 2020 meeting of the FSCDR. Additionally, in
December 2020, additional data on key secondary endpoints from the Phase 3 clinical trial as well as new data from the
Open Label Extension (OLE) trial of rivipansel, designed to evaluate real-world data on safety and efficacy in patients
treated in the Phase 3 trial conducted by Pfizer, were presented in an oral presentation at ASH. Collectively, the
comprehensive post hoc analysis of data highlights the importance and benefit of early intervention with rivipansel in acute
VOC in individuals with SCD.
In October 2020, the FDA granted Rare Pediatric Disease designation for rivipansel for the treatment of SCD in
patients 18 years old and younger. This designation recognizes the significant needs in pediatric patients. Based on input
received from the FDA regarding rivipansel as well as feedback from key opinion leaders in sickle cell disease, we have
determined not to proceed with the development of rivipansel as a potential treatment for the acute VOC setting.
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GMI-1687
We have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be suitable for
subcutaneous administration. Initially developed as a potential life-cycle extension to uproleselan, when given by
subcutaneous injection in animal models, GMI-1687 has been observed to have equivalent activity to uproleselan, but at an
approximately 1,000-fold lower dose. We believe that GMI-1687 could be developed to broaden the clinical usefulness of
an E-selectin antagonist to conditions where outpatient treatment is preferred or required.
In September 2020 at the virtual meeting of the FSCDR, we gave an oral presentation on an abstract containing data
on GMI-1687, which included data from a preclinical model showing the drug candidate’s potential as a subcutaneously
administered treatment for VOC, a common complication of SCD. We are currently conducting activities and studies with
GMI-1687 to support our planned submission of an investigational new drug application, or IND, to the FDA.
Galectin Antagonists
Galectin-3 is a carbohydrate-binding protein whose expression has been shown to play a central role in fibrosis and
cancer. Galectin-3 has been linked to a number of biologic processes including inflammation, aberrant cell activation and
proliferation (macrophages, neutrophils, and mast cells), fibrogenesis and ultimately, organ dysfunction. Experimental data
have implicated galectin-3 in a variety of diseases across a number of organ systems, including liver, kidney, lung, eye and
heart. In our preclinical studies, blockage of galectin-3 has been shown to prevent fibrosis following organ damage, which
we believe makes it a promising target for further evaluation and development.
Current research also indicates that galectins have important roles in modulating the immune and inflammatory
response to cancer that contributes to neoplastic transformation, tumor cell survival, angiogenesis and metastasis. Applying
our understanding of carbohydrate biology and chemistry, we have rationally designed several high-potency, selective,
small-molecule glycomimetic antagonists of galectin-3. These novel compounds have been observed to have anti-fibrotic
activity in our animal models of disease.
Our Strategy
Our goal is to be the leader in the discovery, development and commercialization of novel glycomimetic drugs to
address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. Leveraging the
potentially broad applicability of our proprietary glycomimetics platform, our initial focus is to internally develop and
advance orphan drug candidates targeted at hematologic cancers and other diseases, and to out-license any drug candidates
we may develop that are targeted at larger market opportunities. The key elements of our strategy are to:
● Complete clinical development of and obtain regulatory approval for uproleselan for the treatment of adults
with relapsed/refractory AML. Based on the positive Phase 1/2 clinical trial results presented at ASH in 2018,
we are currently conducting a randomized, double-blind, placebo-controlled Phase 3 clinical trial to evaluate
uproleselan in adults with relapsed/refractory AML, with the design of the trial aligned with guidance we
received from the FDA. In this single pivotal trial, we plan to enroll approximately 380 adult patients with
relapsed or refractory AML at centers in the United States, Canada, Europe and Australia. Enrollment began in
the fourth quarter of 2018, and we expect to complete enrollment in the second half of 2021. If the results from
this Phase 3 clinical trial are positive, we plan to apply for regulatory approval from the FDA and potentially the
European Medicines Agency, or EMA.
● Explore the potential use of uproleselan in other AML patient populations through third-party
collaborations. In May 2018, we signed a Cooperative Research and Development Agreement, or CRADA,
with the NCI, part of the National Institutes of Health. Under the terms of the CRADA, we will collaborate with
both the NCI and the Alliance for Clinical Trials in Oncology to conduct a randomized, controlled clinical trial
evaluating the addition of uproleselan to a standard Cytarabine/Daunorubicin chemotherapy regimen (7&3) in
older adults with previously untreated AML who are eligible for intensive chemotherapy. The primary endpoint
will be overall survival, with a planned interim analysis based on event-free survival after the first 250 patients
have been enrolled in the trial. Under the terms of the CRADA, the NCI may fund additional research, including
clinical trials of pediatric patients with AML as well as preclinical experiments and clinical trials evaluating
alternative chemotherapy regimens.
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● Expand the potential use of E-selectin inhibition (uproleselan and GMI-1687) in other select territories
through out-licensing arrangements. In January 2020, we entered into an exclusive collaboration and license
agreement with Apollomics for the development and commercialization of uproleselan and GMI-1687 in
Greater China. Apollomics will be responsible at its cost for clinical development and commercialization of
uproleselan in Greater China, and will work with us to advance the preclinical and clinical development of GMI-
1687. We have also entered into separate agreements to provide clinical and commercial supplies of uproleselan
and GMI-1687 to Apollomics, and we retain all rights for both compounds in the rest of the world.
● Advance the clinical development of GMI-1359 for the treatment of cancers that affect the bone and bone
marrow. Following completion of a Phase 1 single-dose escalation trial in healthy volunteers in 2018, in the
fourth quarter of 2019 we initiated a Phase 1b trial of GMI-1359 in HR+ breast cancer patients whose tumors
have spread to bone, and the first patient was dosed in January 2020. The trial is being conducted at Duke
University and will evaluate dose escalation as well as safety, PK and PD markers of biologic activity in these
patients.
● Advance the development of GMI-1687 for the treatment of acute VOC. With the rights to rivipansel
transferred back to the company, we now have the ability to develop and commercialize our selectin inhibitors
for the treatment of acute VOC in patients with SCD. Based on input received from the FDA regarding
rivipansel, as well as feedback from key opinion leaders with respect to sickle cell disease, we have determined
not to proceed with the development of rivipansel as a potential treatment for the acute VOC setting. We have
initiated IND-enabling activities with GMI-1687 to support our planned submission of an IND to the FDA.
● Identify and develop additional novel selectin antagonists to address unmet medical needs with significant
market potential. We believe our glycomimetics platform will enable us to develop a broad pipeline of potential
drug candidates that may be orphan products or may address larger market opportunities. We have identified a
highly potent E-selectin / galectin-3 antagonist which we believe could be of value in potential major market
opportunities, such as the treatment of certain fibrotic conditions and inflammatory diseases.
● Apply our insights and our glycomimetics platform to other carbohydrate targets beyond selectins. We have
identified additional opportunities where carbohydrates play critical roles in disease processes and where we
believe we can apply our platform to create targeted glycomimetic drugs. We have designed inhibitors that
specifically block the binding of galectin-3 to carbohydrate structures. We plan to optimize these compounds
and conduct additional preclinical studies to further characterize the effects of galectin-3 inhibitors on
inflammation and fibrosis, as well as immune processes. We are also designing other galectin inhibitors with
dual functional inhibition of E-selectin that we believe could be used to treat various diseases.
Our Platform
Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding
of the role carbohydrates play in key biological processes. Carbohydrate structures on cell surfaces are responsible for
complex carbohydrate-protein binding interactions. Inhibiting these binding interactions affects the functions of these
proteins and their interactions with other molecules. We believe our expertise enables us to design specific glycomimetic
molecules that can mimic carbohydrate structures and thereby inhibit their disease-related functions.
Our initial focus is on selectin antagonists, which we believe have the potential to address unmet medical needs in a
number of orphan and large market opportunities. Selectins have been shown to play a key role in a wide range of diseases,
including hematologic disorders, inflammatory diseases, infection, cancer and cardiovascular disease.
Our initial drug design efforts are focused on a naturally occurring, three-dimensional complex carbohydrate core
structure known as the Lewis structure. This core structure is naturally modified in a variety of ways to form many different
functional carbohydrates. These variations determine the biological functions of the carbohydrates, including functions
related to conditions defined above. Accordingly, we believe that this structure provides the foundation for the design of
glycomimetic drug candidates that could be used to address a variety of diseases.
Once we identify a carbohydrate structure involved in a disease pathway, we design molecules that mimic that
carbohydrate structure and inhibit its disease-related functions by binding to the carbohydrate’s target receptor, thereby
blocking the binding by the native carbohydrate itself. For example, one of the naturally modified Lewis structures binds
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to selectins, which play a key role in adhesion of AML blasts to the vasculature of the bone marrow. Uproleselan mimics
that carbohydrate structure and accordingly binds to selectins, which we believe thereby inhibits the adhesion of AML
blasts and renders them more susceptible to killing with cytotoxic chemotherapies. In addition, our glycomimetic molecules
are designed to have greater affinity to the carbohydrate’s target receptor than does the native carbohydrate. This means
that the glycomimetic molecules possess stronger intermolecular forces between themselves and the target receptors, and
thus “outcompete” the native carbohydrates in binding to the relevant target receptors, thereby inhibiting their disease-
related functions. Using our glycomimetics platform, we have designed and synthesized a proprietary library of these
structures targeting different biological processes.
Our glycomimetics platform includes intellectual property, know-how, expertise, proprietary biological information
and biochemical assays, all of which support the rational design of potent glycomimetic compounds. These include:
● Know-how to successfully mimic the Lewis structure, which is common to a number of functional
carbohydrates.
● Use of empirical methods to determine critical interactions between variations of a particular functional
carbohydrate and its target molecule.
● Application of the empirically determined bioactive structure of the functional carbohydrate for docking into the
binding area of the crystal structure of the target molecule.
● Expertise in stabilizing the bioactive core of glycomimetic compounds and increasing the number of interaction
contact points to improve affinity.
● Experience and technology in synthetic organic chemistry required for the specialized synthesis of
carbohydrates and their modifications.
● Proprietary assays to determine the binding characteristics, inhibitory activity and biological activity of
glycomimetic compounds.
Our Pipeline
We have discovered our drug candidates internally through a rational drug design approach that couples our expertise
in carbohydrate chemistry with our knowledge of carbohydrate biology. We are actively developing glycomimetic drug
candidates based on this expertise. Our drug candidates and their target indications and development status are summarized
in the chart below.
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Uproleselan —Targeting the Bone Marrow Microenvironment to Treat Hematologic Cancers
We are developing uproleselan, a specific E-selectin antagonist, to be used adjunctively with standard chemotherapy
to treat AML and other hematologic cancers. We believe that uproleselan may be used as first-line treatment for elderly
patients with AML or for patients with relapsed or refractory AML. Uproleselan targets interactions between cancer cells
and the bone marrow microenvironment. In preclinical studies, combining uproleselan with chemotherapy made cancer
cells more sensitive to chemotherapy. In other preclinical studies, uproleselan also reduced some of the toxic effects of
chemotherapy, including neutropenia and mucositis, on normal cells.
Uproleselan received Orphan Drug designation from the FDA in 2015 for the treatment of patients with AML. In
2016, uproleselan received Fast Track designation from the FDA for the treatment of adult patients with relapsed or
refractory AML and elderly patients aged 60 years or older with AML. In 2017, uproleselan received Breakthrough
Therapy designation from the FDA for the treatment of adult patients with relapsed or refractory AML. In 2017, the
European Commission, based on a favorable recommendation from the EMA Committee for Orphan Medicinal Products,
granted orphan designation for uproleselan for the treatment of patients with AML. In January 2021, the China National
Medical Products Administration Center for Drug Evaluation granted Breakthrough Therapy designation to uproleselan for
the treatment of relapsed/refractory AML.
Acute Myeloid Leukemia
AML, a hematologic cancer that is characterized by the rapid growth of abnormal white blood cells that accumulate
in the bone marrow and interfere with the production of normal blood cells, is a relatively rare disease, but one that
accounts for the largest number of annual deaths from leukemia in the United States. According to the Surveillance,
Epidemiology, and End Results Program managed by the NCI, there were an estimated 19,940 new cases of AML
diagnosed in 2020 in the United States. AML caused an estimated 11,180 deaths in 2020 in the United States.
AML is more commonly present in elderly patients, with a median age at diagnosis of 68 years old according to the
NCI. In a review published in the Journal of Clinical Oncology, the median overall survival of patients 60 years old or
older was nine months. The overall five-year relative survival rate for all AML patients from 2010 to 2016 was 28.7%.
Relative survival is a statistical measure of net survival that is calculated by comparing observed survival with expected
survival from a comparable set of people who do not have AML, in order to measure the excess mortality that is associated
with the AML diagnosis.
A number of published studies indicate that only some AML patients who receive chemotherapy achieve a complete
response, which is defined as the disappearance of all signs of AML, and that most patients with a complete response will
eventually relapse. Patients who do not enter remission are referred to as refractory, meaning that they are resistant to the
chemotherapy treatment.
We believe there is a need for new treatment options for elderly patients with AML, as well as those AML patients
who relapse or develop refractory disease. Most AML patients with relapsed or refractory disease have limited established
treatment options and, accordingly, may be referred for participation in clinical studies of potential new therapies. For
patients who elect not to participate or are unable to participate, treatment options typically include chemotherapy
regimens, hypomethylating agents and supportive care. Further, many elderly patients with AML are too frail to undergo
chemotherapy as a result of other medical conditions, and may only be able to tolerate pain comfort or control measures.
Without treatment, however, AML is uniformly fatal.
Role of E-selectin in AML
E-selectin has been shown to play important roles in the progression of AML. This has been observed in several
studies, which have shown that levels of E-selectin correlate with tumor infiltration and relapse in AML. We therefore
believe that our E-selectin antagonist, uproleselan, has the potential to improve the current treatment of patients with AML.
Uproleselan Preclinical Development
Leukemia cells can bind to E-selectin in the bone marrow where they are relatively protected from the effects of
chemotherapy. This phenomenon is now known as environment-mediated drug resistance, or EMDR. We believe that E-
selectin inhibition disrupts the cell adhesion involved in EMDR and mobilizes blasts out of the bone marrow and into the
bloodstream, making them more susceptible to chemotherapy. We believe that this mechanism of action may allow
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uproleselan to improve chemotherapy response rates, duration of remission and, ultimately, survival in patients with
hematologic cancers such as AML.
In one in vivo study in a mouse model of AML, combining uproleselan with chemotherapy, mobilized AML blast
cells and significantly reduced tumor burden as compared to treatment with chemotherapy alone. In an in vitro study, AML
cells once bound to E-selectin were more resistant to chemotherapy. In a related study, when treated with uproleselan, the
resistance of such cells to chemotherapy was reduced. Tumor cells of patients who have relapsed AML, when tested in the
laboratory, bound significantly higher levels of E-selectin than tumor cells of patients at initial diagnosis. Additional
preclinical studies in mouse models of AML, in which E-selectin was observed to be upregulated, suggest that AML cells
binding to E-selectin have increased chemo-resistance. This is due to the induction of tumor cell survival signaling
pathways as a consequence of E-selectin binding. This effect within the bone marrow microenvironment is unique to E-
selectin as compared to other vascular adhesion molecules and can be blocked by uproleselan. The results of these
preclinical studies were published in the journal Nature Communications in April 2020, and we believe the findings
provide important information about how treatment with uproleselan may improve sensitivity to chemotherapy.
As uproleselan disrupts the interactions between cancer cells and bone marrow microenvironment, its mechanism of
action is not limited to a single tumor type. In addition to our studies in AML, we have also tested the drug candidate in
other cancer models. In in vivo studies involving animal models of multiple myeloma, chronic myelogenous leukemia and
acute lymphoblastic leukemia, uproleselan, as an adjunct to standard-of-care chemotherapy, decreased tumor burden and
improved survival over chemotherapy alone.
In addition to its anti-tumor effects, uproleselan, in animal models, has shown protection against some of the
toxicities of chemotherapy. In particular, animals treated with uproleselan in combination with chemotherapy had less
severe neutropenia and mucositis and lower bone marrow toxicity as compared to animals treated with chemotherapy
alone. We believe that treatment with uproleselan results in lower bone marrow toxicity due to its inhibition of E-selectin,
thereby making hematopoietic stem cells divide less frequently and protecting them from chemotherapy agents that target
rapidly dividing cells. Hematopoietic stem cells are blood cells that give rise to all other types of blood cells and are
heavily concentrated in the bone marrow. Based on these reductions in some of the toxicities of chemotherapy, we are
evaluating these effects as secondary efficacy endpoints in our clinical trials.
Expanding the Utility of E-selectin antagonists
At the 2018 annual ASH meeting, we reported on the preclinical development of a highly potent antagonist of E-
selectin, GMI-1687, which demonstrated significant activity in animal models previously reported for uproleselan but at an
approximately 1,000-fold lower dose. This level of activity was obtained following injections under the skin and could
alleviate the need for intravenous infusions. Based on these compound characteristics, we believe GMI-1687 could
potentially be used in outpatient settings where an E-selectin antagonist has therapeutic relevance. We are currently
conducting IND-enabling studies of GMI-1687.
In 2020, we reported on expanded preclinical studies with GMI-1687 in which the subcutaneous administration of
GMI-1687 was effective in restoring blood flow in occluded blood vessels in two mouse models of SCD. Combined with
the recent post hoc analysis of the data from the Phase 3 trial conducted by Pfizer showing that administration of rivipansel
early in the course of VOC was associated with favorable outcomes, we believe that these data support our planned
development of GMI-1687 for subcutaneous use and self-administration with the potential for use in the early intervention
of VOC.
Uproleselan Clinical Trials
In 2014, we completed a Phase 1 trial of uproleselan in healthy volunteers. The single-site Phase 1 trial was a
randomized, double-blind, placebo-controlled, single ascending intravenous dose trial. In the trial, we evaluated the safety,
tolerability and PK of uproleselan. Twenty-eight healthy adult subjects were enrolled in cohorts to receive study drug at
three dose levels. In the trial, we observed that the subjects tolerated uproleselan well, and that the PK for uproleselan was
consistent with what was predicted based on preclinical data.
In 2015, we commenced a multinational, Phase 1/2, open-label trial of uproleselan as an adjunct to standard
chemotherapy in patients with AML. This trial in males and females with AML was conducted at a number of academic
institutions in the United States, Ireland and Australia. The trial consisted of two parts. In the Phase 1 portion, escalation
testing was performed to determine a recommended uproleselan dose in combination with standard chemotherapy to be
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used in the Phase 2 portion. In the Phase 2 portion of the trial, dose expansion was performed at the recommended dose of
10 mg/kg uproleselan in combination with standard chemotherapy. The primary objective of the trial was to evaluate the
safety of uproleselan in combination with chemotherapy. Secondary objectives were to characterize PK and PD and to
observe anti-leukemic activity. A total of 19 patients with relapsed or refractory AML were enrolled and dosed with a
single cycle of treatment with uproleselan and chemotherapy in the Phase 1 portion of the trial. In the Phase 2 portion, one
cohort of 25 patients over 60 years of age with newly diagnosed AML and a second cohort of 47 patients with relapsed or
refractory AML were enrolled. Unlike in the Phase 1 portion, some of the patients in the Phase 2 portion were eligible to
receive multiple cycles of uproleselan with chemotherapy.
In December 2018, we presented final efficacy and correlative results from the Phase 1/2 trial at the annual ASH
meeting. Key highlights from the Phase 1/2 clinical data include the following:
● Relapsed/Refractory (R/R) AML Cohort: There were 66 patients in the R/R cohort of which 54 were in the
recommended phase 2 dose. At the recommended Phase 2 dose (RP2D), CR (complete remission)/CRi
(complete remission with incomplete blood count recovery) rate was 41%, median overall survival, or OS, was
8.8 months (95% CI 5.7-11.4) and 69% of evaluable patients (11/16) achieved measurable residual disease
negativity as assessed by either flow and/or DNA-based methods such as reverse transcription polymerase chain
reaction (RT-PCR). OS will be the primary outcome measure in our ongoing Phase 3 trial in relapsed/refractory
AML patients. In historical controls, OS of approximately 5.2-5.4 months has been observed in this population
with this treatment approach. If we are able to achieve OS results in the Phase 3 trial comparable to those
observed in the Phase 1/2 clinical trial, it could be a significant improvement over the results observed in these
historical controls.
● Newly Diagnosed AML Cohort: At the RP2D, CR/CRi rate was 72%, median overall survival was 12.6 months
(95% CI 9.9-not reached), EFS was 9.2 months (95% CI 3.0-12.6) and 56% of evaluable patients (5 out of 9)
achieved measurable residual disease negativity as assessed by either flow and/or DNA-based methods such as
RT-PCR. Of note, the EFS data (primary outcome measure for the interim analysis in the NCI-sponsored clinical
trial in newly diagnosed AML patients) compares favorably to a range of 2.0-6.5 months for EFS in historical
controls, which generally included lower risk patient populations than those treated in our Phase 1/2 trial.
● An analysis of E-selectin ligand expression on leukemic cells demonstrated that detectable levels were present
on leukemic blasts for every patient tested, providing clinical evidence of biological relevance of the E-selectin
ligand in this disease setting. In bone marrow samples, leukemic stem cell expression of E-selectin ligand
correlated with leukemic blast E-selectin ligand expression (p<0.0001), consistent with the hypothesis that E-
selectin-mediated interactions are a mechanism of chemoresistance. Additionally, investigators assessed the
association between baseline E-selectin ligand expression on leukemic blasts and clinical outcomes using a log-
rank test. In the R/R cohort of patients treated with uproleselan and evaluated for E-selectin ligand expression at
baseline, this analysis demonstrated that ≥10% E-selectin ligand expression was correlated with prolonged
survival (p<0.01) compared to <10% E-selectin ligand expression. We believe this observation is important
because in patients not treated with uproleselan the scientific literature has instead observed that high levels of
E-selectin ligand correlated with a worse clinical prognosis. The addition of uproleselan in our study appears to
have reversed this trend toward worsened prognosis, and we believe this result may be achieved through the
restoration of chemosensitivity.
Based on these results, we are conducting a randomized, double-blind, placebo-controlled Phase 3 clinical trial to
evaluate uproleselan in individuals with relapsed/refractory AML, with a trial design aligned with guidance received from
the FDA. Based on consultations with the FDA, this single pivotal trial is planned to enroll approximately 380 adult
patients with relapsed or refractory AML at centers in the United States, Canada, Europe and Australia. To best capture the
full benefits of uproleselan, the primary efficacy endpoint will be overall survival; importantly, the FDA has advised us that
data on overall survival will not need to be censored for transplant in the primary efficacy analysis, meaning that patients
who proceed to transplant will continue to be included as part of the survival analysis.
All patients will be treated with standard chemotherapy of either MEC (mitoxantrone, etoposide and cytarabine) or
FAI (fludarabine, cytarabine and idarubicin), with approximately half of the patients randomized to receive uproleselan in
addition to chemotherapy. Patients receiving uproleselan will be dosed for one day prior to initiation of chemotherapy,
twice a day through the chemotherapy regimen, and then for two days after the end of chemotherapy, which was the
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same regimen as in the Phase 2 portion of the Phase 1/2 trial. The dose regimen will be fixed, rather than weight-based,
which we believe will simplify administration, and we will offer up to three cycles of consolidation therapy in both arms of
the trial for patients who achieve remission. We believe that multiple cycles of treatment in patients who respond may drive
an even deeper response in patients treated with uproleselan. If this is the case, it could lengthen the duration of remission
with potential for additional benefit on survival. Key secondary endpoints of the Phase 3 trial will include the incidence of
severe mucositis and remission rate, which will be assessed in a hierarchical fashion to provide supportive data. Enrollment
in this pivotal trial began in the fourth quarter of 2018, and we expect to complete enrollment of the trial in the second half
of 2021.
In 2018, we signed a CRADA with the NCI. Under the terms of the CRADA, we are collaborating with both the NCI
and the Alliance for Clinical Trials in Oncology to conduct a Phase 2/3 randomized, controlled clinical trial testing the
addition of uproleselan to a standard cytarabine/daunorubicin chemotherapy regimen (7&3) in older adults with previously
untreated AML who are suitable for intensive chemotherapy. The primary endpoint is overall survival, which is defined as
the time from the date of randomization to death from any cause, with a planned interim analysis based on event-free
survival after the first 262 patients have been enrolled in the trial. The full trial is expected to enroll approximately 670
patients. Under the terms of the CRADA, the NCI may also fund additional research, including clinical trials involving
pediatric patients with AML as well as preclinical experiments and clinical trials evaluating alternative populations and
chemotherapy regimens. We will supply uproleselan as well as provide financial support to augment data analysis and
monitoring for the Phase 2/3 program. The trial opened for enrollment in early 2019 and enrolled the first patient in April
2019.
GMI-1359 - Drug Candidate Targeting E-selectin and CXCR4
The chemokine CXCR4 has emerged as an important pro-inflammatory cytokine that is involved in cell migration
throughout the body. Like E-selectin, tumor cells may also use the CXCR4 cellular pathway, contributing to
chemoresistance, metastatic disease and ultimately decreased survival. We are developing, GMI-1359, that simultaneously
targets both E-selectin and CXCR4. Since E-selectin and CXCR4 are implicated in keeping cancer cells in the bone
marrow, we believe that targeting both E-selectin and CXCR4 with a single compound could improve efficacy in the
treatment of cancers that affect the bone marrow, such as hematologic cancers, including AML and multiple myeloma,
metastases of certain solid tumors, such as breast and prostate cancer, and primary tumors of the bone such as
osteosarcoma, a rare cancer affecting about 900 adolescents a year in the United States, as compared to targeting CXCR4
alone.
Leukemic cells and circulating tumor cells derived from adenocarcinomas home to and are retained in the bone
marrow via defined sinusoidal vascular gateways that express E-selectin and soluble mediators such as C-X-C motif
chemokine 12 (CXCL12, also known as stem cell-derived factor 1). This homing and retention occurs through an
interaction with E-selectin ligands and the chemokine receptor for CXCL12, CXCR4, which is expressed on tumor cells.
Interrupting E-selectin-mediated cell activation, adhesion and homing and CXCR4-mediated homing and cell migration
and retention may be synergistic and could have therapeutic benefit in many malignancies with unmet medical need. We
believe the use of an E-selectin/CXCR4 dual antagonist as an adjunct to chemotherapy and possibly immunotherapy could
improve response and remission rates, remission duration, and, ultimately, survival, particularly in malignancies where
bone involvement is a primary hallmark of cancer growth and metastasis.
In one in vivo mouse model of bone metastatic prostate carcinoma, combining GMI-1359 with docetaxel
significantly reduced tumor burden and attenuated bone destruction compared to docetaxel alone. In two mouse models of
primary osteosarcoma, administration of GMI-1359 resulted in inhibition of both tumor growth and spread to the lung.
These results were presented during the 2015 and 2018 meetings of the American Association of Cancer Research. In both
mouse models, GMI-1359 showed single agent activity.
GMI-1359 has completed a Phase 1 single-dose escalation trial in healthy volunteers. In this trial, volunteer
participants received a single injection of GMI-1359, after which they were evaluated for safety, tolerability, PK and PD.
This randomized, double-blind, placebo-controlled, dose-escalation trial was conducted at a single site in the United States.
GMI-1359 was generally well tolerated in this trial, with no subjects experiencing serious adverse events. We initiated a
Phase 1b trial of GMI-1359 in the fourth quarter of 2019 in HR+ breast cancer patients whose tumors have spread to bone,
and the first patient was dosed in January 2020. The trial is being conducted at Duke University and will evaluate safety
and PK and PD markers of biologic activity in these patients. In January 2020, the FDA granted GMI-1359 orphan drug
designation and rare pediatric disease designation for the treatment of osteosarcoma.
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Galectin Inhibitors
Using our glycomimetics platform, we have designed galectin-3 inhibitors that specifically block the binding of
galectin-3 to carbohydrate structures. Galectin-3 is a protein that is known to play critical roles in many pathological
processes, including fibrosis, checkpoints in T-cell exhaustion during cancer immunotherapy, chemotherapy resistance and
cardiovascular disease. We plan to continue to optimize these compounds and conduct additional preclinical experiments in
2021 to further characterize the effects of our galectin-3 inhibitors on immune processes and fibrotic-associated disease
progression. One such compound, GMI-1757, is a dual antagonist of both E-selectin and galectin-3 and was shown to
inhibit thrombus formation in a vena cava model and fibrosis in a corneal neovascularization model. These results were
presented at ASH in 2018.
Our License Agreement with Pfizer for Rivipansel
In October 2011, we entered into a license agreement with Pfizer, under which we granted Pfizer an exclusive
worldwide license to develop and commercialize rivipansel, for all fields and uses. The products licensed under the
agreement also include certain backup compounds, along with modifications of and improvements to rivipansel that meet
defined chemical properties. On February 5, 2020, we received written notice of Pfizer’s termination of the license
agreement, effective April 5, 2020.
Upon termination, all rights and licenses granted to Pfizer under the license agreement terminated and Pfizer returned
to us the rights to develop and commercialize the products subject to the license agreement, including rivipansel, and
granted us a non-exclusive license to use the intellectual property developed by Pfizer in connection with its development
of such products, subject to the terms of the license agreement. In addition, in August 2020, we executed a separate post-
termination agreement with Pfizer to effectuate any necessary transition activities with respect to the license agreement,
including the transfer of rivipansel clinical drug product, active pharmaceutical ingredients and other intermediaries.
Pursuant to the terms of the agreement, Pfizer may be eligible to receive a milestone payment of $25.0 million upon
achievement of specified levels of cumulative net sales of rivipansel, as well as a low single-digit royalty on net sales of the
product for a period of ten years from first commercial sale.
Our Collaboration and License Agreement with Apollomics for Uproleselan and GMI-1687
In January 2020, we entered into an exclusive collaboration and license agreement with Apollomics for the
development and commercialization of uproleselan and GMI-1687 for all fields and all uses in Greater China. Apollomics
will be responsible for all clinical development and commercialization activities in Greater China. We and Apollomics will
also collaborate to advance the preclinical and clinical development of GMI-1687. As part of the agreement, we received
an upfront cash payment of $9.0 million and will be eligible to receive potential milestone payments totaling
approximately $180.0 million based on the achievement of specified development, regulatory and commercial milestones,
as well as tiered royalties ranging from the high single digits to 15% based on net sales. In September 2020, we received a
non-refundable $1.0 million development milestone payment upon acceptance by Chinese regulatory authorities of a Phase
3 bridging study design to support registration in China. Apollomics will be responsible for all costs related to
development, regulatory approvals and commercialization in Greater China for uproleselan and GMI-1687. We retain all
rights for both compounds in the rest of the world and have agreed to supply uproleselan and GMI-1687 to Apollomics
pursuant to clinical and commercial supply agreements.
In September 2020, the China National Medical Products Administration (NMPA) Center for Drug Evaluation (CDE)
granted IND approval for uproleselan (APL-106) enabling the initiation of a Phase 1 PK and tolerability study and includes
acceptance of a Phase 3 bridging study of APL-106 in combination with chemotherapy in relapsed/refractory AML. In
January 2021, APL-106 was granted Breakthrough Therapy designation from the China NMPA CDE for the treatment of
relapsed/refractory acute myeloid leukemia.
We and Apollomics have established a joint development committee to oversee activities under the collaboration and
license agreement. The collaboration and license agreement will terminate on a region-by-region basis upon the expiration
of the royalty term for each region, unless earlier terminated by either party. Either party may terminate the collaboration
and license agreement upon prior written notice, subject to specified conditions, including uncured material breach, or upon
bankruptcy or insolvency of the other party. Apollomics may terminate the collaboration and license agreement upon prior
written notice for any reason.
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Intellectual Property
We strive to protect the intellectual property that we believe is important to our business, including seeking and
maintaining patent protection intended to cover the composition of matter of our drug candidates and their methods of use.
We have issued patents directed to rivipansel and methods of use that are expected to expire between 2023 and 2030. We
also have issued patents which cover uproleselan and methods of use that are expected to expire between 2032 and 2033. In
addition, we have several pending patent applications covering uproleselan and/or methods of using it, the last expiring of
which, if issued, currently would be predicted to expire in 2040. We also have an issued patent which covers GMI-1359
and methods of use that is expected to expire in 2036. In addition, we have several pending patent applications covering
GMI-1359 and/or methods of using it, the last expiring of which, if issued, currently would be predicted to expire in 2040.
We also have several pending patent applications covering GMI-1687 and/or methods of using it, the last expiring of
which, if issued, currently would be predicted to expire in 2040. We also rely on trade secret protection for our confidential
and proprietary information and careful monitoring of such information to protect aspects of our business.
Our success will depend significantly on our ability to obtain and maintain patent and other proprietary protection
for commercially important inventions and know-how related to our business, defend and enforce our patents, preserve the
confidentiality of our trade secrets and operate without infringing the valid and enforceable patents and other proprietary
rights of third parties. We also rely on know-how and continuing technological innovation to develop, strengthen and
maintain our proprietary position in the field of glycomimetics.
A third party may hold intellectual property, including patent rights that are important or necessary to the
development of our drug candidates. It may be necessary for us to use the patented or proprietary technology of third
parties to commercialize our drug candidates, in which case we would be required to obtain a license from these third
parties. If we are not able to obtain such a license, or are not able to obtain such a license on commercially reasonable
terms, our business could be materially harmed.
We plan to continue to expand our intellectual property estate by filing patent applications directed to additional
glycomimetic compounds and their derivatives, compositions and formulations containing them and methods of using
them. Additionally, we will seek patent protection in the United States and internationally for novel compositions of matter
covering the compounds and their use in a variety of therapies.
The patent positions of biotechnology companies like us are generally uncertain and involve complex legal, scientific
and factual questions. In addition, the coverage claimed in a patent application can be significantly reduced before the
patent is issued, and its scope can be reinterpreted after issuance, including where a reissue application is filed in relation to
an issued patent to correct issues or errors arising during prosecution that may render claims of the issued patent either
wholly or partially invalid or unenforceable. Consequently, we do not know whether any of our drug candidates will be
protectable or remain protected by enforceable patents. We cannot predict whether the patent applications we are currently
pursuing will issue as patents in any particular jurisdiction or whether the claims of any issued patents will provide
sufficient proprietary protection from competitors. Any patents that we hold may be challenged, circumvented or
invalidated by third parties.
Because patent applications in the United States and certain other jurisdictions are maintained in secrecy for 18
months, and since publication of discoveries in the scientific or patent literature often lags behind actual discoveries, we
cannot be certain of the priority of inventions covered by pending patent applications. Moreover, we may have to
participate in interference proceedings declared by the U.S. Patent and Trademark Office, or USPTO, or a foreign patent
office to determine priority of invention or in post-grant challenge proceedings, such as oppositions, that challenge priority
of invention or other features of patentability. Such proceedings could result in substantial cost, even if the eventual
outcome is favorable to us.
Manufacturing
We do not have any manufacturing facilities or personnel. We currently rely, and expect to continue to rely, on third
parties for the manufacturing of our drug candidates for preclinical and clinical testing, as well as for commercial
manufacturing if our drug candidates receive marketing approval. We anticipate continuing to manage process
development, scale-up and manufacturing under contracts with third parties. For uproleselan, we expect a significant
increase in manufacturing as we prepare for potential regulatory filings for marketing approval.
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All of our drug candidates are small molecules and are manufactured in reliable and reproducible synthetic processes
from readily available starting materials. The chemistry does not require unusual equipment in the manufacturing process.
We expect to continue to develop drug candidates that can be produced cost-effectively at contract manufacturing facilities.
Commercialization
We have not yet established a sales, marketing or drug distribution infrastructure. We generally expect to retain
commercial rights in the United States for our current drug candidates, all of which are still in preclinical or clinical
development. We believe that it will be possible for us to access the U.S. market for those drug candidates through a
focused, specialized sales force. With respect to uproleselan and GMI-1687, we have granted Apollomics exclusive
commercialization rights in Greater China, and we may grant similar rights to third parties for our drug candidates in other
jurisdictions around the world.
Subject to receiving marketing approvals, we expect to commence commercialization activities by building or
outsourcing a focused sales and marketing organization in the United States to sell our drugs. We believe that such an
organization will be able to target the community of physicians who are the key specialists in treating the patient
populations for which our drug candidates are being developed. Outside the United States, we expect to enter into
distribution and other marketing arrangements with third parties for any of our drug candidates that obtain marketing
approval.
We also plan to build a marketing and sales management organization to create and implement marketing strategies
for any drugs that we market through our own sales organization and to oversee and support our sales force. The
responsibilities of the marketing organization would include developing educational initiatives with respect to approved
drugs and establishing relationships with thought leaders in relevant fields of medicine.
Competition
The key competitive factors affecting the success of all of our drug candidates, if approved, are likely to be their
safety, efficacy, convenience, price, the level of generic competition and the availability of coverage and reimbursement
from government and other third-party payors.
As the treatment landscape for AML changes, there is substantial risk that uproleselan might not provide additional
benefit over other existing therapies. A key consideration in the treatment of relapsed/refractory AML patients is the
patient’s suitability for intensive salvage chemotherapy. The patient population being studied in our ongoing Phase 3
clinical trial of uproleselan includes AML patients deemed able to tolerate salvage chemotherapy. While there is no
commonly accepted single standard approach for salvage chemotherapy, existing options for the treatment of
relapsed/refractory AML patients who can tolerate salvage chemotherapy include cytarabine-based combinations. In
addition, we are aware of several other products and product candidates that are commercially available or are in
development as potential treatment options for AML patients. Some of the patient populations being studied for these
product candidates in development overlap with the patient population being studied in our Phase 3 clinical trial of
uproleselan. The existence of established treatment options and the development of competing therapies for
relapsed/refractory AML patients could negatively impact our ability to successfully commercialize uproleselan.
The following therapies have been approved by the FDA for the treatment of AML:
● RYDAPT® (midostaurin), an oral prescription medicine commercialized by Novartis to be used in combination
with certain chemotherapy medicines to treat adults with newly diagnosed AML who have a defect in a gene
called FLT3;
● IDHIFA® (enasidenib), a prescription medicine commercialized by Celgene intended to treat people with AML
with an isocitrate dehydrogenase-2 (IDH2) mutation whose disease has come back or has not improved after
previous treatments;
● VYXEOSTM (daunorubicin and cytarabine), commercialized by Jazz Pharmaceuticals, which is indicated for the
treatment of adults with newly-diagnosed therapy-related AML (t-AML) or AML with myelodysplasia-related
changes (AML-MRC);
● MYLOTARGTM (gemtuzumab ozogamicin), commercialized by Pfizer, which is indicated for the treatment for
the treatment of newly-diagnosed CD33-positive AML in adults (in combination with daunorubicin and
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cytarabine) and for treatment of relapsed or refractory CD33-positive AML in adults and in pediatric patients
aged 2 years and older as a stand-alone treatment;
● TIBSOVO® (ivosidenib), a prescription medicine commercialized by Agios intended to treat people with AML
with an isocitrate dehydrogenase-1 (IDH1) mutation whose disease has come back or has not improved after
previous treatments;
● XOSPATA® (gilteritinib), an oral prescription medicine commercialized by Astellas intended to treat people
with AML with a FLT3 gene mutation whose disease has come back or has not improved after previous
treatments;
● DAURISMO (glasdigib), an oral prescription medicine commercialized by Pfizer to be used in combination
with low-dose cytarabine, for the treatment of newly-diagnosed AML in adult patients who are ≥75 years old or
who have comorbidities that preclude use of intensive induction chemotherapy; and
● VENCLEXTA® (venetoclax), an oral prescription medicine commercialized by AbbVie/Genentech to be used
in combination with azacitidine, or decitabine, or low-dose cytarabine to treat adults with newly-diagnosed
AML who are either 75 years of age or older, or have other medical conditions that prevent the use of standard
chemotherapy.
While many chemotherapies, either approved or in development for hematologic malignancies, will likely be
complementary to uproleselan, there are also therapies in development that could be directly competitive with uproleselan.
In particular, Pfizer has recently initiated Phase 1 development of an E-selectin antibody (PF-07209326). While the initial
target indication for this biologic is SCD, it is possible Pfizer could expand development to AML and other hematologic
malignancies. Additionally, there are a number of CXCR4 antagonists in clinical development that target the bone marrow
microenvironment in order to mobilize and sensitize cancer cells to chemotherapy, including candidates developed by
Sanofi-Aventis (Mozobil), Bristol Myers Squibb (BMS-936564), NOXXON Pharma (NOX-A12), Eli Lilly (LY2510924)
and BioLine RX (BL-8040).
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 testing,
conducting clinical trials, obtaining regulatory approvals and marketing approved drugs 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 or early stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies. These competitors also
compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial
sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our
programs.
Government Regulation and Product Approval
Government authorities in the United States, at the federal, state and local levels, and in other countries, extensively
regulate, among other things, the research, development, testing, manufacture, packaging, storage, recordkeeping, labeling,
advertising, promotion, distribution, marketing, import and export of pharmaceutical products, such as those we are
developing. The processes for obtaining regulatory approvals in the United States and in foreign countries, along with
subsequent compliance with applicable statutes and regulations, require the expenditure of substantial time and financial
resources.
United States Government Regulation
In the United States, the FDA regulates drugs under the Federal Food, Drug, and Cosmetic Act, or FDCA, and its
implementing regulations. The process of obtaining regulatory approvals and the subsequent compliance with appropriate
federal, state, local and foreign statutes and regulations requires the expenditure of substantial time and financial resources.
Failure to comply with the applicable United States requirements at any time during the drug development process,
approval process or after approval, may subject an applicant to a variety of administrative or judicial sanctions, such as the
FDA’s refusal to approve pending new drug applications, or NDAs, withdrawal of an approval, imposition of a clinical
hold, issuance of warning or untitled letters, product recalls, product seizures, total or partial suspension of production or
distribution, injunctions, fines, refusals of government contracts, restitution, disgorgement or civil or criminal penalties.
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The process required by the FDA before a drug may be marketed in the United States generally involves:
● completion of preclinical laboratory tests, animal studies and formulation studies in compliance with the FDA’s
good laboratory practice, or GLP, regulations;
● submission to the FDA of an IND, which must become effective before human clinical trials may begin;
● approval by an independent institutional review board, or IRB, at each clinical site before each trial may be
initiated;
● performance of human clinical trials, including adequate and well-controlled clinical trials, in accordance with
good clinical practices, or GCP, to establish the safety and efficacy of the proposed drug for each indication;
● submission to the FDA of an NDA;
● satisfactory completion of an FDA advisory committee review, if applicable;
● satisfactory completion of an FDA inspection of the manufacturing facility or facilities at which the product is
produced to assess compliance with current good manufacturing practices, or cGMP, and to assure that the
facilities, methods and controls are adequate to preserve the drug’s identity, strength, quality and purity, as well
as satisfactory completion of an FDA inspection of selected clinical sites to determine GCP compliance; and
● FDA review and approval of the NDA.
Preclinical Studies
Preclinical studies include laboratory evaluation of product chemistry, toxicity and formulation, as well as animal
studies to assess potential safety and efficacy. An IND sponsor must submit the results of the preclinical studies, together
with manufacturing information, analytical data and any available clinical data or literature, among other things, to the
FDA as part of an IND. Some preclinical testing may continue even after the IND is submitted. An IND automatically
becomes effective 30 days after receipt by the FDA, unless before that time the FDA raises concerns or questions related to
one or more proposed clinical trials and places the clinical trial on a clinical hold. In such a case, the IND sponsor and the
FDA must resolve any outstanding concerns before the clinical trial can begin. As a result, submission of an IND may not
result in the FDA allowing clinical trials to commence.
Clinical Trials
Clinical trials involve the administration of the investigational new drug to human subjects under the supervision of
qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects
provide their informed consent in writing for their participation in any clinical trial. Clinical trials are conducted under
protocols detailing, among other things, the objectives of the trial, the parameters to be used in monitoring safety and the
effectiveness criteria to be evaluated. A protocol for each clinical trial and any subsequent protocol amendments must be
submitted to the FDA as part of the IND. In addition, an IRB at each institution participating in the clinical trial must
review and approve the plan for any clinical trial before it commences at that institution, and the IRB must continue to
oversee the clinical trial while it is being conducted. Information about certain clinical trials must be submitted within
specific timeframes to the National Institutes of Health, or NIH, for public dissemination on their ClinicalTrials.gov
website.
Human clinical trials are typically conducted in three sequential phases, which may overlap or be combined. In Phase
1, the drug is initially introduced into healthy human subjects or patients with the target disease or condition and tested for
safety, dosage tolerance, absorption, metabolism, distribution, excretion and, if possible, to gain an initial indication of its
effectiveness. In Phase 2, the drug typically is administered to a limited patient population to identify possible adverse
effects and safety risks, to preliminarily evaluate the efficacy of the product for specific targeted diseases and to determine
dosage tolerance and optimal dosage. In Phase 3, the drug is administered to an expanded patient population, generally at
geographically dispersed clinical trial sites, in well-controlled clinical trials to generate enough data to statistically evaluate
the safety and efficacy of the product for approval, to establish the overall risk-benefit profile of the product and to provide
adequate information for the labeling of the product.
Progress reports detailing the results of the clinical trials must be submitted, at least annually, to the FDA, and more
frequently if serious adverse events occur. Phase 1, Phase 2 and Phase 3 clinical trials may not be completed
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successfully within any specified period, or at all. Furthermore, the FDA or the sponsor may suspend or terminate a clinical
trial at any time on various grounds, including a finding that the research subjects are being exposed to an unacceptable
health risk. Similarly, an IRB can suspend or terminate approval of a clinical trial at its institution if the clinical trial is not
being conducted in accordance with the IRB’s requirements, or if the drug has been associated with unexpected serious
harm to patients.
A sponsor may request a Special Protocol Assessment, or SPA, the purpose of which is to reach agreement with the
FDA on the Phase 3 clinical trial protocol design and analysis that will form the primary basis of an efficacy claim.
According to the FDA’s published guidance on the SPA process, a sponsor that meets the prerequisites may make a specific
request for an SPA and provide information regarding the design and size of the proposed clinical trial. The FDA is
supposed to evaluate the protocol within 45 days of the request to assess whether the protocol design and planned analysis
of the trial are acceptable to support regulatory approval of the product candidate with respect to effectiveness of the
indication studied, and that evaluation may result in discussions and a request for additional information. An SPA request
must be made before the proposed trial begins, and all open issues must be resolved before the trial begins for an SPA to be
approved. If a written agreement is reached, it will be documented in an SPA letter or the minutes of a meeting between the
sponsor and the FDA and made part of the administrative record.
Even if the FDA agrees to the design, execution and analyses proposed in protocols reviewed under the SPA process,
the FDA may revoke or alter its agreement under the following circumstances:
● public health concerns emerge that were unrecognized at the time of the protocol assessment, or the director of
the review division determines that a substantial scientific issue essential to determining safety or efficacy has
been identified after testing has begun;
● a sponsor fails to follow a protocol that was agreed upon with the FDA; or
● the relevant data, assumptions, or information provided by the sponsor in a request for SPA change are found to
be false statements or misstatements, or are found to omit relevant facts.
A documented SPA may be modified, and such modification will be deemed binding on the FDA review division,
except under the circumstances described above, if the FDA and the sponsor agree in writing to modify the protocol and
such modification is intended to improve the study. An SPA, however, does not guarantee that a trial will be successful.
Marketing Approval
Assuming successful completion of the required clinical testing, the results of the preclinical and clinical studies,
together with detailed information relating to the product’s chemistry, manufacture, controls and proposed labeling, among
other things, are submitted to the FDA as part of an NDA requesting approval to market the product for one or more
indications. In most cases, the submission of an NDA is subject to a substantial application user fee. Under the Prescription
Drug User Fee Act, or PDUFA, guidelines that are currently in effect, the FDA has agreed to certain performance goals
regarding the timing of its review of an application.
In addition, under the Pediatric Research Equity Act, an NDA or supplement to an NDA must contain data that are
adequate to assess the safety and effectiveness of the drug for the claimed indications in all relevant pediatric
subpopulations, and to support dosing and administration for each pediatric subpopulation for which the product is safe and
effective. The FDA may, on its own initiative or at the request of the applicant, grant deferrals for submission of some or all
pediatric data until after approval of the product for use in adults, or full or partial waivers from the pediatric data
requirements. Unless otherwise required by regulation, the pediatric data requirements do not apply to products with
orphan designation.
The FDA also may require submission of a risk evaluation and mitigation strategy, or REMS, plan to mitigate any
identified or suspected serious risks. The REMS plan could include medication guides, physician communication plans,
assessment plans and elements to assure safe use, such as restricted distribution methods, patient registries or other risk
minimization tools.
The FDA conducts a preliminary review of all NDAs within the first 60 days after submission, before accepting them
for filing, to determine whether they are sufficiently complete to permit substantive review. The FDA may request
additional information rather than accept an NDA for filing. In this event, the application must be resubmitted with the
additional information. The resubmitted application is also subject to review before the FDA accepts it for filing. Once
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the submission is accepted for filing, the FDA begins an in-depth substantive review. The FDA reviews an NDA to
determine, among other things, whether the drug is safe and effective and whether the facility in which it is manufactured,
processed, packaged or held meets standards designed to assure the product’s continued safety, quality and purity.
The FDA typically refers questions regarding novel drugs to an external advisory committee. An advisory committee
is a panel of independent experts, including clinicians and other scientific experts, that reviews, evaluates and provides a
recommendation as to whether the application should be approved and under what conditions. The FDA is not bound by
the recommendations of an advisory committee, but it considers such recommendations carefully when making decisions.
Before approving an NDA, the FDA typically will inspect the facility or facilities where the product is manufactured.
The FDA will not approve an application unless it determines that the manufacturing processes and facilities are in
compliance with cGMP requirements and adequate to assure consistent production of the product within required
specifications. Additionally, before approving an NDA, the FDA will typically inspect one or more clinical trial sites to
assure compliance with GCP.
The testing and approval process for an NDA requires substantial time, effort and financial resources, and could take
several years to complete. Data obtained from preclinical and clinical testing are not always conclusive and may be
susceptible to varying interpretations, which could delay, limit or prevent regulatory approval. The FDA may not grant
approval of an NDA on a timely basis, or at all.
After evaluating the NDA and all related information, including the advisory committee recommendation, if any, and
inspection reports regarding the manufacturing facilities and clinical trial sites, the FDA may issue an approval letter, or, in
some cases, a complete response letter. A complete response letter generally contains a statement of specific conditions that
must be met in order to secure final approval of the NDA and may require additional clinical or preclinical testing in order
for the FDA to reconsider the application. Even with submission of this additional information, the FDA ultimately may
decide that the application does not satisfy the regulatory criteria for approval. If and when those conditions have been met
to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial
marketing of the drug with specific prescribing information for specific indications.
Special FDA Expedited Review and Approval Programs
The FDA has various programs, including fast track designation, accelerated approval, priority review, and
breakthrough therapy designation, which are intended to expedite or simplify the process for the development and the FDA
review of drugs that are intended for the treatment of serious or life threatening diseases or conditions and demonstrate the
potential to address unmet medical needs. The purpose of these programs is to provide important new drugs to patients
earlier than under standard FDA review procedures.
To be eligible for a fast track designation, the FDA must determine, based on the request of a sponsor, that a product
is intended to treat a serious or life-threatening disease or condition and demonstrates the potential to address an unmet
medical need. The FDA will determine that a product will fill an unmet medical need if it will provide a therapy where
none exists or provide a therapy that may be potentially superior to existing therapy based on efficacy or safety factors. The
FDA may review sections of the NDA for a fast track product on a rolling basis before the complete application is
submitted, if the sponsor provides a schedule for the submission of the sections of the NDA, the FDA agrees to accept
sections of the NDA and determines that the schedule is acceptable, and the sponsor pays any required user fees upon
submission of the first section of the NDA.
The FDA may give a priority review designation to drugs that offer major advances in treatment, or provide a
treatment where no adequate therapy exists. A priority review means that the goal for the FDA to review an application is
six months, rather than the standard review of ten months under current PDUFA guidelines. These six and ten month
review periods are measured from the “filing” date rather than the receipt date for NDAs for new molecular entities, which
typically adds approximately two months to the timeline for review and decision from the date of submission. Most
products that are eligible for fast track designation are also likely to be considered appropriate to receive a priority review.
In addition, products studied for their safety and effectiveness in treating serious or life-threatening illnesses and that
provide meaningful therapeutic benefit over existing treatments may be eligible for accelerated approval and may be
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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, or on a clinical endpoint that can be measured earlier
than irreversible morbidity or mortality, that is reasonably likely to predict an effect on irreversible morbidity or mortality
or other clinical benefit, taking into account the severity, rarity or prevalence of the condition and the availability or lack of
alternative treatments. As a condition of approval, the FDA may require a sponsor of a drug receiving accelerated approval
to perform post-marketing studies to verify and describe the predicted effect on irreversible morbidity or mortality or other
clinical endpoint, and the drug may be subject to accelerated withdrawal procedures.
A sponsor can also request designation of a product candidate as a “breakthrough therapy.” A breakthrough therapy
is defined as a drug that is intended, alone or in combination with one or more other drugs, to treat a serious or life-
threatening disease or condition, and preliminary clinical evidence indicates that the drug may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects
observed early in clinical development. Drugs designated as breakthrough therapies are also eligible for accelerated
approval. The FDA must take certain actions, such as holding timely meetings and providing advice, intended to expedite
the development and review of an application for approval of a breakthrough therapy.
Even if a product qualifies for one or more of these programs, the FDA may later decide that the product no longer
meets the conditions for qualification or decide that the time period for FDA review or approval will not be shortened. We
may explore some of these opportunities for our product candidates as appropriate.
Post-Approval Requirements
Drugs manufactured or distributed pursuant to FDA approvals are subject to pervasive and continuing regulation by
the FDA, including, among other things, requirements relating to recordkeeping, periodic reporting, product sampling and
distribution, advertising and promotion and reporting of adverse experiences with the product. After approval, most
changes to the approved product, such as adding new indications, manufacturing changes or other labeling claims, are
subject to further testing requirements and prior FDA review and approval. There also are continuing annual user fee
requirements for any marketed products, as well as application fees for supplemental applications with clinical data.
Even if the FDA approves a product, it may limit the approved indications for use of the product, require that
contraindications, warnings or precautions be included in the product labeling, including a boxed warning, require that
post-approval studies, including Phase 4 clinical trials, be conducted to further assess a drug’s safety after approval, require
testing and surveillance programs to monitor the product after commercialization, or impose other conditions, including
distribution restrictions or other risk management mechanisms under a REMS, which can materially affect the potential
market and profitability of the product. The FDA may prevent or limit further marketing of a product based on the results
of post-marketing studies or surveillance programs.
In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are
required to register their establishments with the FDA and state agencies, and are subject to periodic unannounced
inspections by the FDA and these state agencies for compliance with cGMP requirements. Changes to the manufacturing
process are strictly regulated and often require prior FDA approval before being implemented. FDA regulations also
require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements
upon the sponsor and any third-party manufacturers that the sponsor may decide to use. Accordingly, manufacturers must
continue to expend time, money and effort in the area of production and quality control to maintain cGMP compliance.
Once an approval is granted, the FDA may withdraw the approval if compliance with regulatory requirements and
standards is not maintained or if problems occur after the product reaches the market.
Later discovery of previously unknown problems with a product, including adverse events of unanticipated severity
or frequency, or with manufacturing processes, or failure to comply with regulatory requirements, may result in mandatory
revisions to the approved labeling to add new safety information; imposition of post-market studies or clinical trials to
assess new safety risks; or imposition of distribution or other restrictions under a REMS program. Other potential
consequences include, among other things:
● restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the
market or product recalls;
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● fines, warning letters or holds on post-approval clinical trials;
● refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or revocation of
product license approvals;
● product seizure or detention, or refusal to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market.
Although physicians, in the practice of medicine, may prescribe approved drugs for unapproved indications,
pharmaceutical companies generally are required to promote their drug products only for the approved indications and in
accordance with the provisions of the approved label. 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. However, physicians may, in their independent medical judgment, prescribe
legally available products for off-label uses. The FDA does not regulate the behavior of physicians in their choice of
treatments but the FDA does restrict manufacturer’s communications on the subject of off-label use of their products.
In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing
Act, or PDMA, which regulates the distribution of drugs and drug samples at the federal level, and sets minimum standards
for the registration and regulation of drug distributors by the states. Both the PDMA and state laws limit the distribution of
prescription pharmaceutical product samples and impose requirements to ensure accountability in distribution.
Federal and State Fraud and Abuse, Data Privacy and Security, and Transparency Laws and Regulations
In addition to FDA restrictions on marketing of pharmaceutical products, federal and state healthcare laws and
regulations restrict business practices in the biopharmaceutical industry. These laws include, but are not limited to, anti-
kickback and false claims laws and regulations, data privacy and security, and transparency laws and regulations.
The federal Anti-Kickback Statute prohibits, among other things, knowingly and willfully offering, paying, soliciting
or receiving remuneration to induce or in return for purchasing, leasing, ordering or arranging for or recommending the
purchase, lease or order of any item or service reimbursable under Medicare, Medicaid or other federal healthcare
programs. The term “remuneration” has been broadly interpreted to include anything of value. The Anti-Kickback Statute
has been interpreted to apply to arrangements between pharmaceutical manufacturers on one hand and prescribers,
purchasers and formulary managers on the other. Although there are a number of statutory exemptions and regulatory safe
harbors protecting some common activities from prosecution, the exemptions and safe harbors are drawn narrowly and
require strict compliance in order to offer protection. Practices that involve remuneration that may be alleged to be intended
to induce prescribing, purchases or recommendations may be subject to scrutiny if they do not qualify for an exemption or
safe harbor. Several courts have interpreted the statute’s intent requirement to mean that if any one purpose of an
arrangement involving remuneration is to induce referrals of federal healthcare covered business, the statute has been
violated.
The reach of the federal Anti-Kickback Statute was also broadened by the Patient Protection and Affordable Care Act
of 2010, as amended by the Health Care and Education Reconciliation Act of 2010, or collectively PPACA, which, among
other things, amended the intent requirement of the federal Anti-Kickback Statute such that a person or entity no longer
needs to have actual knowledge of this statute or specific intent to violate it in order to have committed a violation. In
addition, PPACA provides that the government may assert that a claim including items or services resulting from a
violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal civil False
Claims Act or the civil monetary penalties statute, which imposes penalties against any person or entity who is determined
to have presented or caused to be presented a claim to a federal health program that the person knows or should know is for
an item or service that was not provided as claimed or is false or fraudulent.
Federal false claims laws, including the federal civil False Claims Act, prohibit any person or entity from knowingly
presenting, or causing to be presented, a false claim for payment to the federal government or knowingly making, using or
causing to be made or used a false record or statement material to a false or fraudulent claim to the federal government. A
claim includes “any request or demand” for money or property presented to the U.S. government. Pharmaceutical and other
healthcare companies have been prosecuted under these laws for, among other things,
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allegedly providing free product to customers with the expectation that the customers would bill federal programs for the
product. Companies also have been prosecuted for causing false claims to be submitted because of the companies’
marketing of products for unapproved, and thus non-reimbursable, uses. The federal Health Insurance Portability and
Accountability Act of 1996, or HIPAA, created additional federal criminal statutes that prohibit, among other things,
knowingly and willfully executing a scheme to defraud any healthcare benefit program, including private third-party payors
and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious
or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services. Also, many
states have similar fraud and abuse statutes or regulations that apply to items and services reimbursed under Medicaid and
other state programs, or, in several states, apply regardless of the payor.
In addition, we may be subject to data privacy and security regulation by both the federal government and the states
in which we conduct our business. HIPAA, as amended by the Health Information Technology for Economic and Clinical
Health Act, or HITECH, and their respective implementing regulations, including the Final HIPAA Omnibus Rule
published on January 25, 2013, imposes specified requirements on certain types of individuals and entities relating to the
privacy, security and transmission of individually identifiable health information. Among other things, HITECH makes
HIPAA’s security standards directly applicable to “business associates,” defined as independent contractors or agents of
covered entities 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 the federal HIPAA laws and seek attorney’s fees
and costs associated with pursuing federal civil actions. In addition, state laws govern the privacy and security of health
information in certain circumstances, many of which are not pre-empted by HIPAA, differ from each other in significant
ways and may not have the same effect, thus complicating compliance efforts.
The federal Physician Payments Sunshine Act requires certain manufacturers of drugs, devices, biologics and
medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program,
with specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, information related
to payments or other transfers of value made to physicians, as defined by such law, and teaching hospitals, and applicable
manufacturers and applicable group purchasing organizations to report annually to CMS ownership and investment
interests held by the physicians and their immediate family members.
We may also be subject to state laws that require pharmaceutical companies to comply with the pharmaceutical
industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government,
as well as state laws that require drug manufacturers to report information related to payments and other transfers of value
to physicians and other healthcare providers or marketing expenditures.
Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions, it is
possible that some of our business activities could be subject to challenge under one or more of such laws. If our operations
are found to be in violation of any of the federal and state laws described above or any other governmental regulations that
apply to us, we may be subject to penalties, including administrative, criminal and significant civil monetary penalties,
damages, fines, disgorgement, imprisonment, additional reporting requirements and oversight if we become subject to a
corporate integrity agreement or similar agreement to resolve allegations of non-compliance with these laws, contractual
damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from participation in
government healthcare programs and the curtailment or restructuring of our operations, any of which could adversely affect
our ability to operate our business and our results of operations. To the extent that any of our products are sold in a foreign
country, we may be subject to similar foreign laws and regulations, which may include, for instance, applicable post-
marketing requirements, including safety surveillance, anti-fraud and abuse laws and implementation of corporate
compliance programs and reporting of payments or transfers of value to healthcare professionals.
Coverage and Reimbursement
The future commercial success of our drug candidates or any of our collaborators’ ability to commercialize any
approved drug candidates successfully will depend in part on the extent to which governmental payor programs at the
federal and state levels, including Medicare and Medicaid, private health insurers and other third-party payors provide
coverage for and establish adequate reimbursement levels for our drug candidates. Government health administration
authorities, private health insurers and other organizations generally decide which drugs they will pay for and establish
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reimbursement levels for healthcare. In particular, in the United States, private health insurers and other third-party payors
often provide reimbursement for products and services based on the level at which the government, through the Medicare
or Medicaid programs, provides reimbursement for such treatments. In the United States, the EU and other potentially
significant markets for our drug candidates, government authorities and third party payors are increasingly attempting to
limit or regulate the price of medical products and services, particularly for new and innovative products and therapies,
which often has resulted in average selling prices lower than they would otherwise be. Further, the increased emphasis on
managed healthcare in the United States and on country and regional pricing and reimbursement controls in the EU will put
additional pressure on product pricing, reimbursement and usage, which may adversely affect our future product sales and
results of operations. These pressures can arise from rules and practices of managed care groups, judicial decisions and
laws and regulations related to Medicare, Medicaid and healthcare reform, pharmaceutical coverage and reimbursement
policies and pricing in general.
Third-party payors are increasingly imposing additional requirements and restrictions on coverage and limiting
reimbursement levels for medical products. For example, federal and state governments reimburse covered prescription
drugs at varying rates generally below average wholesale price. These restrictions and limitations influence the purchase of
healthcare services and products. Third-party payors may limit coverage to specific drug products on an approved list, or
formulary, which might not include all of the FDA-approved drug products for a particular indication. Third-party payors
are increasingly challenging the price and examining the medical necessity and cost-effectiveness of medical products and
services, in addition to their safety and efficacy. We may need to conduct expensive pharmacoeconomic studies in order to
demonstrate the medical necessity and cost-effectiveness of our products, in addition to the costs required to obtain the
FDA approvals. Our drug candidates may not be considered medically necessary or cost-effective. A payor’s decision to
provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved. Further, one
payor’s determination to provide coverage for a drug product does not assure that other payors will also provide coverage
for the drug product. Adequate third-party reimbursement may not be available to enable us to maintain price levels
sufficient to realize an appropriate return on our investment in drug development. Legislative proposals to reform
healthcare or reduce costs under government insurance programs may result in lower reimbursement for our drugs and drug
candidates or exclusion of our drugs and drug candidates from coverage. The cost containment measures that healthcare
payors and providers are instituting and any healthcare reform could significantly reduce our revenues from the sale of any
approved drug candidates. We cannot provide any assurances that we will be able to obtain and maintain third party
coverage or adequate reimbursement for our drug candidates in whole or in part.
Impact of Healthcare Reform on our Business
The United States and some foreign jurisdictions are considering enacting or have enacted a number of additional
legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our
products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in
promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and
expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts, which
include major legislative initiatives to reduce the cost of care through changes in the healthcare system, including limits on
the pricing, coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-
funded health care programs, and increased governmental control of drug pricing.
There have been several U.S. government initiatives over the past few years to fund and incentivize certain
comparative effectiveness research, including creation of the Patient-Centered Outcomes Research Institute under PPACA.
Although the results of the comparative effectiveness studies are not intended to mandate coverage policies for public or
private payors, it is not clear what effect, if any, the research will have on the sales of any product, if any such product or
the condition that it is intended to treat is the subject of a study. It is also possible that comparative effectiveness research
demonstrating benefits in a competitor’s product could adversely affect the sales of our product candidates. If third-party
payors do not consider our drug candidates to be cost-effective compared to other available therapies, they may not cover
our drug candidates, once approved, as a benefit under their plans or, if they do, the level of payment may not be sufficient
to allow us to sell our drugs on a profitable basis. PPACA became law in March 2010 and substantially changed the way
healthcare is financed by both governmental and private insurers. Among other measures that may have an impact on our
business, PPACA established an annual, nondeductible fee on any entity that manufactures or imports specified branded
prescription drugs and biologic agents; a new Medicare Part D coverage gap discount program; and a new formula that
increases the rebates a manufacturer must pay under the Medicaid Drug Rebate Program. Additionally, PPACA extends
manufacturers’ Medicaid rebate liability, expands eligibility criteria for
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Medicaid programs, and expands entities eligible for discounts under the Public Health Service pharmaceutical pricing
program. There remain judicial and Congressional challenges to certain aspects of PPACA, as well as recent efforts by the
Trump administration to repeal or replace certain aspects of the PPACA.
Since January 2017, President Trump has signed two Executive Orders designed to delay the implementation of any
certain provisions of the PPACA or otherwise circumvent some of the requirements for health insurance mandated by the
PPACA. Concurrently, Congress has considered legislation that would repeal or repeal and replace all or part of the
PPACA. While Congress has not passed comprehensive repeal legislation, two bills affecting the implementation of certain
taxes under the PPACA have been signed into law. The Tax Cuts and Jobs Act of 2017 includes a provision repealing,
effective January 1, 2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who
fail to maintain qualifying health coverage for all or part of a year that is commonly referred to as the “individual
mandate”. In addition, the 2020 federal spending package permanently eliminated, effective January 1, 2020, the PPACA-
mandated “Cadillac” tax on high-cost employer-sponsored health coverage and medical device tax and, effective January 1,
2021, also eliminates the health insurer tax. On December 14, 2018, a Texas U.S. District Court Judge ruled that the
PPACA is unconstitutional in its entirety because the “individual mandate” was repealed by Congress as part of the Tax
Act. Additionally, on December 18, 2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that
the individual mandate was unconstitutional and remanded the case back to the District Court to determine whether the
remaining provisions of the PPACA are invalid as well.
In addition, there has been increasing legislative and enforcement interest in the United States with respect to
specialty drug pricing practices. Specifically, there have been several recent U.S. Congressional inquiries and proposed
federal and proposed and enacted state legislation designed to, among other things, bring more transparency to drug
pricing, review the relationship between pricing and manufacturer patient programs, and reform government program
reimbursement methodologies for drugs. At the federal level, the Trump administration’s budget proposal for fiscal year
2020 contained further drug price control measures that could be enacted during the budget process or in other future
legislation, including, for example, measures to permit Medicare Part D plans to negotiate the price of certain drugs under
Medicare Part B, to allow some states to negotiate drug prices under Medicaid, and to eliminate cost sharing for generic
drugs for low-income patients. Further, the Trump administration released a “Blueprint” to lower drug prices and reduce
out of pocket costs of drugs that contains additional proposals to increase drug manufacturer competition, increase the
negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the list price of their products,
and reduce the out of pocket costs of drug products paid by consumers. The Department of Health and Human Services, or
HHS, has solicited feedback on some of these measures and has implemented others under its existing authority. While
some of these and other measures may require additional authorization to become effective, Congress has indicated that it
will continue to seek new legislative and/or administrative measures to control drug costs. At the state level, legislatures are
increasingly passing legislation and implementing regulations designed to control pharmaceutical and biological product
pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access and
marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other
countries and bulk purchasing.
As a result of PPACA, Medicare payments are increasingly tied to quality of care and value measures, and reporting
of related data by providers such as physicians and hospitals. So called “value based reimbursement” measures may present
challenges as well as potential opportunities for biopharmaceutical manufacturers. Medicare incentives for providers
meeting certain quality measures may ultimately prove beneficial for manufacturers that are able to establish that their
products may help providers to meet such measures. However, manufacturers’ ability to market their drug products based
on quality or value is highly regulated and not always permissible. In addition, the potentially decreased Medicare
reimbursement to those providers that fail to adequately comply with quality reporting requirements could translate to
decreased resources available to purchase products and may negatively impact marketing or utilization of our drug
candidates if they are approved for marketing. We cannot predict at this time what impact, if any, the longer-term shift
towards value based reimbursement will have on any of our drug candidates in either the Medicare program, or in any other
third party payor programs that may similarly tie payment to provider quality.
In addition, other legislative changes have been proposed and adopted since PPACA was enacted. In August 2011,
the President signed into law the Budget Control Act of 2011, as amended, which, among other things, created the Joint
Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select
Committee on Deficit Reduction did not achieve its targeted deficit reduction of at least $1.2 trillion for the years 2013
through 2021, triggering the legislation’s automatic reductions to several government programs. These reductions
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include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which began in 2013 and,
following passage of the Bipartisan Budget Act of 2015, will continue through 2029 unless additional Congressional action
is taken. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other
things, reduced Medicare payments to several providers and increased the statute of limitations period for the government
to recover overpayments to providers from three to five years. These and other healthcare reform initiatives may result in
additional reductions in Medicare and other healthcare funding.
Exclusivity and Approval of Competing Products
Hatch-Waxman Patent Listing
In seeking approval for a drug through an NDA, applicants are required to list with the FDA each patent with claims
that cover the applicant’s product or a method of using the product. 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
competitors in support of approval of an abbreviated new drug application, or ANDA, or 505(b)(2) NDA. Generally, an
ANDA provides for marketing of a drug product that has the same active ingredients in the same strengths, dosage form
and route of administration as the listed drug and has been shown to be bioequivalent through in vitro or in vivo testing or
otherwise to the listed drug. ANDA applicants are not required to conduct or submit results of preclinical or clinical tests to
prove the safety or efficacy of their drug product, other than the requirement for bioequivalence testing. Drugs approved in
this way are commonly referred to as “generic equivalents” to the listed drug, and can often be substituted by pharmacists
under prescriptions written for the original listed drug. 505(b)(2) NDAs generally are submitted for changes to a previously
approved drug product, such as a new dosage form or indication.
The ANDA or 505(b)(2) NDA applicant is required to certify to the FDA concerning any patents listed for the
approved product in the FDA’s Orange Book, except for patents covering methods of use for which the ANDA applicant is
not seeking approval. Specifically, the applicant must certify with respect to each patent that:
● the required patent information has not been filed;
● the listed patent has expired;
● the listed patent has not expired, but will expire on a particular date and approval is sought after patent
expiration; or
● the listed patent is invalid, unenforceable or will not be infringed by the new product.
Generally, the ANDA or 505(b)(2) NDA cannot be approved until all listed patents have expired, except when the
ANDA or 505(b)(2) NDA applicant challenges a listed drug. A certification that the proposed product will not infringe the
already approved product’s listed patents or that such patents are invalid or unenforceable is called a Paragraph IV
certification. If the applicant does not challenge the listed patents or indicate that it is not seeking approval of a patented
method of use, the ANDA or 505(b)(2) NDA application will not be approved until all the listed patents claiming the
referenced product have expired.
If the ANDA or 505(b)(2) NDA 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 application 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 after the receipt of notice of the
Paragraph IV certification automatically prevents the FDA from approving the ANDA or 505(b)(2) NDA 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.
Hatch-Waxman Non-Patent Exclusivity
Market and data exclusivity provisions under the FDCA also can delay the submission or the approval of certain
applications for competing products. The FDCA provides a five-year period of non-patent data exclusivity within the
United States to the first applicant to gain approval of an NDA for a new chemical entity. A drug is a new chemical entity if
the FDA has not previously approved any other new drug containing the same active moiety, which is the molecule or ion
responsible for the activity of the drug substance. During the exclusivity period, the FDA may not accept for review an
ANDA or a 505(b)(2) NDA submitted by another company that contains the previously approved active
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moiety. However, an ANDA or 505(b)(2) NDA may be submitted after four years if it contains a certification of patent
invalidity or noninfringement.
The FDCA also provides three years of marketing exclusivity for an NDA, 505(b)(2) NDA or supplement to an
existing NDA or 505(b)(2) 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 or supplement. Three-
year exclusivity may be awarded for changes to a previously approved drug product, such as new indications, dosages,
strengths or dosage forms of an existing drug. This three-year exclusivity covers only the conditions of use associated with
the new clinical investigations and, as a general matter, does not prohibit the FDA from approving ANDAs or 505(b)(2)
NDAs for generic versions of the original, unmodified drug product. Five-year and three-year exclusivity will not delay the
submission or approval of a full NDA; however, an applicant submitting a full NDA would be required to 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.
Orphan Drug Exclusivity
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biological product intended to treat
a rare disease or condition, which is generally a disease or condition that affects fewer than 200,000 individuals in the
United States, or more than 200,000 individuals in the United States and for which there is no reasonable expectation that
the cost of developing and making a drug or biological product available in the United States for this type of disease or
condition will be recovered from sales of the product. Orphan designation must be requested before submitting an NDA or
biologics license application. Orphan designation does not convey any advantage in or shorten the duration of the
regulatory review and approval process. We have received orphan drug designation for rivipansel, uproleselan and GMI-
1359, and we intend to seek orphan drug designation and exclusivity for our other drug candidates whenever it is available.
If a product that has orphan designation subsequently receives the first FDA approval for such drug for the disease or
condition for which it has such designation, the product is entitled to orphan product exclusivity, which means that the FDA
may not approve any other applications to market the same drug or biological product for the same indication for seven
years, except in limited circumstances, such as a showing of clinical superiority to the product with orphan exclusivity.
Competitors, however, may receive approval of different products for the indication for which the orphan product has
exclusivity or obtain approval for the same product but for a different indication for which the orphan product has
exclusivity. If a drug or biological product designated as an orphan product receives marketing approval for an indication
broader than what is designated, it may not be entitled to orphan product exclusivity. Orphan drug status in the EU has
similar, but not identical, benefits.
Pediatric Exclusivity
Pediatric exclusivity is another type of non-patent marketing exclusivity in the United States and, if granted, provides
for the attachment of an additional six months of marketing protection to the term of any existing regulatory exclusivity,
including the non-patent and orphan drug exclusivity periods described above. This six-month exclusivity may be granted
if an NDA sponsor submits pediatric data that fairly respond to a written request from the FDA for such data. The 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. If reports of requested pediatric studies are
submitted to and accepted by FDA within the statutory time limits, whatever statutory or regulatory periods of exclusivity
or Orange Book listed patent protection cover the drug are extended by six months. This is not a patent term extension, but
it effectively extends the regulatory period during which the FDA cannot approve an ANDA or 505(b)(2) application
owing to regulatory exclusivity or listed patents. If any of our drug candidates is approved, we anticipate seeking pediatric
exclusivity when it is appropriate.
Foreign Regulation
In order to market any product outside of the United States, we would need to comply with numerous and varying
regulatory requirements of other countries regarding safety and efficacy and governing, among other things, clinical trials,
marketing authorization, commercial sales and distribution of our drug candidates. For example, in the EU, we must obtain
authorization of a clinical trial application, or CTA, in each member state in which we intend to conduct a clinical trial.
Whether or not we obtain FDA approval for a drug, we would need to obtain the necessary approvals by the comparable
regulatory authorities of foreign countries before we can commence clinical trials or marketing of the drug in
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those countries. The approval process varies from country to country and can involve additional product testing and
additional administrative review periods. The time required to obtain approval in other countries might differ from and be
longer than that required to obtain FDA approval. Regulatory approval in one country does not ensure regulatory approval
in another, but a failure or delay in obtaining regulatory approval in one country may negatively impact the regulatory
process in others.
Employees and Human Capital Resources
As of December 31, 2020, we had 54 employees, all of whom are full-time and located in the United States. None of
our employees is represented by a labor union or covered by a collective bargaining agreement. We consider our
relationship with our employees to be good.
Our human capital resources objectives include, as applicable, identifying, recruiting, retaining, incentivizing and
integrating our existing and new employees. The principal purposes of our equity incentive plans are to attract, retain and
reward high performing employees through the granting of equity-based compensation awards in order to increase
shareholder value and the success of our company by motivating employees to perform to the best of their abilities and
achieve our company objectives.
Legal Proceedings
We are not currently a party to any material legal proceedings, and we are not aware of any pending or threatened
legal proceeding against us that we believe could have a material adverse effect on our business, operating results or
financial condition.
Corporate Information
We were incorporated under the laws of the State of Delaware in April 2003 and commenced operations in May
2003. Our principal executive offices are located at 9708 Medical Center Drive, Rockville, Maryland 20850. Our telephone
number is (240) 243-1201.
“GlycoMimetics,” the GlycoMimetics logo and other trademarks or service marks of GlycoMimetics, Inc. appearing
in this Annual Report are the property of GlycoMimetics, Inc. This Annual Report contains additional trade names,
trademarks and service marks of others, which are the property of their respective owners.
Available Information
Our internet website address is www.glycomimetics.com. In addition to the information contained in this Annual
Report, information about us can be found on our website. Our website and information included in or linked to our
website are not part of this Annual Report.
Our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, are
available free of charge through our website as soon as reasonably practicable after they are electronically filed with or
furnished to the Securities and Exchange Commission, or SEC. Additionally the SEC maintains an internet site that
contains reports, proxy and information statements and other information. The address of the SEC’s website is
www.sec.gov.
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ITEM 1A. RISK FACTORS
Our business is subject to numerous risks. You should carefully consider the following risks, as well as general economic
and business risks, and all of the other information contained in this Annual Report, together with any other documents we
file with the SEC. Any of the following risks could have a material adverse effect on our business, operating results and
financial condition and cause the trading price of our common stock to decline.
Risks Related to Our Financial Position and Capital Needs
We have incurred significant losses since our inception. We expect to continue to incur losses over the next several
years and may never achieve or maintain profitability.
Since inception, we have incurred significant operating losses. As of December 31, 2020, we had an accumulated
deficit of $309.5 million. In recent years, we have financed our operations with proceeds from registered public offerings of
our common stock and upfront and milestone payments under our license and collaboration agreements. We have not
generated any meaningful revenue since our inception other than such payments from our license and collaboration
agreements.
We have devoted substantially all of our financial resources and efforts to research and development, including
preclinical studies and clinical trials. We are still in the early stages of development of our drug candidates, and we have
not completed development of any drugs. We expect to continue to incur significant expenses and operating losses over the
next several years. Our net losses may fluctuate significantly from quarter to quarter and year to year. We anticipate that our
expenses will increase substantially as we:
● conduct our ongoing clinical trials and initiate additional clinical trials of our drug candidates;
● continue the research and preclinical development of our drug candidates;
● seek to discover and develop additional drug candidates;
● seek regulatory approvals for any drug candidates that successfully complete clinical trials;
● ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing
capabilities to commercialize any drugs for which we may obtain regulatory approval;
● maintain, expand and protect our intellectual property portfolio;
● hire additional clinical, quality control, regulatory and scientific personnel;
● add operational, financial and management information systems and personnel, including personnel to support
our drug development and planned future commercialization efforts; and
● incur legal, accounting, insurance and other expenses in operating as public company.
To become and remain profitable, we must succeed in developing and eventually commercializing drugs that
generate significant revenue. This will require us to be successful in a range of challenging activities, including completing
preclinical testing and clinical trials of our drug candidates, obtaining regulatory approval for these drug candidates and
manufacturing and commercializing any drugs for which we may obtain regulatory approval, as well as discovering
additional drug candidates. We are only in the preliminary stages of most of these activities. We may never succeed in these
activities and, even if we do, may never generate revenue that is significant enough to achieve profitability.
In the case of uproleselan and GMI-1687, our ability to generate revenue is partially dependent upon the achievement
of development, regulatory and commercial milestones and sales sufficient to generate royalties under our license
agreement with Apollomics, and the achievement of such milestones is largely out of our control. If Apollomics fails, or
chooses not to continue, to further develop, to seek regulatory approval for or to commercialize uproleselan in Greater
China, our ability to generate revenue with respect to uproleselan may be significantly reduced or eliminated.
Because of the numerous risks and uncertainties associated with drug development, we are unable to accurately
predict the timing or amount of increased expenses or when, or if, we will be able to achieve profitability. If we are
required by regulatory authorities to perform studies in addition to those currently expected, or if there are any delays in
completing our clinical trials or the development of any of our drug candidates, our expenses could increase.
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Even if we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual
basis. Our failure to become and remain profitable would depress the value of our company and could impair our ability to
raise capital, expand our business, maintain our research and development efforts or even continue our operations. A
decline in the value of our company could also result in significant harm to our financial position and adversely affect our
stock price.
We will need substantial additional funding to pursue our business objectives. If we are unable to raise capital
when needed, we could be forced to delay, reduce or eliminate our drug development programs or potential
commercialization efforts.
We believe that our cash and cash equivalents as of December 31, 2020 will enable us to fund our operating expenses
and capital expenditure requirements into the fourth quarter of 2022. However, we will need to obtain substantial additional
funding in connection with our continuing operations. Our future capital requirements will depend on many factors,
including:
● the scope, progress, results and costs of preclinical development, laboratory testing and clinical trials for our
drug candidates, including our ongoing and planned clinical trials of uproleselan, GMI-1359 and GMI-1687;
● the number and development requirements of other drug candidates that we may pursue;
● the costs, timing and outcome of regulatory review of our drug candidates;
● the costs and timing of future commercialization activities, including product manufacturing, marketing, sales
and distribution, for any of our drug candidates for which we receive marketing approval;
● the revenue, if any, received from commercial sales of our drug candidates for which we receive marketing
approval;
● the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our
intellectual property rights and defending any intellectual property-related claims; and
● the extent to which we acquire or in-license other drug candidates and technologies.
Identifying potential drug candidates and conducting preclinical testing and clinical trials is a time-consuming,
expensive and uncertain process that takes years to complete, and we or any current or future collaborators may never
generate the necessary data or results required to obtain regulatory approval and achieve product sales. In addition, our
drug candidates, if approved, may not achieve commercial success. Our commercial revenue, if any, will be derived from
the sale of drugs that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to
continue to rely on additional financing to achieve our business objectives. Adequate additional financing may not be
available to us on acceptable terms, or at all. If we are unable to raise capital when needed or on attractive terms, we could
be forced to delay, reduce or eliminate our research and development programs or any future commercialization efforts. For
example, our ability to raise additional capital may be adversely impacted by potential worsening global economic
conditions and the recent disruptions to and volatility in the credit and financial markets in the United States and worldwide
resulting from the ongoing COVID-19 pandemic.
Raising additional capital may cause dilution to our stockholders, restrict our operations or require us to
relinquish rights to our drug candidates.
Until such time, if ever, as we can generate substantial revenue from the sale of our drugs, we expect to finance our
cash needs through a combination of equity offerings, debt financings and license and development agreements. We do not
currently have any committed external source of funds other than possible milestone payments and possible royalties under
our license agreement with Apollomics. To the extent that we raise additional capital through the sale of equity or
convertible debt securities, your ownership interest will be diluted, and the terms of these securities may include liquidation
or other preferences that could adversely affect your rights as a common stockholder. Debt financing and preferred equity
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 additional funds through collaborations, strategic alliances or marketing, distribution or licensing
arrangements with third parties, we may be required to relinquish valuable rights to our research programs or drug
candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through
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equity or debt financings or other arrangements with third parties when needed, we may be required to delay, limit, reduce
or terminate our drug development or future commercialization efforts or grant rights to third parties to develop and market
drug candidates that we would otherwise prefer to develop and market ourselves.
Our operating history may make it difficult for you to evaluate the success of our business to date and to assess
our future viability.
We commenced operations in 2003, and our operations to date have been largely focused on raising capital,
developing our expertise in carbohydrate chemistry and knowledge of carbohydrate biology, identifying potential drug
candidates, undertaking preclinical studies and conducting clinical trials. We have two drug candidates in clinical
development, but we have not yet demonstrated our ability to successfully complete later stage clinical trials, obtain
regulatory approvals, manufacture a commercial scale drug, or arrange for a third party to do so on our behalf, or conduct
sales and marketing activities necessary for successful commercialization.
We may encounter unforeseen expenses, difficulties, complications, delays and other known or unknown factors in
achieving our business objectives. We will need to transition at some point from a company with a research and
development focus to a company capable of supporting commercial activities. We may not be successful in such a
transition.
We expect our financial condition and operating results to continue to fluctuate significantly from quarter to quarter
and year to year due to a variety of factors, many of which are beyond our control. Accordingly, you should not rely upon
the results of any quarterly or annual periods as indications of future operating performance
Our ability to use net operating losses to offset future taxable income may be subject to limitations.
As of December 31, 2020, we had federal and state net operating loss carryforwards of $232.0 million, research and
development tax credit carryforwards of $9.6 million and $32.4 million of orphan drug tax credit carryforwards. The
federal and state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2026, the research and
development tax credits in 2023 and the orphan drug tax credit in 2033. These net operating loss and tax credit
carryforwards could expire unused and be unavailable to offset future income tax liabilities. Under federal income tax laws,
federal net operating losses incurred in 2018 and in future years may be carried forward indefinitely, but the deductibility of
such federal net operating losses is limited. In addition, under Section 382 of the Internal Revenue Code of 1986, as
amended, and corresponding provisions of state law, if a corporation undergoes an “ownership change,” which is generally
defined as a greater than 50% change, by value, in its equity ownership over a three-year period, the corporation’s ability to
use its pre-change net operating loss carryforwards and other pre-change tax attributes to offset its post-change income or
taxes may be limited. We could experience ownership changes in the future that would limit our ability to use our net
operating loss carryforwards.
Risks Related to the Discovery and Development of Our Drug Candidates
Our research and development is focused on discovering and developing novel glycomimetic drugs, and we are
taking an innovative approach to discovering and developing drugs, which may never lead to marketable drugs.
A key element of our strategy is to use and expand our platform to build a pipeline of novel glycomimetic drug
candidates and progress these drug candidates through clinical development for the treatment of a variety of diseases. The
discovery of therapeutic drugs based on molecules that mimic the structure of carbohydrates is an emerging field, and the
scientific discoveries that form the basis for our efforts to discover and develop drug candidates are relatively new. The
scientific evidence to support the feasibility of developing drug candidates based on these discoveries is both preliminary
and limited. Although our research and development efforts to date have resulted in a pipeline of glycomimetic drug
candidates, we may not be able to develop drug candidates that are safe and effective. Even if we are successful in
continuing to build our pipeline, the potential drug candidates that we identify may not be suitable for clinical development,
including as a result of being shown to have harmful side effects or other characteristics that indicate that they are unlikely
to be drugs that will receive marketing approval and achieve market acceptance. If we do not successfully develop and
commercialize drug candidates based upon our glycomimetics platform, we will not be able to obtain product revenue in
future periods, which likely would result in significant harm to our financial position and adversely affect our stock price.
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We have only two drug candidates that are in active clinical trials. All of our other drug candidates are still in
preclinical development. If we or our collaborators are unable to commercialize our drug candidates or experience
significant delays in doing so, our business will be materially harmed.
Uproleselan and GMI-1359 are our only drug candidates that are in clinical trials. Our other drug candidates are still
in preclinical development. We have not completed the development of any drug candidates, we currently generate no
revenue from the sale of any drugs and we may never be able to develop a marketable drug. We have invested substantially
all of our efforts and financial resources in the development of our glycomimetics platform, the identification of potential
drug candidates using that platform and the development of our drug candidates. Our ability to generate revenue from our
other drug candidates, which we do not expect to occur for many years, if ever, will depend heavily on their successful
development and eventual commercialization. The success of those drug candidates will depend on several factors,
including:
● successful completion of preclinical studies and clinical trials;
● receipt of marketing approvals from applicable regulatory authorities;
● obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our drug candidates;
● making arrangements with third-party manufacturers for, or establishing, commercial manufacturing
capabilities;
● launching commercial sales of the drugs, if and when approved, whether alone or in collaboration with others;
● acceptance of the drugs, if and when approved, by patients, the medical community and third-party payors;
● effectively competing with other therapies;
● obtaining and maintaining healthcare coverage and adequate reimbursement;
● protecting our rights in our intellectual property portfolio; and
● maintaining a continued acceptable safety profile of the drugs following approval.
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 our drug candidates, which would materially harm our business.
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
commercialization of our drug candidates.
All of our drug candidates other than uproleselan and GMI-1359 are in preclinical development, and their risk of
failure is high. It is impossible to predict when or if any of our drug candidates will prove safe or effective in humans or
will receive regulatory approval. Before obtaining marketing approval from regulatory authorities for the sale of any drug
candidate, we or a collaborator must complete preclinical development and then conduct extensive clinical trials to
demonstrate the safety and efficacy of the drug candidate in humans. Clinical testing is expensive, difficult to design and
implement, can take many years to complete and is uncertain as to outcome. A failure of one or more clinical trials can
occur at any stage of development. The outcome of preclinical testing and early clinical trials may not be predictive of the
success of later clinical trials, and interim results of a clinical trial do not necessarily predict final results. In addition,
changes in patient treatment options over time may make the relevance of historical control data for a given indication less
relevant to the drug candidate being studied, which could impact the success of the trial or, even if successful, the
desirability of a successful drug candidate versus other available treatment options. Moreover, preclinical and clinical data
are often susceptible to varying interpretations and analyses, and many companies that have believed their drug candidates
performed satisfactorily in preclinical studies and clinical trials have nonetheless failed to obtain marketing approval of
their drugs.
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We or our current or future collaborators may experience numerous unforeseen events during, or as a result of,
clinical trials that could delay or prevent our or their ability to receive marketing approval or commercialize our drug
candidates, including:
● regulators or institutional review boards may not authorize us or our investigators to commence a clinical trial or
conduct a clinical trial at a prospective trial site;
● we may experience delays in reaching, or fail to reach, agreement on acceptable clinical trial contracts or
clinical trial protocols with prospective trial sites;
● clinical trials of our drug candidates may produce negative or inconclusive results, including failure to
demonstrate statistical significance, and we may decide, or regulators may require us, to conduct additional
clinical trials or abandon drug development programs;
● the number of patients required for clinical trials of our drug candidates 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 institutional review boards may require that we or our investigators suspend or terminate clinical
research for various reasons, including noncompliance with regulatory requirements or a finding that the
participants are being exposed to unacceptable health risks;
● the cost of clinical trials of our drug candidates may be greater than we anticipate;
● the supply or quality of our drug candidates or other materials necessary to conduct clinical trials of our drug
candidates may be insufficient or inadequate; and
● our drug candidates may have undesirable side effects or other unexpected characteristics, causing us or our
investigators, regulators or institutional review boards to suspend or terminate the trials.
If we are required to conduct additional clinical trials or other testing of our drug candidates beyond those that we
currently contemplate, if we are unable to successfully complete clinical trials of our drug candidates or other testing, if the
results of these clinical trials or tests are not positive or are only modestly positive or if there are safety concerns, we may:
● be delayed in obtaining marketing approval for our drug candidates;
● not obtain marketing approval at all;
● obtain approval for indications or patient populations that are not as broad as intended or desired;
● obtain approval with labeling that includes significant use or distribution restrictions or safety warnings;
● be subject to additional post-marketing testing requirements; or
● have the drug removed from the market after obtaining marketing approval.
Our drug development costs will also increase if we experience delays in testing or marketing approvals. We do not
know whether any of our preclinical studies or clinical trials will begin as planned, will need to be restructured or will be
completed on schedule, or at all. Significant preclinical study or clinical trial delays also could shorten any periods during
which we may have the exclusive right to commercialize our drug candidates or allow our competitors to bring drugs to
market before we do, and thereby impair our ability to successfully commercialize our drug candidates.
If we or our collaborators experience delays or difficulties in the enrollment of patients in clinical trials, or
obtaining data on the patients enrolled, our receipt of necessary regulatory approvals could be delayed or prevented.
We are currently conducting a Phase 3 clinical trial of our drug candidate uproleselan, for which we currently expect
to complete enrollment in the second half of 2021. However, the timing for completion of enrollment in this and other
clinical trials, or in obtaining relevant clinical data from such trials, could be delayed for a number of reasons. For
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example, we experienced delays in recruitment for this trial early in the pandemic as a result of hospital initiatives to treat
COVID patients in the United States and other countries in which our trial is conducted as a result of the ongoing COVID-
19 pandemic. As the situation continues to evolve on a daily basis, it is impossible for us to assess whether any such
adverse impacts in recruitment will be ongoing in the short- or long-term, or whether our efforts to mitigate any such
impacts, if any, will be effective. In addition, we or our collaborators may not be able to initiate or continue clinical trials
for our drug candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these
trials as required by the FDA or similar regulatory authorities outside the United States. In particular, because our drug
candidates are intended to treat patients with orphan diseases such as AML, our or our collaborators’ ability to enroll
eligible patients may be limited or may result in slower enrollment than we anticipate. In addition, some of our competitors
have ongoing clinical trials for drug candidates that treat the same or similar indications as our drug candidates, and
patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ drug
candidates. Patient enrollment is also affected by other factors, including:
● the severity of the disease or condition under investigation;
● the eligibility criteria for the trial;
● the perceived risks and benefits of the drug candidate;
● the availability of drugs approved to treat the disease or condition under investigation;
● the efforts to facilitate timely enrollment in clinical trials;
● the patient referral practices of physicians;
● the ability to monitor patients adequately during and after treatment; and
● the proximity and availability of clinical trial sites for prospective patients.
Our or our collaborators’ inability to enroll a sufficient number of patients for clinical trials would result in
significant delays, could lead to incomplete data sets and could require us or them to abandon one or more clinical trials
altogether. Enrollment delays in these clinical trials may result in increased development costs for our drug candidates,
which would cause the value of our company to decline and limit our ability to obtain additional financing.
Our business could be adversely affected by the effects of health epidemics or pandemics, including the ongoing
COVID-19 pandemic, in regions where we or third parties on whom we rely have significant manufacturing facilities,
clinical trial sites or other business operations.
Our business could be adversely affected by health epidemics or pandemics in regions where we have concentrations
of clinical trial sites or other business operations, and could cause significant disruption in the operations of third-party
collaborators, manufacturers and CROs upon whom we rely. For example, in December 2019, a novel strain of
coronavirus, SARS-CoV-2, causing a disease referred to as COVID-19, was reported to have surfaced in Wuhan, China.
Since then, COVID-19 has spread to multiple countries, including the United States and several European countries. In
March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic, and the U.S. government
imposed travel restrictions on travel between the United States, Europe and certain other countries. Further, the President of
the United States declared the COVID-19 pandemic a national emergency, invoking powers under the Stafford Act, the
legislation that directs federal emergency disaster response. Similarly, a state of emergency and catastrophic health
emergency related to the spread of COVID-19 was declared for the State of Maryland on March 5, 2020, including
Rockville, Maryland where our headquarters are located. In March and April 2020, the Governor of Maryland renewed the
emergency declarations and issued aggressive proclamations and orders to reduce the spread of the disease, including a
stay-at-home order. Although the initial stay-at-home order has been superseded, there continue to be significant
restrictions imposed on business activity.
In response to these public health directives and orders, we have implemented a work-from-home policy for most of
our employees. The effects of our work-from-home policy may negatively impact productivity, disrupt our business and
delay our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the
restrictions and other limitations on our ability to conduct our business in the ordinary course. These and similar, and
perhaps more severe, disruptions in our operations could negatively impact our business, operating results and financial
condition.
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Quarantines, shelter-in-place, stay-at-home, executive and similar government orders—or the perception that such
orders, shutdowns or other restrictions on the conduct of business operations could occur—related to COVID-19 or other
infectious diseases, could impact personnel at third-party manufacturing facilities in the United States and other countries,
or the availability or cost of materials, which would disrupt our supply chain. For example, any manufacturing supply
interruption of uproleselan, which is currently manufactured at facilities in Switzerland and China, could adversely affect
our ability to conduct ongoing and future clinical trials of uproleselan.
In addition, our clinical trials may be affected by the COVID-19 pandemic. Clinical site initiation and patient
enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic. Some patients may
not be able to comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services.
Similarly, our ability to recruit and retain patients and principal investigators and site staff who, as healthcare providers,
may have heightened exposure to COVID-19 and adversely impact our clinical trial operations.
The spread of COVID-19, which has caused a broad impact globally, may materially affect us economically. While
the potential economic impact brought by, and the duration of, the COVID-19 outbreak may be difficult to assess or
predict, a widespread pandemic could result in significant disruption of global financial markets, reducing our ability to
access capital, which could in the future negatively affect our liquidity. In addition, a recession or market correction
resulting from the spread of COVID-19 could materially affect our business and the value of our common stock.
The global pandemic of COVID-19 continues to rapidly evolve. The ultimate impact of the COVID-19 pandemic or
a similar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays
or impacts on our business, our clinical trials, healthcare systems or the global economy as a whole. However, these effects
could have a material impact on our operations, and we will continue to monitor the COVID-19 situation closely.
If serious adverse or unacceptable side effects are identified during the development of our drug candidates, we
may need to abandon or limit the development of some of our drug candidates.
If our drug candidates are associated with undesirable side effects in clinical trials or have characteristics that are
unexpected, we may need to abandon their development or limit their development to more narrow uses or subpopulations
in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-
benefit perspective. Many drug candidates that initially showed promise in early stage testing have later been found to
cause side effects that prevented their further development.
We may expend our limited resources to pursue a particular drug candidate or indication and fail to capitalize on
drug candidates or indications that may be more profitable or for which there is a greater likelihood of success.
Because we have limited financial and management resources, we focus on a limited number of research programs
and drug candidates. As a result, we may forego or delay pursuit of opportunities with other drug candidates or for other
indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to
capitalize on viable commercial drugs or profitable market opportunities. Our spending on current and future research and
development programs and drug candidates for specific indications may not yield any commercially viable drugs. If we do
not accurately evaluate the commercial potential or target market for a particular drug candidate, we may relinquish
valuable rights to that drug candidate through collaboration, licensing or other arrangements in cases in which it would
have been more advantageous for us to retain sole development and commercialization rights.
Risks Related to Our Dependence on Third Parties
Our success depends in part on current and future collaborations. If we are unable to maintain any of these
collaborations, or if these collaborations are not successful, our business could be adversely affected.
We have limited capabilities for drug development and do not yet have any capabilities for sales, marketing or distribution.
We cannot assure you that our current or future collaborators will develop our drug candidates in a timely manner, or at all,
or, if regulatory approval for a drug candidate is achieved, that such collaborator will successfully commercialize the
candidate.
Any collaborations we might enter into may pose a number of risks, including:
● collaborators have significant discretion in determining the efforts and resources that they will apply to these
collaborations;
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● collaborators may not perform their obligations as expected;
● collaborators may not pursue the commercialization of any drug candidates that achieve regulatory approval or
may elect not to pursue, continue or renew development or commercialization of drug candidates based on
clinical trial results, changes in such collaborators’ strategic focus or available funding or external factors, such
as an acquisition, that divert resources or create competing priorities;
● collaborators may delay clinical trials, provide insufficient funding for a clinical trial program, stop a clinical
trial or abandon a drug candidate, repeat or conduct new clinical trials or require a new formulation of a drug
candidate for clinical testing;
● collaborators could experience delays in initiating or conducting clinical trials for any number of reasons;
● collaborators could independently develop, or develop with third parties, drugs that compete directly or
indirectly with our drugs or drug candidates if such collaborators believe that competitive products are more
likely to be successfully developed or can be commercialized under terms that are more economically attractive
than ours;
● drug candidates discovered in collaboration with us may be viewed by our collaborators as competitive with
their own drug candidates or drugs, which may cause such collaborators to cease to devote resources to the
commercialization of our drug candidates;
● a collaborator with marketing and distribution rights to one or more of our drug candidates that achieve
regulatory approval may not commit sufficient resources to the marketing and distribution of such drug or drugs;
● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or the
preferred course of development, might cause delays or termination of the research, development or
commercialization of drug candidates, might lead to additional responsibilities for us with respect to drug
candidates or might result in litigation or arbitration, any of which would be time consuming and expensive;
● collaborators may not properly maintain or defend our or their intellectual property rights or may use our or their
proprietary information in such a way as to invite litigation that could jeopardize or invalidate such intellectual
property or proprietary information or expose us to potential litigation;
● collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and
potential liability; and
● collaborations may be terminated for the convenience of the collaborator and, if terminated, we could be
required to raise additional capital to pursue further development or commercialization of the applicable drug
candidates.
If any collaborations we might enter into do not result in the successful development and commercialization of drugs,
or if one of our collaborators terminates its agreement with us, we may not receive any future research funding or milestone
or royalty payments under the collaboration. For example, in February 2020, Pfizer terminated its license agreement with
us for the worldwide development and commercialization of rivipansel, thereby eliminating our right to receive any future
development or commercialization milestones or royalty payments for sales of the drug candidate. In addition, even if we
are eligible to receive any such payments from a collaborator, they could be substantially delayed. If we do not receive the
funding we expect under these agreements, the development of our drug candidates could be delayed and we may need
additional resources to develop our drug candidates. All of the risks relating to drug development, regulatory approval and
commercialization described in this report also apply to the activities of our collaborators.
If a current or future collaborator of ours is involved in a business combination, the collaborator might deemphasize
or terminate development or commercialization of any drug candidate licensed to it by us. If one of our collaborators
terminates its agreement with us, we may find it more difficult to attract new collaborators and our reputation in the
business and financial communities could be adversely affected. We may in the future determine to collaborate with
pharmaceutical and biotechnology companies for their development and potential commercialization of our drug
candidates. We face significant competition in seeking appropriate collaborators. Our ability to reach a
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definitive agreement for a collaboration will depend, among other things, upon our assessment of a collaborator’s resources
and expertise, the terms and conditions of the proposed collaboration and the proposed collaborator’s evaluation of a
number of factors. If we are unable to reach agreements with suitable collaborators on a timely basis, on acceptable terms,
or at all, we may have to curtail the development of a drug candidate, reduce or delay its development 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 fund and undertake development or commercialization activities on our own, we may need to obtain additional
expertise and additional capital, which may not be available to us on acceptable terms or at all. If we fail to enter into
collaborations and do not have sufficient funds or expertise to undertake the necessary development and commercialization
activities, we may not be able to further develop our drug candidates or bring them to market, which would impair our
business prospects.
We expect to rely on third parties to conduct our future clinical trials for drug candidates, and those third parties
may not perform satisfactorily, including failing to meet deadlines for the completion of such trials.
We have engaged a third-party contract research organization, or CRO, to conduct our ongoing and planned clinical
trials for uproleselan and GMI-1359 and expect to engage CROs with respect to any of our other drug candidates that may
progress to clinical development. We expect to continue to rely on third parties, such as CROs, clinical data management
organizations, medical institutions and clinical investigators, to conduct those clinical trials. Agreements with such third
parties might terminate for a variety of reasons, including a failure to perform by the third parties. If we need to enter into
alternative arrangements, that would delay our drug development activities.
Our reliance on these third parties for research and development activities will reduce our control over these
activities, but will not relieve us of our responsibilities. For example, we will remain responsible for ensuring that each of
our clinical trials is conducted in accordance with the general investigational plan and protocols for the trial. Moreover, the
FDA requires us to comply with standards, commonly referred to as good clinical practices, or GCPs, for conducting,
recording and reporting the results of clinical trials to assure that data and reported results are credible and accurate and that
the rights, integrity and confidentiality of trial participants are protected. We also are required to register ongoing clinical
trials and post the results of completed clinical trials on a government-sponsored database, ClinicalTrials.gov, within
specified timeframes. Failure to do so can result in fines, adverse publicity and significant civil and criminal sanctions.
Furthermore, these third parties may also have relationships with other entities, some of which may be our
competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct
our clinical trials in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may
be delayed in obtaining, marketing approvals for our drug candidates and will not be able to, or may be delayed in our
efforts to, successfully commercialize our drug candidates.
We also expect to rely on other third parties to store and distribute drug supplies for our clinical trials. Any
performance failure on the part of our distributors could delay clinical development or marketing approval of our drug
candidates or commercialization of our drugs, producing additional losses and depriving us of potential revenue.
We contract with third parties for the manufacturing of our drug candidates for preclinical and clinical testing
and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we will not
have sufficient quantities of our drug candidates or drugs, or such quantities at an acceptable cost, which could delay,
prevent or impair our development or commercialization efforts.
We do not have any manufacturing facilities or personnel. For our drug candidates other than rivipansel, for which
manufacturing responsibility will remain with Pfizer until the first anniversary of the effective date of termination of our
license agreement with them, we rely, and expect to continue to rely, on third parties for the manufacturing of our drug
candidates for preclinical and clinical testing, as well as for commercial manufacture if any of our drug candidates receives
marketing approval. Disruption to our supply arrangements may arise from unforeseeable events that impact such third
parties, including the ongoing COVID-19 pandemic. Our reliance on third parties increases the risk that we will not have
sufficient quantities of our drug candidates or drugs, or such quantities at an acceptable cost or quality, which could delay,
prevent or impair our ability to timely conduct our clinical trials or our other development or commercialization efforts.
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We also expect to rely on third-party manufacturers or third-party collaborators for the manufacturing of commercial
supply of any other drug candidates for which we or our collaborators obtain marketing approval. We may be unable to
establish any agreements with third-party manufacturers or to 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:
● 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 non-renewal of the agreement by the third party at a time that is costly or
inconvenient for us.
Third-party manufacturers may not be able to comply with current good manufacturing practices, or cGMP,
regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party
manufacturers, to comply with 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 drug candidates or drugs, operating restrictions and criminal prosecutions, any of which could significantly and
adversely affect supplies of our drugs.
In addition, in the event that any of our third-party manufacturers fails to comply with such requirements or to
perform its obligations to us in relation to quality, timing or otherwise, or if our supply of components or other materials
becomes limited or interrupted for other reasons, we may be forced to manufacture the materials ourselves, for which we
currently do not have the capabilities or resources, or enter into an agreement with another third party, which we may not
be able to do on commercially reasonable terms, if at all. We do not currently have arrangements in place for redundant
supply or a second source for bulk drug substance. If our current contract manufacturers cannot perform as agreed, we may
be required to replace such manufacturers and we may incur added costs and delays in identifying and qualifying any such
replacement. Any replacement of our manufacturers could require significant effort and expertise because there may be a
limited number of qualified replacements. If we are required to change manufacturers for any reason, we will be required to
verify that the new manufacturer maintains facilities and procedures that comply with quality standards and with all
applicable regulations and guidelines. The delays associated with the verification of a new manufacturer could negatively
affect our ability to develop our drug candidates in a timely manner or within budget.
Our current and anticipated future dependence upon others for the manufacturing of our drug candidates 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.
We, or our third-party manufacturers, may be unable to successfully scale-up manufacturing of our drug
candidates in sufficient quality and quantity, which would delay or prevent us from conducting our ongoing and
planned clinical trials and developing our drug candidates.
In order to conduct our ongoing and planned clinical trials of our drug candidates, we will need to manufacture them
in large quantities. We, or our manufacturing partners, may be unable to successfully increase the manufacturing capacity
for any of our drug candidates in a timely or cost-effective manner, or at all. In addition, quality issues may arise during
scale-up activities. If we or our manufacturing partners are unable to successfully scale up the manufacture of our drug
candidates in sufficient quality and quantity, the development, testing and clinical trials of that drug candidate may be
delayed or become infeasible, and marketing approval or commercial launch of any resulting drug may be delayed or not
obtained, which could significantly harm our business.
Risks Related to the Commercialization of Our Drug Candidates
Even if any of our drug candidates receives marketing approval, it 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.
If any of our drug candidates receives marketing approval, it may nonetheless fail to gain sufficient market
acceptance by physicians, patients, third-party payors and others in the medical community. If our drug candidates do not
achieve an adequate level of acceptance, we may not generate significant revenue from drug sales and we may not
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become profitable. The degree of market acceptance of our drug candidates, if approved for commercial sale, will depend
on a number of factors, including:
● the efficacy and potential advantages compared to alternative treatments;
● our ability to offer our drugs 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 strength of marketing and distribution support;
● the availability of third-party coverage and adequate reimbursement;
● the prevalence and severity of any side effects; and
● any restrictions on the use of our drugs together with other medications.
If we are unable to establish sales, marketing and distribution capabilities for our drug candidates, we may not be
successful in commercializing those drug candidates if and when they are approved.
We do not have a sales or marketing infrastructure and have no experience in the sale, marketing or distribution of
pharmaceutical drugs. To achieve commercial success for any drug candidate for which we may obtain marketing approval,
we will need to establish a sales and marketing organization to market or co-promote such drugs. There are risks involved
with establishing our own sales, marketing and distribution capabilities. For example, recruiting and training a sales force is
expensive and time consuming and could delay any product launch. If the commercial launch of a drug candidate for which
we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have
prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be
lost if we cannot retain or reposition our sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our drugs on our own include:
● our inability to recruit, train 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 products; and
● unforeseen costs and expenses associated with creating an independent sales and marketing organization.
If we are unable to establish our own sales, marketing and distribution capabilities and enter into arrangements with
third parties to perform these services, our revenue and our profitability, if any, are likely to be lower than if we were to
sell, market and distribute any drugs that we develop ourselves. In addition, we may not be successful in entering into
arrangements with third parties to sell, market and distribute our drug candidates or may be unable to do so 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 sell and market our drugs 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 our drug candidates.
We face substantial competition, which may result in others discovering, developing or commercializing drugs
before or more successfully than we do.
The development and commercialization of new drugs is highly competitive. We face competition with respect to our
current drug candidates, and we will face competition with respect to any drug candidates that we may seek to develop or
commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies, biotechnology
companies, academic institutions, governmental agencies and public and private research institutions. Should any
competitors’ drug candidates receive regulatory or marketing approval prior to ours, they may establish a strong market
position and be difficult to displace or diminish the need for our drug candidates.
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The key competitive factors affecting the success of all of our drug candidates, if approved, are likely to be their
safety, efficacy, convenience, price, the level of generic competition and the availability of coverage and reimbursement
from government and other third-party payors. As described above under “Business—Competition,” we expect that our
drug candidates will compete with approved therapies and those currently in development by other companies. To the
extent that competitive drugs or drug candidates developed by others are successful in treating our target indications, it
could reduce the market opportunity for our drug candidates.
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 testing,
conducting clinical trials, obtaining regulatory approvals and marketing approved drugs 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 or early stage companies may also prove to be significant
competitors, particularly through collaborative arrangements with large and established companies. These competitors also
compete with us in recruiting and retaining qualified scientific and management personnel and establishing clinical trial
sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our
programs.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize drugs that
are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any drugs
that we may develop. Our competitors also may obtain FDA or other regulatory approval for their drugs 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.
In addition, because we have no patents with respect to our glycomimetics platform, our competitors may use our
methods, or acquire similar expertise, in order to develop glycomimetic drug candidates and progress these drug candidates
through clinical development and commercialization, which could impair our ability to successfully commercialize our
drug candidates or otherwise limit our commercial opportunities.
Even if we or our collaborators are able to commercialize any of our drug candidates, the drugs may become
subject to unfavorable pricing regulations or third-party coverage and reimbursement policies.
Our and our collaborators’ ability to commercialize any of our drug candidates successfully will depend, in part, on
the extent to which coverage and adequate reimbursement for these drugs and related treatments will be available from
government payor programs at the federal and state levels authorities, including Medicare and Medicaid, private health
insurers, managed care plans and other organizations. Government authorities and third-party payors, such as private health
insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement
levels. 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 reimbursement for particular
medications. 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. Coverage and reimbursement may not be available for any
drug that we or our collaborators commercialize and, even if these are available, the level of reimbursement may not be
satisfactory. Inadequate reimbursement levels may adversely affect the demand for, or the price of, any drug candidate for
which we or our collaborators obtain marketing approval. Obtaining and maintaining adequate reimbursement for our drugs
may be difficult. We may be required to conduct expensive pharmacoeconomic studies to justify coverage and
reimbursement or the level of reimbursement relative to other therapies. If coverage and adequate reimbursement are not
available or reimbursement is available only to limited levels, we or our collaborators may not be able to successfully
commercialize any drug candidates for which marketing approval is obtained.
There may be significant delays in obtaining coverage and reimbursement for newly approved drugs, and coverage
may be more limited than the indications for which the drug is approved by the FDA or similar regulatory authorities
outside the United States. Moreover, eligibility for coverage and reimbursement does not imply that a drug will be paid for
in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution expenses.
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
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drugs from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon
Medicare coverage policy and payment limitations in setting their own reimbursement policies. However, one payor’s
determination to provide coverage for a drug does not assure that other payors will also provide coverage for the drug. Our
or our collaborators’ inability to promptly obtain coverage and adequate reimbursement rates from both government-
funded and private payors for any approved drugs that we develop could adversely affect our operating results, our ability
to raise capital needed to commercialize drugs and our overall financial condition.
The regulations that govern marketing approvals, pricing, coverage and reimbursement for new drugs vary widely
from country to country. Current and future legislation may significantly change the approval requirements in ways that
could involve additional costs and cause delays in obtaining approvals. 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 or licensing 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 or our collaborators might obtain marketing approval for a
drug in a particular country, but then be subject to price regulations that delay commercial launch of the drug, possibly for
lengthy time periods, and negatively impact our ability to generate revenue from the sale of the drug in that country.
Adverse pricing limitations may hinder our ability to recoup our investment in one or more drug candidates, even if our
drug candidates obtain marketing approval.
There can be no assurance that our drug candidates, if they are approved for sale in the United States or in other
countries, will be considered medically reasonable and necessary for a specific indication, that they will be considered cost-
effective by third-party payors, that coverage or an adequate level of reimbursement will be available or that third-party
payors’ reimbursement policies will not adversely affect our ability to sell our drug candidates profitably if they are
approved for sale.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization
of any drugs that we may develop.
We face an inherent risk of product liability exposure related to the testing of our drug candidates in human clinical
trials, and will face an even greater risk if we commercially sell any drugs that we may develop. If we cannot successfully
defend ourselves against claims that our drug candidates or drugs caused injuries, we will incur substantial liabilities.
Regardless of merit or eventual outcome, liability claims may result in:
● decreased demand for any drug candidates or drugs that we may develop;
● injury to our reputation and significant negative media attention;
● withdrawal of clinical trial participants;
● significant costs to defend the related litigation;
● substantial monetary awards paid to trial participants or patients;
● loss of revenue;
● reduced resources of our management to pursue our business strategy; and
● the inability to commercialize any drugs that we may develop.
We carry clinical trial insurance coverage in an amount that we believe is sufficient in relation to our clinical trials
being conducted in the United States and in foreign countries where we have or plan to have sites as part of our clinical
trials for uproleselan. The use of our drug candidates in clinical trials may result in liability claims for which our current
insurance would not be adequate to cover all liabilities that we may incur. In addition, we may need to increase our
insurance coverage as we expand our clinical trials or if we commence commercialization of our drug candidates.
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.
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Risks Related to Our Intellectual Property
If we are unable to obtain and maintain patent protection for our drug candidates, or if the scope of the patent
protection obtained is not sufficiently broad, our competitors could develop and commercialize drug candidates similar
or identical to ours, and our ability to successfully commercialize our drug candidates may be impaired.
Our success depends in large part on our ability to obtain and maintain patent protection in the United States and
other countries with respect to our drug candidates. We seek to protect our proprietary position by filing patent applications
in the United States and abroad related to our drug candidates.
The patent prosecution process is expensive and time consuming, and we may not be able to file and prosecute all
necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to
identify patentable aspects of our research and development output before it is too late to obtain patent protection. We may
not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the rights to
patents licensed to third parties. Therefore, 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. In addition, the laws of foreign
countries may not protect our rights to the same extent as the laws of the United States, or vice versa. For example,
European patent law restricts the patentability of methods of treatment of the human body more than U.S. law does.
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 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 that protect our drug candidates, in whole or in part, or
which effectively prevent others from commercializing competitive drug candidates. 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 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, only became effective on March 16, 2013. Accordingly, 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.
Moreover, we may be subject to a third-party preissuance submission of prior art to the U.S. Patent and Trademark
Office, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review or interference
proceedings challenging our patent rights or the patent rights of others. An adverse determination in any such submission,
proceeding or litigation could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our
drug candidates and compete directly with us, without payment to us, or result in our inability to manufacture or
commercialize drugs without infringing third-party patent rights. In addition, if the breadth or strength of protection
provided by our patents and patent applications is threatened, it could dissuade companies from collaborating with us to
license, develop or commercialize current or future drug candidates.
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 patents by developing similar or alternative drug candidates in a non-infringing
manner.
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In addition, the issuance of a patent is not conclusive as to its inventorship, scope, validity or enforceability, and our
patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in loss
of exclusivity or freedom to operate 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 drug candidates, or
limit the duration of the patent protection of our drug candidates. Given the amount of time required for the development,
testing and regulatory review of new drug candidates, patents protecting such candidates might expire before or shortly
after such candidates are commercialized. As a result, our patent portfolio may not provide us with sufficient rights to
exclude others from commercializing drugs similar or identical to ours.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could
be expensive, time consuming and unsuccessful.
Competitors may infringe our issued patents or other intellectual property. To counter infringement or unauthorized
use, we may be required to file infringement claims, 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. 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 need to license intellectual property from third parties, and such licenses may not be available or may not
be available on commercially reasonable terms.
A third party may hold intellectual property, including patent, rights that are important or necessary to the
development of our drug candidates. It may be necessary for us to use patented or proprietary technology of third parties to
commercialize our drug candidates, in which case we would be required to obtain a license from these third parties on
commercially reasonable terms, or our business could be harmed, possibly materially.
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.
Our commercial success depends upon our ability, and the ability of our collaborators, to develop, manufacture,
market and sell our drug candidates without infringing the proprietary rights of third parties. There is considerable
intellectual property litigation in the biotechnology and pharmaceutical industries. We may become party to, or threatened
with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our drug candidates,
including interference or derivation proceedings before the U.S. Patent and Trademark Office. Third parties may assert
infringement claims against us based on existing patents or patents that may be granted in the future.
If we are found to infringe a third party’s intellectual property rights, we could be required to obtain a license from
such third party to continue developing and marketing our drug candidates. 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 drug. 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 our drug candidates or force us to cease some of our business operations. Claims
that we have misappropriated the confidential information or trade secrets of third parties could have a similar negative
impact on our business.
We may be subject to claims by third parties asserting that we or our employees 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. 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
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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.
Intellectual property litigation could cause us to spend substantial resources and distract our personnel from their
normal responsibilities.
Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause
us to incur significant expenses, and could distract our technical and management personnel from their normal
responsibilities. In addition, there could be public announcements of the results of hearings, motions or other interim
proceedings or developments, 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 conduct such litigation or proceedings adequately.
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. Uncertainties resulting from the initiation and continuation of patent litigation
or other proceedings could compromise our ability to compete in the marketplace.
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 our drug candidates, we also rely on trade secrets, including unpatented know-how,
technology and other proprietary information, to maintain our competitive position. For example, our platform is based on
trade secrets that consist largely of expertise in carbohydrate chemistry and knowledge of carbohydrate biology. We do not
believe that we can obtain patent protection for our platform. Thus, our competitors may use our methods, or acquire
similar expertise, in order to develop glycomimetic drug candidates and progress these drug candidates through clinical
development and commercialization, which could impair our ability to successfully commercialize our drug candidates.
We seek to protect our 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 also enter into confidentiality and invention or patent
assignment agreements with our employees and consultants. Despite these efforts, 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.
Risks Related to Regulatory Approval of Our Drug Candidates and Other Legal Compliance Matters
If we or our collaborators are not able to obtain, or if there are delays in obtaining, required regulatory approvals,
we or they will not be able to commercialize our drug candidates and our ability to generate revenue will be materially
impaired.
Our drug candidates and the activities associated with their development and commercialization, including their
design, testing, manufacture, safety, efficacy, recordkeeping, labeling, storage, approval, advertising, promotion, sale and
distribution, are subject to comprehensive regulation by the FDA and other regulatory agencies in the United States and by
the European Medicines Agency, or EMA, and similar regulatory authorities outside the United States. Failure to obtain
marketing approval for a drug candidate will prevent us or our collaborators from commercializing the drug candidate. We
have not received approval to market any of our drug candidates from regulatory authorities in any jurisdiction. We have
only limited experience in filing and supporting the applications necessary to gain marketing
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approvals and expect to rely on third-party CROs to assist us in this process. Securing marketing approval requires the
submission of extensive preclinical and clinical data and supporting information to regulatory authorities for each
therapeutic indication to establish the drug candidate’s safety and efficacy. Securing marketing approval also requires the
submission of information about the product manufacturing process to, and inspection of manufacturing facilities by,
applicable regulatory authorities. Our drug candidates 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 preclude our ability to obtain
marketing approval or prevent or limit commercial use. If any of our drug candidates receives marketing approval, the
accompanying label may limit the approved use of our drug, which could limit sales of the drug.
The process of obtaining marketing approvals, both in the United States and abroad, is expensive and may take many
years if additional clinical trials are required, if approval is obtained at all, and can vary substantially based upon a variety
of factors, including the type, complexity and novelty of the drug candidates involved. Changes in marketing approval
policies during the development period, changes in or the enactment of additional statutes or regulations or changes in
regulatory review for each submitted drug application may cause delays in the approval or rejection of an application.
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, clinical or other studies. In addition,
varying interpretations of the data obtained from preclinical and clinical testing could delay, limit or prevent marketing
approval of a drug candidate. Any marketing approval we ultimately obtain may be limited or subject to restrictions or
post-approval commitments that render the approved drug not commercially viable.
If we experience delays in obtaining approval or if we fail to obtain approval of our drug candidates, the commercial
prospects for our drug candidates may be harmed and our ability to generate revenue will be materially impaired.
Even though we have obtained orphan drug designation for several of our drug candidates, we may not be able to
obtain orphan drug marketing exclusivity for these or any of our other drug candidates.
Regulatory authorities in some jurisdictions, including the United States and the European Union, or EU, may
designate drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may
designate a drug as an orphan drug if it is intended to treat a rare disease or condition, which is generally defined as a
patient population of fewer than 200,000 individuals annually in the United States. We have obtained orphan drug
designation from the FDA for uproleselan for the treatment of AML, as well as for rivipansel for the treatment of SCD and
GMI-1359 for the treatment of osteosarcoma. However, in order to obtain marketing exclusivity in a particular jurisdiction,
we must receive the first marketing approval of the drug for its intended indication. In addition, the orphan drug
designation does not convey any advantage in, or shorten the duration of, the regulatory review or approval process.
Generally, if a drug with an orphan drug designation subsequently receives the first marketing approval for the
indication for which it has such designation, the drug is entitled to a period of marketing exclusivity, which precludes the
FDA or the EMA from approving another marketing application for the same drug for the same indication for that time
period. The applicable period is seven years in the United States and 10 years in the EU. The EU exclusivity period can be
reduced to six years if a drug no longer meets the criteria for orphan drug designation or if the drug is sufficiently profitable
so that market exclusivity is no longer justified. Orphan drug exclusivity may be lost if the FDA or the EMA determines
that the request for designation was materially defective or if the manufacturer is unable to assure sufficient quantity of the
drug to meet the needs of patients with the rare disease or condition.
Even if we obtain orphan drug exclusivity for a drug candidate, that exclusivity may not effectively protect the
candidate from competition because different drugs can be approved for the same condition. Even after an orphan drug is
approved, the FDA can subsequently approve another drug with the same active moiety for the same condition if the FDA
concludes that the later drug is clinically superior in that it is shown to be safer, more effective or makes a major
contribution to patient care.
The FDA fast track designation and additional breakthrough therapy designation for uproleselan may not
actually lead to a faster development or regulatory review or approval process.
If a drug is intended for the treatment of a serious or life-threatening disease or condition and the drug demonstrates
the potential to address unmet medical needs for this disease or condition, the drug sponsor may apply for the FDA fast
track designation. If fast track designation is obtained, the FDA may initiate review of sections of a new
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drug application, or NDA, before the application is complete. This “rolling review” is available if the applicant provides,
and the FDA approves, a schedule for submission of the individual sections of the application.
Although we have obtained a fast track designation from the FDA for uproleselan to treat AML and breakthrough
therapy designation for uproleselan to treat AML, we may not experience a faster development process, review or approval
compared to conventional FDA procedures. Our fast track designation may be withdrawn by the FDA if it believes that the
designation is no longer supported by data from our clinical development programs. Our fast track designation does not
guarantee that we will qualify for or be able to take advantage of the expedited review procedures or that we will ultimately
obtain regulatory approval of uproleselan.
Failure to obtain marketing approval in international jurisdictions would prevent our drug candidates from being
marketed abroad.
In order to market and sell our drugs in the EU and any other jurisdictions, we or our collaborators must obtain
separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure
varies among countries and can involve additional testing. The time required to obtain approval may differ substantially
from that required to obtain FDA approval. The regulatory 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 drug be approved for reimbursement before it can be approved for sale in that country. We or our collaborators may
not obtain approvals from regulatory authorities outside the United States on a timely basis, if at all. Approval by the 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 the FDA. However, failure to obtain approval in one jurisdiction may impact our ability to obtain approval elsewhere.
We or our collaborators may not be able to file for marketing approvals and may not receive necessary approvals to
commercialize our drugs in any market.
A variety of risks associated with developing and marketing our drug candidates internationally could hurt our
business.
We or our collaborators may seek regulatory approval for uproleselan and our other drug candidates outside of the
United States and, accordingly, we expect that we will be subject to additional risks related to operating in foreign countries
if we obtain the necessary approvals, including:
● differing regulatory requirements in foreign countries;
● the potential for so-called parallel importing, which is what happens when a local seller, faced with high or
higher local prices, opts to import goods from a foreign market with low or lower prices rather than buying them
locally;
● unexpected changes in tariffs, trade barriers, price and exchange controls and other regulatory requirements;
● economic weakness, including inflation or political instability in particular foreign economies and markets;
● compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
● foreign taxes, including withholding of payroll taxes;
● foreign currency fluctuations, which could result in increased operating expenses and reduced revenues, and
other obligations related to doing business in another country;
● difficulties staffing and managing foreign operations;
● workforce uncertainty in countries where labor unrest is more common than in the United States;
● potential liability under the Foreign Corrupt Practices Act or comparable foreign regulations;
● challenges enforcing our contractual and intellectual property rights, especially in foreign countries that do not
respect and protect intellectual property rights to the same extent as the United States;
● production shortages resulting from any events affecting raw material supply or manufacturing capabilities
abroad; and
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● business interruptions resulting from pandemic, epidemic or disease outbreaks or geo-political actions, including
war and terrorism.
Pursuant to the terms of our collaboration and license agreement, Apollomics is responsible for the clinical
development and commercialization of uproleselan and GMI-1687 in Greater China. The outbreak of the coronavirus, first
identified in Wuhan, Hubei Province, China, could have a material adverse effect on Apollomics’ ability to develop these
drug candidates in a timely manner due to disruptions in the region, travel restrictions, temporary closures of businesses
and suspension of services and supplies. Any such delay or disruptions in clinical development could result in the delay of
any potential milestone payments to us under the license and collaboration agreement, which could have a material adverse
effect on our financial position and results of operations.
Any drug candidate for which we obtain marketing approval could be subject to post-marketing restrictions or
recall or withdrawal from the market, and we may therefore be subject to penalties if we fail to comply with regulatory
requirements or if we experience unanticipated problems with our drug candidates, when and if any of them are
approved.
Any drug candidate for which we obtain marketing approval, along with manufacturing processes, post-approval
clinical data, labeling, advertising and promotional activities for such drug candidate, will be subject to continual
requirements of and review by the FDA and other regulatory authorities. These requirements include submissions of safety
and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to
manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, requirements
regarding the distribution of samples to physicians and recordkeeping. Even if marketing approval of a drug candidate is
granted, the approval may be subject to limitations on the indicated uses for which the drug may be marketed or to the
conditions of approval, including the requirement to implement a risk evaluation and mitigation strategy. If any of our drug
candidates receives marketing approval, the accompanying label may limit the approved use of our drug, which could limit
its sales.
The FDA may also impose requirements for costly post-marketing studies or clinical trials and surveillance to
monitor the safety or efficacy of the drug. 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 off-label use, and if we do
not market our drugs for their approved indications, we may be subject to enforcement action for off-label marketing.
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 laws, as well as state consumer protection
laws.
In addition, later discovery of previously unknown adverse events or other problems with our drugs, manufacturers
or manufacturing processes, or failure to comply with regulatory requirements, may have negative consequences,
including:
● restrictions on such drugs, manufacturers or manufacturing processes;
● restrictions on the labeling or marketing of a drug;
● restrictions on product distribution or use;
● requirements to conduct post-marketing studies or clinical trials;
● warning letters;
● recall or withdrawal of the drugs from the market;
● refusal to approve pending applications or supplements to approved applications that we submit;
● clinical holds;
● fines, restitution or disgorgement of revenue or profit;
● suspension or withdrawal of marketing approvals;
● refusal to permit the import or export of our drugs;
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● product seizure; or
● injunctions or the imposition of civil or criminal penalties.
Non-compliance with the EU requirements regarding safety monitoring or pharmacovigilance, and with requirements
related to the development of drugs for the pediatric population, can also result in significant financial penalties. Similarly,
failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significant
penalties and sanctions.
Our current and future business and relationships with customers and third-party payors in the United States and
elsewhere may be subject, directly or indirectly, to applicable anti-kickback, fraud and abuse, false claims, transparency,
health information privacy and security and other healthcare laws and regulations, which could expose us to significant
penalties, including criminal sanctions, civil penalties, contractual damages, reputational harm, administrative burdens
and diminished profits and future earnings.
Healthcare providers and third-party payors in the United States and elsewhere will play a primary role in the
recommendation and prescription of any drug candidates for which we obtain marketing approval. Our current and future
arrangements with third-party payors and customers may expose us to broadly applicable fraud and abuse and other
healthcare laws and regulations, including, without limitation, the federal Anti-Kickback Statute and the federal False
Claims Act, which may constrain the business or financial arrangements and relationships through which we conduct
clinical research, sell, market and distribute any drugs for which we obtain marketing approval. In addition, we may be
subject to transparency laws and patient data privacy and security regulation by the U.S. federal and state governments and
by governments in foreign jurisdictions in which we conduct our business. The applicable federal, state and foreign
healthcare laws and regulations that may affect our ability to operate include:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons from knowingly and willfully
soliciting, offering, receiving or providing 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 federal healthcare programs, such as Medicare and
Medicaid;
● federal civil and criminal false claims laws, including the federal False Claims Act, which impose criminal and
civil penalties, including civil whistleblower or qui tam actions, and civil monetary penalty laws that prohibit
individuals or entities for knowingly presenting, or causing to be presented, to the federal government, including
the Medicare and Medicaid programs, 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;
● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which imposes criminal and
civil liability for executing a scheme to defraud any healthcare benefit program or making false statements
relating to healthcare matters;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or
HITECH, and their respective implementing regulations, which impose obligations on covered healthcare
providers, health plans, and healthcare clearinghouses, as well as their business associates that create, receive,
maintain or transmit individually identifiable health information for or on behalf of a covered entity, with
respect to safeguarding the privacy, security and transmission of individually identifiable health information;
● the federal Open Payments program, pursuant to the Physician Payments Sunshine Act, which requires
manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare,
Medicaid or the Children’s Health Insurance Program, with specific exceptions, to report annually to the Centers
for Medicare & Medicaid Services, or CMS, information related to “payments or other transfers of value” made
to physicians, which is defined to include doctors, dentists, optometrists, podiatrists and chiropractors, and
teaching hospitals and applicable manufacturers and applicable group purchasing organizations to report
annually to CMS ownership and investment interests held by the physicians and their immediate family
members, with disclosure of such information to be made by CMS on a publicly available website. Beginning in
2022, applicable manufacturers also will be required to report such information regarding payments and
transfers of value provided, as well as ownership and investment interests held,
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during the previous year to physician assistants, nurse practitioners, clinical nurse specialists, certified nurse
anesthetists and certified nurse midwives; and
● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which 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 and foreign 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 or otherwise restrict payments that may be made
to healthcare providers; state and foreign laws that require drug manufacturers to report information related to
payments and other transfers of value to physicians and other healthcare providers or marketing expenditures;
state and local laws requiring the registration of pharmaceutical sales representatives; and state and foreign laws
governing 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.
Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and
regulations may involve substantial costs. It is possible that governmental authorities will 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,
including, without limitation, damages, fines, individual imprisonment, additional reporting requirements and oversight if
we become subject to a corporate integrity agreement or similar agreement to resolve allegations of non-compliance with
these laws, contractual damages, reputational harm, diminished profits and future earnings, disgorgement, exclusion from
participation in government healthcare programs, such as Medicare and Medicaid, and the curtailment or restructuring of
our operations, which could have a material adverse effect on our business. If any of the physicians or other healthcare
providers or entities with whom we expect to do business, including our collaborators, is found not to be in compliance
with applicable laws, it may be subject to criminal, civil or administrative sanctions, including exclusions from
participation in government healthcare programs, which could also materially affect our business.
Recently enacted and future legislation may increase the difficulty and cost for us to obtain marketing approval of
and commercialize our drug candidates 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 our drug
candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any drug candidates for which
we obtain marketing approval.
Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting
changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and expanding access.
In the United States, the pharmaceutical industry has been a particular focus of these efforts, which include major
legislative initiatives to reduce the cost of care through changes in the healthcare system, including limits on the pricing,
coverage, and reimbursement of pharmaceutical and biopharmaceutical products, especially under government-funded
health care programs, and increased governmental control of drug. In March 2010, President Obama signed into law the
Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act, or
collectively PPACA, a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of
healthcare spending, improve quality of care, 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 PPACA of importance to our business and potential drug candidates are:
● an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs
and biologic agents, apportioned among these entities according to their market share in certain government
healthcare programs;
● an increase in the statutory minimum rebates a manufacturer must pay under the Medicaid Drug Rebate Program
to 23.1% and 13.0% of the average manufacturer price for branded and generic drugs, respectively;
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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 non-compliance;
● a new Medicare Part D coverage gap discount program, in which manufacturers must now agree to offer 70%
point-of-sale discounts off negotiated prices of applicable brand drugs to eligible beneficiaries during their
coverage gap period, as a condition for a manufacturer’s outpatient drugs to be covered under Medicare Part D;
● extension of a manufacturer’s Medicaid rebate liability to covered drugs dispensed to individuals who are
enrolled in Medicaid managed care organizations;
● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer Medicaid
coverage to additional individuals and by adding new mandatory eligibility categories for certain individuals
with income at or below 133% of the federal poverty level, thereby potentially increasing a manufacturer’s
Medicaid rebate liability;
● expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;
● the new requirements under the federal Open Payments program and its implementing regulations;
● 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 remain judicial and Congressional challenges to certain aspects of PPACA, as well as efforts by the Trump
administration to repeal or replace certain aspects of the PPACA. Since January 2017, President Trump has signed two
Executive Orders and other directives designed to delay the implementation of certain provisions of the PPACA or
otherwise circumvent some of the requirements for health insurance mandated by the PPACA. Concurrently, Congress has
considered legislation that would repeal or repeal and replace all or part of the PPACA. While Congress has not passed
comprehensive repeal legislation, several bills affecting the implementation of certain taxes under the ACA have been
signed into law. The Tax Cuts and Jobs Act of 2017, or Tax Act, included a provision which repealed, effective January 1,
2019, the tax-based shared responsibility payment imposed by the PPACA on certain individuals who fail to maintain
qualifying health coverage for all or part of a year that is commonly referred to as the “individual mandate”. In addition, the
2020 federal spending package permanently eliminates, effective January 1, 2020, the ACA-mandated “Cadillac” tax on
high-cost employer-sponsored health coverage and medical device tax and, effective January 1, 2021, also eliminates the
health insurer tax. On December 14, 2018, a Texas U.S. District Court Judge ruled that the PPACA is unconstitutional in its
entirety because the “individual mandate” was repealed by Congress as part of the Tax Act. Additionally, on December 18,
2019, the U.S. Court of Appeals for the 5th Circuit upheld the District Court ruling that the individual mandate was
unconstitutional and remanded the case back to the District Court to determine whether the remaining provisions of the
PPACA are invalid as well. It is unclear how this decision, future decisions, subsequent appeals, and other efforts to repeal
and replace the PPACA will impact the PPACA and our business.
In addition, other legislative changes have been proposed and adopted since PPACA was enacted. These changes
include aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, which began in 2013, pursuant
to the Budget Control Act of 2011. On March 1, 2013, the President signed an executive order implementing the 2%
Medicare payment reductions, and on April 1, 2013, these reductions went into effect. Pursuant to the Bipartisan Budget
Act of 2015, these reductions will stay in effect through 2029, unless additional Congressional action is taken. In January
2013, President Obama signed into law the American Taxpayer Relief Act of 2012, which, among other things, reduced
Medicare payments to several providers and increased the statute of limitations period for the government to recover
overpayments to providers from three to five years. These new laws may result in additional reductions in Medicare and
other healthcare funding, which could have a material adverse effect on customers for our drugs, if approved, and,
accordingly, our financial operations.
Current and future healthcare reform measures may result in more rigorous coverage criteria and in additional
downward pressure on the price that we receive for any approved drug. Any reduction in reimbursement from Medicare or
other government-funded programs may result in a similar reduction in payments from private payors. There has been
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increasing legislative and enforcement interest in the United States with respect to specialty drug pricing practices.
Specifically, there have been several recent U.S. Congressional inquiries and proposed bills designed to, among other
things, bring more transparency to drug pricing, review the relationship between pricing and manufacturer patient
programs, and reform government program reimbursement methodologies for drugs. At the federal level, the Trump
administration’s budget proposal for fiscal year 2020 contained further drug price control measures that could be enacted
during the budget process or in other future legislation. Further, the Trump administration released a “Blueprint” to lower
drug prices and reduce out of pocket costs of drugs that contains additional proposals to increase drug manufacturer
competition, increase the negotiating power of certain federal healthcare programs, incentivize manufacturers to lower the
list price of their products, and reduce the out of pocket costs of drug products paid by consumers. The Department of
Health and Human Services, or HHS, has solicited feedback on some of these measures and has implemented others under
its existing authority. While some of these and other measures may require additional authorization to become effective,
Congress has indicated that it will continue to seek new legislative and/or administrative measures to control drug costs. At
the state level, legislatures are increasingly passing legislation and implementing regulations designed to control
pharmaceutical and biological product pricing. The implementation of cost containment measures or other healthcare
reforms may prevent us from being able to generate revenue, attain profitability or commercialize our drugs.
Legislative and regulatory proposals have been made to expand post-approval requirements and restrict sales and
promotional activities for drugs. We cannot be sure whether additional legislative changes will be enacted, or whether the
FDA regulations, guidance or interpretations will be changed, or what the impact of such changes on the marketing
approvals of our drug candidates, if any, 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 testing and other requirements.
Governments outside the United States tend to impose strict price controls, which may adversely affect our
revenue, if any.
In some countries, particularly in the EU, 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 drug. To obtain coverage and reimbursement or pricing approval in some countries, we may be
required to conduct a clinical trial that compares the cost-effectiveness of our drug candidate to other available therapies. If
reimbursement of our drugs is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our
business could be harmed, possibly materially.
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 any 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 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 research, 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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Risks Related to Employee Matters and Managing Our Growth
Our future success depends on our ability to retain key executives and to attract, retain and motivate qualified
personnel.
We are highly dependent on the management, research and development, clinical, financial and business
development expertise of Rachel King, our President and Chief Executive Officer; John Magnani, our Senior Vice
President of Research and Chief Scientific Officer; Eric Feldman, our Senior Vice President of Clinical Development and
Chief Medical Officer; Armand Girard, our Senior Vice President and Chief Business Officer; and Brian Hahn, our Senior
Vice President of Finance and Chief Financial Officer, as well as the other members of our scientific and clinical teams. In
particular, we are dependent upon Dr. Magnani for key expertise in carbohydrate chemistry and knowledge of carbohydrate
biology with respect to our glycomimetics platform, and the loss of his services would materially impair our future drug
discovery efforts. Although we have entered into employment agreements with our executive officers, each of them may
currently terminate their employment with us at any time. We do not maintain “key person” insurance for any of our
executives or employees.
Recruiting and retaining qualified scientific and clinical personnel and, if we progress the development of our drug
pipeline toward scaling up for commercialization, 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, gain regulatory approval for and commercialize our drug candidates. Competition to hire qualified
personnel in our industry is intense, and we may be unable to hire, train, retain or motivate these key personnel on
acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar
personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research
institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in
formulating our research and development and commercialization strategy. Our consultants and advisors may have
commitments under consulting or advisory contracts with other entities that may limit their availability to us. If we are
unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
We expect to expand our development and regulatory capabilities and potentially implement sales, marketing and
distribution capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our
operations.
As our development progresses, we expect to experience significant growth in the number of our employees and the
scope of our operations, particularly in the areas of research, drug development, regulatory affairs and, if any of our drug
candidates receives marketing approval, sales, marketing and distribution. To manage our anticipated future growth, we
must continue to implement and improve our managerial, operational and financial systems, expand our facilities and
continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited
experience of our management team in managing a company with such anticipated growth, we may not be able to
effectively manage the expansion of our operations or recruit and train additional qualified personnel. The expansion of our
operations may lead to significant costs and may divert our management and business development resources. Any inability
to manage growth could delay the execution of our business plans or disrupt our operations.
Our employees and employees of our collaborators may engage in misconduct or other improper activities,
including non-compliance with regulatory standards and requirements.
We and our collaborators are exposed to the risk of employee fraud or other misconduct. Misconduct by employees
could include intentional failures to comply with the FDA regulations, to provide accurate information to the FDA, to
comply with manufacturing standards we have established, to comply with federal and state healthcare fraud and abuse
laws and regulations, to report financial information or data accurately or to disclose unauthorized activities to us. In
particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and
regulations intended to prevent fraud, 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. Employee misconduct could also involve the improper use of individually
identifiable information, including, without limitation, information obtained in the course of clinical trials, which could
result in regulatory sanctions and serious harm to our reputation. We have adopted a code of business
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conduct and ethics, but it is not always possible to identify and deter employee misconduct, and the precautions we take to
detect and prevent improper activities 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 be in compliance
with such laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves
or asserting our rights, or any such actions are instituted against any of our collaborators, those actions could have a
significant impact on our business, including the imposition of significant fines or other sanctions and diminished royalties.
General Risks Related to Ownership of Our Common Stock
An active trading market for our common stock may not be sustained.
Although our common stock is listed on The Nasdaq Global Market, we cannot assure you that an active trading
market for our shares will be sustained. If an active market for our common stock is not sustained, it may be difficult for
investors in our common stock to sell shares without depressing the market price for the shares or to sell the shares at all.
The trading price of our common stock has been and is likely to continue to be volatile.
Our stock price from time to time has been volatile. The stock market in general and the market for
biopharmaceutical companies in particular have experienced extreme volatility that has often been unrelated to the
operating performance of particular companies. As a result of this volatility, investors may not be able to sell their common
stock at or above the price paid for the shares. The market price for our common stock may be influenced by many factors,
including:
● announcements relating to development, regulatory approvals or commercialization of our drug candidates;
● actual or anticipated variations in our operating results;
● changes in financial estimates by us or by any securities analysts who might cover our stock;
● conditions or trends in our industry;
● changes in laws or other regulatory actions affecting us or our industry, such as drug pricing and reimbursement;
● stock market price and volume fluctuations of comparable companies and, in particular, those that operate in the
biopharmaceutical industry;
● announcements by us or our competitors of significant acquisitions, strategic partnerships or divestitures;
● announcements of investigations or regulatory scrutiny of our operations or lawsuits filed against us;
● capital commitments;
● investors’ general perception of our company and our business;
● disputes concerning our intellectual property or other proprietary rights;
● recruitment or departure of key personnel; and
● sales of our common stock, including sales by our directors and officers or specific stockholders.
In addition, the stock markets have experienced extreme price and volume fluctuations that have affected and
continue to affect the market prices of equity securities of many companies, including recently in connection with the
evolving COVID-19 pandemic, which has resulted in volatile stock prices for many companies notwithstanding the lack of
a fundamental change in their underlying business models or prospects. These fluctuations have often been unrelated or
disproportionate to the operating performance of those companies. Broad market and industry factors, including potentially
worsening economic conditions and other adverse effects or developments relating to the ongoing COVID-19 pandemic,
political, regulatory and other market conditions, may negatively affect the market price of shares of our common stock,
regardless of our actual operating performance.
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In addition, in the past, stockholders have initiated class action lawsuits against pharmaceutical and biotechnology
companies following periods of volatility in the market prices of these companies’ stock. Such litigation, if instituted
against us, could cause us to incur substantial costs and divert management’s attention and resources from our business.
If equity research analysts do not publish research or reports, or publish unfavorable research or reports, about
us, our business or our market, our stock price and trading volume could decline.
The trading market for our common stock is influenced by the research and reports that equity research analysts
publish about us and our business. We have only limited research coverage by equity research analysts. Equity research
analysts may elect not to initiate or continue to provide research coverage of our common stock, and such lack of research
coverage may adversely affect the market price of our common stock. Even if we have equity research analyst coverage,
we will not have any control over the analysts or the content and opinions included in their reports. The price of our stock
could decline if one or more equity research analysts downgrade our stock or issue other unfavorable commentary or
research. If one or more equity research analysts ceases coverage of our company or fails to publish reports on us regularly,
demand for our stock could decrease, which in turn could cause our stock price or trading volume to decline.
The issuance of additional stock in connection with financings, acquisitions, investments, our stock incentive
plan, our employee stock purchase plan or otherwise will dilute all other stockholders.
Our certificate of incorporation authorizes us to issue up to 100,000,000 shares of common stock and up to 5,000,000
shares of preferred stock with such rights and preferences as may be determined by our board of directors. Subject to
compliance with applicable rules and regulations, we may issue our shares of common stock or securities convertible into
our common stock from time to time in connection with a financing, acquisition, investment, our stock incentive plan, our
employee stock purchase plan or otherwise. Any such issuance could result in substantial dilution to our existing
stockholders and cause the trading price of our common stock to decline.
If a substantial number of our total outstanding shares are sold into the market, or if the market perceives that
such sales may occur, it could cause the market price of our common stock to drop significantly, even if our business is
doing well.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. If our
stockholders sell, or if the market perceives that our stockholders intend to sell, substantial amounts of our common stock
in the public market, the market price of our common stock could decline significantly. All of our outstanding shares of
common stock are available for sale in the public market, subject only to the restrictions of Rule 144 under the Securities
Act in the case of our affiliates.
In addition, we have filed registration statements on Form S-8 registering the issuance of shares of common stock
subject to options or other equity awards issued or reserved for future issuance under our equity incentive plans. Shares
registered under these registration statements are available for sale in the public market subject to vesting arrangements and
exercise of options, as well as Rule 144 in the case of our affiliates. If these additional shares are sold, or if it is perceived
that they will be sold, in the public market, the trading price of our common stock could decline.
Provisions in our corporate charter documents and under Delaware law may prevent or frustrate attempts by our
stockholders to change our management and hinder efforts to acquire a controlling interest in us, and the market price
of our common stock may be lower as a result.
There are provisions in our certificate of incorporation and bylaws that may make it difficult for a third party to
acquire, or attempt to acquire, control of our company, even if a change in control was considered favorable by some or all
of our stockholders. For example, our board of directors has the authority to issue up to 5,000,000 shares of preferred stock.
The board of directors can fix the price, rights, preferences, privileges and restrictions of the preferred stock without any
further vote or action by our stockholders. The issuance of shares of preferred stock may delay or prevent a change in
control transaction. As a result, the market price of our common stock and the voting and other rights of our stockholders
may be adversely affected. An issuance of shares of preferred stock may result in the loss of voting control to other
stockholders.
Our charter documents also contain other provisions that could have an anti-takeover effect, including:
● only one of our three classes of directors is elected each year;
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● stockholders are not entitled to remove directors other than by a 66 2/3% vote and only for cause;
● stockholders are not permitted to take actions by written consent;
● stockholders cannot call a special meeting of stockholders; and
● stockholders must give advance notice to nominate directors or submit proposals for consideration at
stockholder meetings.
In addition, we are subject to the anti-takeover provisions of Section 203 of the Delaware General Corporation Law,
which regulates corporate acquisitions by prohibiting Delaware corporations from engaging in specified business
combinations with particular stockholders of those companies. These provisions could discourage potential acquisition
proposals and could delay or prevent a change in control transaction. They could also have the effect of discouraging others
from making tender offers for our common stock, including transactions that may be in your best interests. These
provisions may also prevent changes in our management or limit the price that investors are willing to pay for our stock.
Our certificate of incorporation also provides that the Court of Chancery of the State of Delaware will be the
exclusive forum for substantially all disputes between us and our stockholders.
If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements
on a timely basis could be impaired.
We are subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of
2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the rules and regulations of The
Nasdaq Global Market. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure
controls and procedures and internal control over financial reporting and perform system and process evaluation and testing
of our internal control over financial reporting to allow management to report on the effectiveness of our internal control
over financial reporting. This requires that we incur substantial additional professional fees and internal costs to expand our
accounting and finance functions and that we expend significant management efforts.
We may in the future discover areas of our internal financial and accounting controls and procedures that need
improvement. Our internal control over financial reporting will not prevent or detect all errors and all fraud. A control
system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control
system’s objectives will be met. Because of the inherent limitations in all control systems, no evaluation of controls can
provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of
fraud will be detected.
If we are unable to maintain proper and effective internal controls in the future, we may not be able to produce timely
and accurate financial statements, and we may conclude that our internal controls over financial reporting are not effective.
If that were to happen, the market price of our stock could decline and we could be subject to sanctions or investigations by
Nasdaq, the SEC or other regulatory authorities.
We do not anticipate paying any cash dividends on our common stock in the foreseeable future and our stock may
not appreciate in value.
We have not declared or paid cash dividends on our common stock to date. We currently intend to retain our future
earnings, if any, to fund the development and growth of our business. In addition, the terms of any future debt agreements
may preclude us from paying dividends. There is no guarantee that shares of our common stock will appreciate in value or
that the price at which our stockholders have purchased their shares will be able to be maintained.
We incur increased costs and demands upon management as a result of being a public company.
As a public company listed in the United States, we incur, and will continue to incur now that we have ceased to be
an “emerging growth company,” significant legal, accounting and other costs. These costs could negatively affect our
financial results. In addition, changing laws, regulations and standards relating to corporate governance and public
disclosure, including regulations implemented by the SEC and Nasdaq, may increase legal and financial compliance costs
and make some activities more time-consuming. These laws, regulations and standards are subject to varying
interpretations and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory
and governing bodies.
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We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may
result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-
generating activities to compliance activities. If we do not comply with new laws, regulations and standards, regulatory
authorities may initiate legal proceedings against us and our business may be harmed.
Failure to comply with these rules might also make it more difficult for us to obtain some types of insurance,
including director and officer liability insurance, and we might be forced to accept reduced policy limits and coverage or
incur substantially higher costs to obtain the same or similar coverage. The impact of these events could also make it more
difficult for us to attract and retain qualified persons to serve on our board of directors, on committees of our board of
directors or as members of senior management.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
PROPERTIES
Our principal offices occupy approximately 42,000 square feet of leased office space in Rockville, Maryland,
pursuant to a lease agreement that expires in October 2023. We believe that our properties are generally in good condition,
well maintained, suitable and adequate to carry on our business. We believe our capital resources are sufficient to lease any
additional facilities required to meet our expected growth needs.
ITEM 3.
LEGAL PROCEEDINGS
From time to time, we are subject to litigation and claims arising in the ordinary course of business. We are not
currently a party to any material legal proceedings and we are not aware of any pending or threatened legal proceeding
against us that we believe could have a material adverse effect on our business, operating results, cash flows or financial
condition.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS
AND ISSUER PURCHASES OF EQUITY SECURITIES
PART II
Market Information for Common Stock
Our common stock is listed on The Nasdaq Global Market under the symbol “GLYC.”
Dividend Policy
We have never declared or paid any dividends on our common stock. We anticipate that we will retain all of our
future earnings, if any, for use in the operation and expansion of our business and do not anticipate paying cash dividends
in the foreseeable future.
Stockholders
As of February 26, 2021, we had 51,493,571 shares of common stock outstanding held by 24 holders of record. The
actual number of stockholders is greater than this number of record holders and includes stockholders who are beneficial
owners but whose shares are held in street name by brokers and other nominees. This number of holders of record also does
not include stockholders whose shares may be held in trust by other entities.
Performance Graph
The following graph compares the five-year cumulative total return of our common stock with the Nasdaq Composite
Index (U.S.) and the Nasdaq Biotechnology Index. The comparison assumes a $100 investment on December 31, 2015 in
our common stock, the stocks comprising the Nasdaq Composite Index, and the stocks comprising the Nasdaq
Biotechnology Index, and assumes reinvestment of the full amount of all dividends, if any. Historical stockholder return is
not necessarily indicative of the performance to be expected for any future periods.
Among GlycoMimetics, Inc., the Nasdaq Composite Index and the Nasdaq Biotechnology Index
Comparison of Cumulative Total Return
The performance graph shall not be deemed to be incorporated by reference by means of any general statement
incorporating by reference this Form 10-K into any filing under the Securities Act of 1933, as amended or the Exchange
Act, except to the extent that we specifically incorporate such information by reference, and shall not otherwise be deemed
filed under such acts.
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Recent Sales of Unregistered Securities
None.
Purchases of Equity Securities by the Issuer and Affiliated Parties
None.
ITEM 6.
SELECTED FINANCIAL DATA
Not applicable.
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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 consolidated financial statements and the related notes and other financial information included elsewhere in this
Annual Report. Some of the information contained in this discussion and analysis or set forth elsewhere in this Annual
Report, including information with respect to our plans and strategy for our business, includes forward-looking statements
that involve risks and uncertainties. You should review Item 1A. “Risk Factors” and “Special Note Regarding Forward-
Looking Statements” in this Annual Report for a discussion of important factors that could cause actual results to differ
materially from the results described in or implied by the forward-looking statements contained in the following discussion
and analysis.
For the discussion of our financial condition and results of operations for the year ended December 31, 2019
compared to the year ended December 31, 2018, please refer to Part II, Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the year ended December 31, 2019
filed with the SEC on February 28, 2020.
Overview
We are a clinical-stage biotechnology company focused on the discovery and development of novel glycomimetic
drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a key role. We are
developing a pipeline of proprietary glycomimetics, which are small molecules that mimic the structure of carbohydrates
involved in important biological processes, to inhibit disease-related functions of carbohydrates such as the roles they play
in inflammation, cancer and infection. We believe this represents an innovative approach to drug discovery to treat a wide
range of diseases. We are focusing our efforts on drug candidates for diseases that we believe will qualify for orphan drug
designation.
Our proprietary glycomimetics platform is based on our expertise in carbohydrate chemistry and our understanding
of the role carbohydrates play in key biological processes. Most human proteins are modified by the addition of complex
carbohydrate structures to the surface of such proteins, which affects the functions of the proteins and their interactions
with other molecules. Our initial research and development efforts have focused on drug candidates targeting selectins,
which are proteins that serve as adhesion molecules and bind to carbohydrates that are involved in the inflammatory
component and progression of a wide range of diseases, including hematologic disorders, cancer and cardiovascular
disease. For example, we believe that members of the selectin family play a key role in tumor metastasis and resistance to
chemotherapy. Inhibiting specific carbohydrates from binding to selectins has long been viewed as a potentially attractive
approach for therapeutic intervention. The ability to successfully develop drug-like compounds that inhibit binding with
selectins, known as selectin antagonists, has historically been limited by the complexities of carbohydrate chemistry. We
believe our expertise in carbohydrate chemistry and our understanding of carbohydrate protein binding interactions enable
us to design selectin antagonists and other glycomimetics that may inhibit the disease-related functions of certain
carbohydrates in order to develop novel drug candidates to address orphan diseases with high unmet medical need.
Our lead glycomimetic drug candidate, uproleselan, is a specific E-selectin inhibitor that we are developing to be
used in combination with chemotherapy to treat patients with acute myeloid leukemia, or AML, a life-threatening
hematologic cancer, and potentially other hematologic cancers. In 2018, we commenced a randomized, double-blind,
placebo-controlled Phase 3 pivotal clinical trial to evaluate uproleselan in individuals with relapsed/refractory AML, the
design of which was based on guidance received from the U.S. Food and Drug Administration, or FDA. We intend to enroll
approximately 380 adult patients with relapsed or refractory AML at centers in the United States, Canada, Europe and
Australia. We expect to complete enrollment of the trial in the second half of 2021. In 2018, we also signed a Cooperative
Research and Development Agreement, or CRADA, with the National Cancer Institute, or NCI, part of the National
Institutes of Health, to conduct a Phase 2/3 randomized, controlled clinical trial testing the addition of uproleselan to a
standard chemotherapy regimen. The trial opened for enrollment in early 2019 and enrolled the first patient in April 2019.
We previously developed a glycomimetic drug candidate, rivipansel, a pan-selectin antagonist for the potential
treatment of vaso-occlusive crisis, or VOC, a debilitating and painful condition that occurs periodically throughout the life
of a person with sickle cell disease, or SCD. Our former collaborator Pfizer conducted a pivotal Phase 3 clinical trial to
evaluate the efficacy and safety of rivipansel in patients aged six and older with SCD who were hospitalized for VOC
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and required treatment with intravenous opioids. The clinical trial did not meet its primary or key secondary efficacy
endpoints. Pfizer terminated our exclusive license agreement effective as of April 2020, resulting in the transfer of
development and commercialization rights, including the IND application for rivipansel, back to us. Based on input
received from the FDA regarding rivipansel, as well as feedback from key opinion leaders with respect to sickle cell
disease, we have determined not to proceed with the development of rivipansel as a potential treatment for the acute VOC
setting.
We have rationally designed an innovative antagonist of E-selectin, GMI-1687, that could be a subcutaneously
administered treatment. Initially developed as a potential life-cycle extension to uproleselan, we believe that GMI-1687
could be developed to broaden the clinical usefulness of an E-selectin antagonist to conditions where outpatient treatment is
preferred or required. We are currently conducting preclinical activities and studies with GMI-1687 to support our planned
submission of an investigational new drug application, or IND, to the FDA.
We are also developing a drug candidate, GMI-1359, that simultaneously targets both E-selectin and a chemokine
receptor known as CXCR4. In the fourth quarter of 2019, we initiated a Phase 1b trial of GMI-1359 in hormone receptor
positive breast cancer patients whose tumors have spread to bone, and the first patient was dosed in January 2020. We are
also advancing other preclinical-stage programs, including small-molecule glycomimetic compounds that inhibit the
protein galectin-3, which we believe may have potential to be used for the treatment of fibrosis, cancer and cardiovascular
disease.
We have financed our operations primarily through private placements of our securities, up-front and milestone
payments under our license and collaboration agreements and the net proceeds from public offerings of common stock,
including sales of common stock under at-the-market sales facilities with Cowen and Company LLC, or Cowen. We have
no approved drugs currently available for sale, and substantially all of our revenue to date has been revenue from up-front
and milestone payments under license and collaboration agreements with Pfizer and Apollomics.
Since inception, we have incurred significant operating losses. We had an accumulated deficit of $309.5 million as of
December 31, 2020, and we expect to continue to incur significant expenses and operating losses over at least the next
several years. Our net losses may fluctuate significantly from quarter to quarter and year to year, depending on the timing
of our clinical trials and our expenditures on other research and development activities. We anticipate that our expenses will
increase substantially as we:
● initiate and conduct our planned clinical trials of uproleselan, GMI-1359 and GMI-1687, including fulfilling our
funding and supply commitments related to the clinical trial of uproleselan being conducted in collaboration
with NCI;
● conduct NDA-enabling activities related to manufacture, toxicology and clinical pharmacology for our product
candidates;
● manufacture additional uproleselan drug supplies for validation and prepare for commercialization;
● seek to discover and develop additional drug candidates;
● seek regulatory approvals for any drug candidates that successfully complete clinical trials;
● ultimately establish a sales, marketing and distribution infrastructure and scale up external manufacturing
capabilities to commercialize any drug candidates for which we may obtain regulatory approval;
● maintain, expand and protect our intellectual property portfolio;
● hire additional clinical, quality control, regulatory and scientific personnel;
● maintain sufficient level of insurance including product liability and directors, officers and corporate liability
insurance policies; and
● add operational, financial and management information systems and personnel, including personnel to support
our drug development and potential future commercialization efforts.
To fund further operations, we will need to raise capital. We may obtain additional financing in the future through the
issuance of our common stock, through other equity or debt financings, potentially including the use of our at-the-market
sales facility with Cowen, or through collaborations or partnerships with other companies. We may not be able to
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raise additional capital on terms acceptable to us, or at all, and any failure to raise capital as and when needed could
compromise our ability to execute on our business plan. For example, the current global COVID-19 pandemic presents
material uncertainty and its disruption of the capital markets may have a material adverse impact on our ability to raise
additional capital if we decide to do so. Although it is difficult to predict future liquidity requirements, we believe that our
existing cash and cash equivalents will be sufficient to fund our operations into the fourth quarter of 2022. However, our
ability to successfully transition to profitability will be dependent upon achieving a level of revenues adequate to support
our cost structure. We cannot assure you that we will ever be profitable or generate positive cash flow from operating
activities.
Impact of COVID-19 on Our Business
The imposition of “lockdown,” “social distancing” and “shelter in place” directives by state and federal governments
in the United States as well as governments in other regions of the world in response to the COVID-19 pandemic, including
in locations in which our Phase 3 clinical trial of uproleselan is being conducted, resulted in slowed clinical site initiation,
patient recruitment and enrollment rates early in the pandemic. Enrollment rates have returned to forecasted rates since the
beginning of the lockdowns. However, COVID-19 infection rates continue to fluctuate, which could negatively affect
enrollment going forward. We cannot at this time fully assess the effect of the COVID-19 pandemic on our continued
enrollment and whether the pandemic would potentially materially adversely impact the timing of completion of enrollment
of our Phase 3 clinical trial. We continue to closely monitor the COVID-19 situation and any potential impact to our
planned activities.
We have also implemented business continuity plans designed to address and mitigate the impact of the COVID-19
pandemic on our employees and our business. While to date we have experienced limited impacts beyond the earlier
delays in recruitment in our ongoing uproleselan Phase 3 clinical trial, given the global economic slowdown, the overall
disruption of global healthcare systems and the other risks and uncertainties associated with the pandemic, our business,
financial condition, results of operations and growth prospects could be materially adversely affected. We continue to
closely monitor the COVID-19 situation as we evolve our business continuity plans and response strategy. In March 2020,
our workforce transitioned to working remotely in accordance with federal and state declarations. We have partially
reopened to allow certain employees to return to the office based on a phased approach that is consistent with federal and
state guidelines, with a focus on employee safety and optimal work environment.
Our Collaboration and License Agreements
Apollomics
In January 2020, we entered into an exclusive collaboration and license agreement with Apollomics (Hong Kong)
Limited, or Apollomics, for the development and commercialization of uproleselan and GMI-1687 in Mainland China,
Hong Kong, Macau and Taiwan, also known as Greater China. Under the terms of the agreement, Apollomics will be
responsible for clinical development and commercialization in Greater China. We will also collaborate with Apollomics to
advance the preclinical and clinical development of GMI-1687. We received an upfront cash payment of $9.0 million and
in September 2020 received a $1.0 million development milestone payment. Subject to the terms of the agreement, will be
eligible to receive potential further milestone payments totaling approximately $179.0 million, as well as tiered royalties
ranging from the high single digits to 15%, as a percentage of net sales. Apollomics will be responsible for all costs related
to development, regulatory approvals, and commercialization activities for uproleselan and GMI-1687 in Greater China,
and we and Apollomics expect to enter into clinical and commercial supply agreements with respect to our provision of
uproleselan and GMI-1687 to Apollomics. We retain all rights for both compounds in the rest of the world.
In September 2020, the China National Medical Products Administration (NMPA) Center for Drug Evaluation (CDE)
granted IND approval for uproleselan (APL-106) enabling the initiation of a Phase 1 PK and tolerability study and includes
acceptance of a Phase 3 bridging study of APL-106 in combination with chemotherapy in relapsed/refractory AML. In
January 2021, APL-106 was granted Breakthrough Therapy designation from the China NMPA CDE for the treatment of
relapsed/refractory acute myeloid leukemia.
In June 2020, we entered into a clinical supply agreement with Apollomics under which we will manufacture and
supply uproleselan product to Apollomics at agreed upon prices. Apollomics has the option to begin manufacture after
appropriate material transfer requirements are met. During the year ended December 31, 2020, we recognized $163,000 in
revenue from the sale of clinical supplies to Apollomics under the clinical supply agreement.
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Pfizer
In October 2011, we entered into an exclusive license agreement with Pfizer, or the Pfizer Agreement. Pfizer
terminated the Pfizer Agreement, effective as of April 5, 2020, and we now hold all rights to the potential future
development and commercialization of rivipansel and are free to commercialize any product for treatment or prevention of
VOC in SCD. We did not earn any revenue or receive any payments from Pfizer during the year ended December 31, 2020
or 2019 and will not be eligible to receive any future payments from Pfizer following the termination of the Pfizer
Agreement.
In August 2020, we entered into a separate agreement with Pfizer with respect to certain post-termination
commitments, including, among other things, Pfizer’s transfer of certain raw materials and inventory that could potentially
be utilized in subsequent development or commercialization activities. Pursuant to the terms of the agreement, Pfizer may
be eligible to receive a milestone payment of $25.0 million upon achievement of specified levels of cumulative net sales of
rivipansel, as well as a low single-digit royalty on net sales of the product for a period of ten years from first commercial
sale.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our
financial statements, which have been prepared in accordance with generally accepted accounting principles in the United
States, or GAAP. The preparation of these financial statements requires us to make estimates, judgments and assumptions
that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the dates of the
balance sheets and the reported amounts of revenue and expenses during the reporting periods. In accordance with GAAP,
we base our estimates on historical experience and on various other assumptions that we believe are reasonable under the
circumstances at the time such estimates are made. Actual results may differ materially from our estimates and judgments
under different assumptions or conditions. We periodically review our estimates in light of changes in circumstances, facts
and experience. The effects of material revisions in estimates are reflected in our financial statements prospectively from
the date of the change in estimate.
We define our critical accounting policies as those accounting principles generally accepted in the United States that
require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material
impact on our financial condition and results of operations, as well as the specific manner in which we apply those
principles. While our significant accounting policies are more fully described in Note 2 to our financial statements
appearing elsewhere in this Annual Report, we believe the following are the critical accounting policies used in the
preparation of our financial statements that require significant judgments and estimates.
Revenue Recognition
We apply Accounting Standard Codification, or ASC, Topic 606, Revenue from Contracts with Customers, to all
contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance,
collaboration agreements and financial instruments. Under Topic 606, an entity recognizes revenue when its customer
obtains control of promised goods and services, in an amount that reflects the consideration which the entity expects to
receive in exchange for those goods and services. To determine revenue recognition for an arrangement that an entity
determines is within the scope of Topic 606, we perform the following five steps: (i) identify the contract(s) with the
customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the
transaction price to the performance obligation in the contract; and (v) recognize revenue when (or as) we satisfy a
performance obligation. We only apply the five-step model to contracts when it is probable that we will collect the
consideration we are entitled to in exchange for the goods or services we transfer to the customer. At contract inception,
once the contract is determined to be within the scope of Topic 606, we assess the goods or services promised within each
contract and identify, as a performance obligation, and assess whether each promised good or service is distinct. We then
recognize as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or
as) the performance obligation is satisfied.
We enter into licensing agreements which are within the scope of Topic 606, under which we license certain of our
product candidates’ rights to third parties. The terms of these arrangements typically include payment of one or more of the
following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments; and
royalties on net sales of the licensed product. In determining the appropriate amount of revenue to be recognized as we
fulfill our obligation under our agreements, we perform the five steps described above. As part of the accounting for
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these arrangements, we must develop assumptions that require judgment to determine the stand-alone selling price, which
may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and
probabilities of technical and regulatory success.
Licensing of Intellectual Property: If the license to our intellectual property is determined to be distinct from the
other performance obligations identified in the arrangement, we will recognize revenue from non-refundable, up-front fees
allocated to the license when the license is transferred to the licensee and the licensee 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 from non-
refundable, up-front-fees. We evaluate the measure of progress each reporting period, and, if necessary, adjust the measure
of performance and related revenue recognition.
Milestone Payments: At the inception of each arrangement that includes development milestone payments, we
evaluate whether the milestones are considered probable of being reached and estimate the amount to be included in the
transaction price using the most likely amount method. If it is probable that a significant revenue reversal will not occur,
the associated milestone value is included in the transaction price. Milestone payments that are not within our control or the
licensee’s control, such as regulatory approvals, are not considered probable of being achieved until those approvals are
received. The transaction price is then allocated to each performance obligation on a relative stand-alone selling price basis,
for which we recognize revenue as or when the performance obligations under the contract are satisfied. At the end of each
subsequent reporting period, we re-evaluate the probability of achievement of such development milestones and any related
constraint, and if necessary, adjust our estimate of the overall transaction price. Any such adjustments are recorded on a
cumulative catch-up basis, which would affect license, collaboration and other revenues and earnings in their period of
adjustment.
Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of
sales, for which the license is deemed to be the predominant item to which royalties relate, we recognize revenue at the
later of (i) when the related sales occur, or (ii) when the performance obligation to which some of all of the royalty has
been allocated has been satisfied (or partially satisfied). To date, we have not recognized any royalty revenue from our
license agreements.
Manufacturing and Supply: Our agreements may include providing clinical and commercial manufacturing products
to the counterparties. The services are generally determined to be distinct from the other promises or performance
obligations identified in the arrangement. We recognize the transaction price allocated to these services as revenue at a
point in time when transfer of control of the related products to the customer occurs.
Stock-Based Compensation
We issue stock-based compensation awards to our employees and non-employee directors, including stock options.
We measure stock-based compensation expense related to these awards based on the fair value of the award, utilizing the
Black-Scholes-Merton option pricing model, on the date of grant and recognize stock-based compensation expense on a
straight-line basis over the requisite service period of the awards, which generally equals the vesting period. We account for
forfeitures as they occur. We grant stock options with exercise prices equal to the estimated fair value of our common stock
on the date of grant. The Black-Scholes-Merton option pricing model requires the input of various assumptions that require
management to apply judgment and make assumptions and estimates, including:
Risk-Free Interest Rate—The risk-free interest rate assumption is based on observed interest rates for constant
maturity U.S. Treasury securities consistent with the expected life of our employee stock options.
Expected Term—The expected life represents the period of time the stock options are expected to be outstanding
and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the
midpoint between the vesting date and the end of the contractual term. We used the simplified method due to the lack of
sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the
stock options.
Expected Volatility— Expected volatility is based on the historical volatilities of a peer group of comparable
publicly traded companies with drug candidates in similar stages of development along with our historical volatility since
our public offering. Effective January 1, 2020, we base the expected volatility on the historical volatility of our common
stock. Prior to January 1, 2020, we utilized the historical volatilities of a peer group (e.g., several public entities of
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similar size, complexity, and stage of development), along with our historical volatility since our initial public offering, to
determine our expected volatility.
Expected Dividend Yield—We have assumed no dividend yield because we do not expect to pay dividends in the
future, which is consistent with our history of not paying dividends.
Accruals for Clinical Trial Expenses
Clinical trial costs primarily consist of expenses incurred under agreements with contract research organizations
(CROs), investigative sites, laboratory testing expenses, data management and consultants that conduct our clinical trials.
Clinical trial expenses are a significant component of research and development expenses, and we outsource a significant
portion of these clinical trial activities to third parties. The accrual for site and patient costs includes inputs such as
estimates of patient enrollment, patient cycles incurred, clinical site activations, estimated project duration and other pass-
through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical information from third
parties. Payments for these activities are based on the terms of the individual arrangements, which may differ from the
pattern of costs incurred, and are reflected on the balance sheets as prepaid assets or accrued expenses. These third-party
agreements are generally cancellable, and related costs are recorded as research and development expenses as incurred.
Except for payments made in advance of services, clinical trial costs are expensed as incurred. Non-refundable advance
clinical payments for goods or services that will be used or rendered for future research and development activities are
recorded as a prepaid asset and recognized as expense as the related goods are delivered or the related services are
performed. When evaluating the adequacy of the accrued expenses, management assessments include: (i) an evaluation by
the project manager of the work that has been completed during the period; (ii) measurement of progress prepared
internally and/or provided by the third-party service provider; (iii) analyses of data that justify the progress; and (iv) our
judgment. Significant judgments and estimates may be made in determining the accrued balances at the end of any
reporting period. Actual results could differ from the estimates made. Our historical clinical accrual estimates have not
been materially different from the actual costs. Clinical trial accruals that are due longer than one year are classified as
noncurrent accrued expenses.
Components of Operating Results
Revenue
To date, we have not generated any revenue from the sale of our drug candidates and do not expect to generate any
revenue from the sale of drugs in the near future. Substantially all of our historical revenue consisted of upfront and
milestone payments under license and collaboration agreements.
Research and Development
Research and development expenses consist of expenses incurred in performing research and development activities,
including compensation and benefits for full-time research and development employees, facilities expenses, overhead
expenses, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, fees paid to CROs and
other consultants and other outside expenses. Other preclinical research and platform programs include activities related to
exploratory efforts, target validation, lead optimization for our earlier programs and our proprietary glycomimetics
platform. Our research and development expenses have related primarily to the development of rivipansel, uproleselan and
our other drug candidates.
We do not currently utilize a formal time allocation system to capture expenses on a project-by-project basis because
we are organized and record expense by functional department and our employees may allocate time to more than one
development project. Accordingly, we only allocate a portion of our research and development expenses by functional area
and by drug candidate.
Research and development costs are expensed as incurred. Non-refundable advance payments for goods or services
to be received in the future for use in research and development activities are deferred and capitalized. The capitalized
amounts are expensed as the related goods are delivered or the services are performed.
Research and development activities are central to our business model. Drug candidates 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. We expect our research and development expenses to increase
over the next several years as we seek to progress uproleselan, GMI-1359 and our other drug candidates into and through
clinical development. However, it is difficult to determine with certainty the duration and completion costs
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of our current or future preclinical studies and clinical trials of our drug candidates, or if, when or to what extent we will
generate revenues from the commercialization and sale of any of our drug candidates that obtain regulatory approval. We
may never succeed in achieving regulatory approval for any of our drug candidates.
The duration, costs and timing of clinical trials and development of our drug candidates will depend on a variety of
factors that include:
● per patient trial costs;
● the number of patients that participate in the trials;
● the number of sites included in the trials;
● the countries in which the trial is conducted;
● the length of time required to enroll eligible patients;
● the number of doses that patients receive;
● the drop-out or discontinuation rates of patients;
● potential additional safety monitoring or other studies requested by regulatory agencies;
● the duration of patient follow-up; and
● the safety and efficacy profile of the drug candidate.
In addition, the probability of success for each drug candidate will depend on numerous factors, including
competition, manufacturing capability and commercial viability. We will determine which programs to pursue and how
much to fund each program in response to the scientific and clinical success of each drug candidate, as well as an
assessment of each drug candidate’s commercial potential.
General and Administrative
General and administrative expenses consist primarily of salaries and other related costs, including stock-based
compensation, for personnel in executive, finance, accounting, business development and human resources functions. Other
significant costs include facility costs not otherwise included in research and development expenses, legal fees relating to
patent and corporate matters and fees for accounting and consulting services. We anticipate that our general and
administrative expenses will increase in the future to support our continued research and development activities.
Interest Income
Other income consists of interest income earned on our cash and cash equivalents.
Results of Operations for the Years Ended December 31, 2020 and 2019
The following table sets forth our results of operations for the years ended December 31, 2020 and 2019.
(in thousands)
Revenue
Costs and expenses:
Research and development expense
General and administrative expense
Total costs and expenses
Loss from operations
Interest income
Net loss and comprehensive loss
Revenue
YEAR ENDED
DECEMBER 31,
2020
$ 10,163
$
2019
PERIOD-TO
PERIOD
CHANGE
— $ 10,163
44,929
16,743
61,672
(51,509)
482
47,029
14,360
61,389
(61,389)
3,497
$ (51,027) $ (57,892) $
(2,100)
2,383
283
9,880
(3,015)
6,865
During the year ended December 31, 2020, we recognized revenue of $10.2 million, all of which was the result of
payments received under our agreements with Apollomics for the development and commercialization of uproleselan
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and GMI-1687 in Greater China. In January 2020, we recognized $9.0 million in revenue from an upfront payment under
our collaboration agreement, and in September 2020, we earned a $1.0 million clinical development milestone payment.
There was no revenue recognized during the year ended December 31, 2019.
Research and Development Expense
The following table summarizes our research and development expense by functional area for the years ended
December 31, 2020 and 2019:
(in thousands)
Clinical development
Manufacturing and formulation
Contract research services, consulting and other costs
Laboratory costs
Personnel-related
Stock-based compensation
Research and development expense
YEAR ENDED
DECEMBER 31,
2019
2020
$ 11,898
$ 18,321
18,077
9,221
2,644
1,907
2,146
2,066
9,862
10,467
2,402
2,947
$ 47,029
$ 44,929
$
PERIOD-TO
PERIOD
CHANGE
6,423
(8,856)
(737)
(80)
605
545
$ (2,100)
The following table summarizes our research and development expense by drug candidate for the years ended
December 31, 2020 and 2019:
(in thousands)
Uproleselan
GMI-1359
Other research and development
Personnel-related and stock-based compensation
Research and development expense
YEAR ENDED
DECEMBER 31,
2019
2020
$ 30,033
$ 27,189
425
467
4,307
3,859
12,264
13,414
$ 47,029
$ 44,929
PERIOD-TO
PERIOD
CHANGE
$ (2,844)
42
(448)
1,150
$ (2,100)
Research and development expense decreased by $2.1 million, or 4.5%, to $44.9 million for the year ended
December 31, 2020 from $47.0 million for the year ended December 31, 2019. Clinical development expenses increased by
$6.4 million, primarily as a result of increased clinical costs related to our ongoing global Phase 3 clinical trial of
uproleselan in individuals with relapsed/refractory AML and the Phase 2/3 clinical trial being conducted by the NCI.
Personnel-related and stock-based compensation expenses increased due to annual salary adjustments awarded in the first
quarter of 2020, retention bonuses and additional stock awards issued in 2020. These increases were offset in part by a $8.9
million decrease in manufacturing and formulation primarily due to lower raw material purchases in 2020 as compared to
2019.
General and Administrative Expense
The following table sets forth the components of our general and administrative expense for the years ended
December 31, 2020 and 2019:
(in thousands)
Personnel-related
Stock-based compensation
Legal, consulting and other professional expenses
Other
General and administrative expense
YEAR ENDED
DECEMBER 31,
2019
2020
$ 4,783
$ 6,275
3,813
3,955
4,849
5,819
915
694
$ 14,360
$ 16,743
$
PERIOD-TO
PERIOD
CHANGE
1,492
142
970
(221)
2,383
$
General and administrative expense increased for the year ended December 31, 2020 by $2.4 million, or 17%,
compared to 2019 primarily due to an increase in personnel-related costs, stock-based compensation expense, legal and
patent expenses and other professional fees. Personnel-related and stock-based compensation expenses increased by $1.6
million due to additional general and administrative headcount, annual salary adjustments awarded in the first quarter of
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2020 and retention bonuses. Patent, legal fees, consulting and other professional expenses increased by $970,000 for the
year ended December 31, 2020 as compared to December 31, 2019 due to a significant increase in the cost of directors,
officers and corporate liability insurance in 2020. Other expenses decreased by $221,000 as compared to the prior year due
to lower travel, meals and conference registration expenses as a result of travel restrictions due to the COVID-19 pandemic.
Interest Income
During the year ended December 31, 2020, interest income decreased by $3.0 million, or 86%, compared to the same
period in 2019, due to lower average cash balances and lower interest rates on those balances.
Liquidity and Capital Resources
Sources of Liquidity
We have historically financed our operations primarily through public offerings and private placements of our capital
stock, including sales agreements with Cowen, and upfront and milestone payments from our license and collaboration
agreements. As of December 31, 2020, we had $137.0 million in cash and cash equivalents.
In March 2018, we completed a public offering in which we sold 8,050,000 shares of our common stock at a price to
the public of $17.00 per share. We received net proceeds of $128.4 million from this offering, after deducting underwriting
discounts, commissions and other offering expenses.
In September 2017, we entered into an at-the-market sales agreement with Cowen, or the 2017 Sales Agreement,
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 $100.0 million through Cowen acting as our sales agent. The shares were registered under
a shelf registration statement filed with the U.S. Securities and Exchange Commission in September 2017. During the year
ended December 31, 2017, we sold an aggregate of 1,600,000 shares of our common stock under the 2017 Sales Agreement
for net proceeds of $19.3 million. There were no shares sold under the 2017 Sales Agreement during the years ended
December 31, 2018 or 2019. During the year ended December 31, 2020, we sold an additional 4,136,742 shares of common
stock under the 2017 Sales Agreement at a weighted average price per share of $3.52, for aggregate net proceeds of $14.1
million, after deducting commissions and offering expenses. The shelf registration statement, under which the shares that
could be sold under the 2017 Sales Agreement were registered expired on October 6, 2020.
In October 2020, we filed a prospectus supplement to a new shelf registration statement that we filed in May 2019
and entered into a new at-the-market sales agreement, or the 2020 Sales Agreement, with Cowen. Under the 2020 Sales
Agreement, we may sell up to $100.0 million of our common stock registered under the shelf registration statement that we
filed in May 2019. The 2020 Sales Agreement replaces the 2017 Sales Agreement between us and Cowen, and the $100.0
million that may be sold under the 2020 Sales Agreement excludes any amounts that were sold under the 2017 Sales
Agreement. During the year ended December 31, 2020, we sold 1,024,760 shares of common stock under the 2020 Sales
Agreement at a weighted average price of $3.74, for aggregate net proceeds of $3.7 million, after deducting commissions
and offering expenses. Subsequent to December 31, 2020 and through February 26, 2021, we sold an additional 2,475,949
shares of common stock under the 2020 Sales Agreement at a weighted average price of $3.92, for aggregate net proceeds
of $9.4 million, after deducting commissions and offering expenses.
We entered into a collaboration and license agreement with Apollomics in January 2020 and are potentially eligible
to earn milestone payments and royalties under that agreement. In January 2020, Apollomics made an upfront payment to
us of $9.0 million. We also received a non-refundable payment of $1.0 million in September 2020 as a clinical development
milestone payment. Our ability to earn additional milestone payments and potential royalty payments and their timing will
be dependent upon the outcome of Apollomics’ activities and is therefore uncertain at this time.
Funding Requirements
Our primary uses of capital are, and we expect will continue to be, compensation and related expenses, third-party
clinical research and development services, laboratory and related supplies, clinical costs, legal and other regulatory
expenses and general overhead costs.
The successful development of any of our drug candidates is highly uncertain. As such, at this time, we cannot
reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the remainder
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of the development of uproleselan or our other drug candidates. We are also unable to predict when, if ever, material net
cash inflows will commence from uproleselan or our other drug candidates. This is due to the numerous risks and
uncertainties associated with developing drugs, including the uncertainty of:
●
●
●
●
●
●
successful enrollment in, and completion of, clinical trials;
receipt of marketing approvals from applicable regulatory authorities;
establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;
obtaining and maintaining patent and trade secret protection and regulatory exclusivity for drug candidates;
launching commercial sales of drugs, if and when approved, whether alone or in collaboration with others; and
obtaining and maintaining healthcare coverage and adequate reimbursement.
A change in the outcome of any of these variables with respect to the development of any of our drug candidates
would significantly change the costs and timing associated with the development of that drug candidate. Because our drug
candidates are in various stages of clinical and preclinical development and the outcome of these efforts is uncertain, we
cannot estimate the actual amounts necessary to successfully complete the development and commercialization of our drug
candidates or whether, or when, we may achieve profitability. Until such time, if ever, as we can generate substantial
product revenues, we expect to finance our cash needs through a combination of equity or debt financings and collaboration
arrangements, including our existing license agreement with Apollomics. Except for Apollomics’ obligation to make
milestone and royalty payments under our license agreement, we do not have any committed external source of liquidity.
To the extent that we raise additional capital through the future sale of equity or debt, the ownership interest of our
stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely
affect the rights of our existing common stockholders. If we raise additional funds through the issuance of convertible debt
securities, these securities could contain covenants that would restrict our operations.
We may require additional capital beyond our currently anticipated amounts. Additional capital may not be available
on reasonable terms, or at all. If we raise additional funds through collaboration arrangements in the future, we may have to
relinquish valuable rights to our drug candidates or grant licenses on terms that may not be favorable to us. If we are unable
to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, reduce or
terminate our drug development or future commercialization efforts or grant rights to develop and market drug candidates
that we would otherwise prefer to develop and market ourselves.
Outlook
Based on our research and development plans and our timing expectations related to the progress of our programs,
we expect that our existing cash and cash equivalents will enable us to fund our operating expenses and capital expenditure
requirements into the fourth quarter of 2022. We have based this estimate on assumptions that may prove to be wrong, and
we could use our capital resources sooner than we expect. Additionally, the process of testing drug candidates in clinical
trials is costly, and the timing of progress in these trials is uncertain.
Cash Flows
The following table summarizes our cash flows for the years ended December 31, 2020, 2019 and 2018.
(in thousands)
Net cash provided by (used in):
Operating activities
Investing activities
Financing activities
Net change in cash and cash equivalents
YEAR ENDED DECEMBER 31,
2018
2019
2020
$ (39,242) $ (51,984) $ (43,331)
(126)
(68)
18,144
129,450
$ (21,166) $ (51,716) $ 85,993
(145)
413
In assessing cash used in operating activities, we consider several principal factors: (i) net loss for the period; (ii)
adjustments for non-cash charges including stock-based compensation expense and depreciation and amortization of
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property and equipment; and (iii) the extent to which receivables, accounts payable and other liabilities, or other working
capital components increase or decrease.
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Operating Activities
Net cash used in operating activities was $39.2 million during the year ended December 31, 2020 compared to $52.0
million during the year ended December 31, 2019. For the year ended December 31, 2020, we received $10.2 million in
revenue under our agreements with Apollomics for the development and commercialization of uproleselan and GMI-1687
in Greater China. In contrast, we did not receive any such payments in the year ended December 31, 2019. In addition,
there was an increase in clinical development expenses as a result of ongoing costs associated with our uproleselan clinical
development programs in our global Phase 3 clinical trial and the NCI-sponsored Phase 2/3 trial.
Investing Activities
Net cash used in investing activities, consisting of purchases of scientific equipment and computers, was $68,000 for
the year ended December 31, 2020 compared to $145,000 during the year ended December 31, 2019.
Financing Activities
Net cash provided by financing activities of $18.1 million during the year ended December 31, 2020 consisted of the
net proceeds received from our at-the-market facility with Cowen of $17.8 million and $319,000 in proceeds from stock
option exercises. Net cash provided by financing activities of $413,000 during the year ended December 31, 2019 consisted
of proceeds from stock option exercises.
Contractual Obligations
As of December 31, 2020, our significant contractual obligations consisted solely of rent obligations under a non-
cancelable lease, as amended, for our current office space in Rockville, Maryland, which has a term through October 2023.
Total remaining obligations under this lease as of December 31, 2020 were $3.1 million.
We have also entered into various agreements for services with third-party vendors, including agreements to conduct
clinical trials, to manufacture products, and for consulting and other contracted services. These agreements include
cancellable terms and we accrue the costs of these agreements based on estimates of work completed to date.
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 SEC rules.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The market risk inherent in our financial instruments and in our financial position represents the potential loss arising
from adverse changes in interest rates. As of December 31, 2020 and 2019, we had cash and cash equivalents of $137.0
million and $158.2 million, respectively. We generally hold our cash in interest-bearing money market accounts. Our
primary exposure to market risk is interest rate sensitivity, which is affected by changes in the general level of U.S. interest
rates. Due to the short-term maturities of our cash equivalents and the low risk profile of our investments, an immediate
100 basis point change in interest rates would not have a material effect on the fair market value of our cash equivalents.
ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The financial statements and related financial statement schedules required to be filed are listed in Part IV, Item 15 of
this Form 10-K.
ITEM 9.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
None.
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ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Under the supervision of and with the participation of our management, including our chief executive officer, who is
our principal executive officer, and our chief financial officer, who is our principal financial officer, we conducted an
evaluation of the effectiveness of our disclosure controls and procedures as of December 31, 2020, the end of the period
covered by this Annual Report. The term “disclosure controls and procedures,” as set forth in Rules 13a-15(e) and 15d-
15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures
of a company that are designed to provide reasonable assurance that information required to be disclosed by a company in
the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time
periods specified in the rules and forms promulgated by the SEC. Disclosure controls and procedures include, without
limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports
that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including
its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required
disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can
provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in
evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure
controls and procedures as of December 31, 2020, our chief executive officer and chief financial officer concluded that, as
of such date, our disclosure controls and procedures were effective at the reasonable assurance level.
Management’s Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public
Accounting Firm
Our management is responsible for establishing and maintaining an adequate system of internal control over financial
reporting, as defined in the Exchange Act Rule 13a-15(f). Management conducted an assessment of our internal control
over financial reporting based on the original framework established in 2013 by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control—Integrated Framework. Based on the assessment,
management concluded that, as of December 31, 2020, our internal control over financial reporting was effective.
This Annual Report does not include an attestation report of our registered public accounting firm regarding the
effectiveness of internal control over financial reporting as required by Section 404(b) of the Sarbanes-Oxley Act of 2002.
Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of
the SEC that permit smaller reporting companies to provide only management’s report in this Annual Report.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting identified in connection with the evaluation
required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended December 31, 2020
that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
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PART III
We will file a definitive proxy statement for our 2021 annual meeting of stockholders, or the 2021 Proxy Statement,
with the SEC, pursuant to Regulation 14A, not later than 120 days after the end of our fiscal year. Accordingly, certain
information required by Part III has been omitted under General Instruction G(3) to Form 10-K. Only those sections of the
2021 Proxy Statement that specifically address the items set forth herein are incorporated by reference.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by Item 10 is hereby incorporated by reference to the relevant information to be included in
the 2021 Proxy Statement under the captions “Information Regarding the Board of Directors and Corporate Governance,”
“Election of Directors” and “Executive Officers.”
ITEM 11. EXECUTIVE COMPENSATION
The information required by Item 11 is hereby incorporated by reference to the relevant information to be included in
the 2021 Proxy Statement under the captions “Executive Compensation” and “Non-Employee Director Compensation.”
ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The information required by Item 12 is hereby incorporated by reference to the relevant information to be included in
the 2021 Proxy Statement under the captions “Security Ownership of Certain Beneficial Owners and Management” and
“Securities Authorized for Issuance under Equity Compensation Plans.”
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The information required by Item 13 is hereby incorporated by reference to the relevant information to be included in
the 2021 Proxy Statement under the captions “Transactions with Related Persons” and “Independence of the Board of
Directors.”
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The information required by Item 14 is hereby incorporated by reference to the relevant information to be included in
the 2021 Proxy Statement under the caption “Ratification of Selection of Independent Auditors.”
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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
(a) The following documents are filed as part of this Annual Report on Form 10-K:
(1) Financial Statements:
PART IV
Report of Ernst & Young LLP, Independent Registered Public Accounting Firm
Balance Sheets
Statements of Operations and Comprehensive Loss
Statements of Stockholders’ Equity
Statements of Cash Flows
Notes to Financial Statements
74
76
77
78
79
80
(2) Financial Statement Schedules:
All financial statement schedules have been omitted because they are not applicable, not required or the
information required is shown in the financial statements or the notes thereto.
(3) Exhibits
Exhibit
Number
3.1(1)
3.2(2)
4.1(3)
4.2(4)
Description of Document
Amended and Restated Certificate of Incorporation.
Amended and Restated Bylaws.
Specimen stock certificate evidencing shares of Common Stock.
Description of Certain of Registrant’s Securities.
10.1+(5)
2003 Stock Incentive Plan, as amended.
10.2+(6)
Form of Incentive Stock Option Agreement under 2003 Stock Incentive Plan.
10.3+(7)
Form of Nonqualified Stock Option Agreement under 2003 Stock Incentive Plan.
10.4+(8)
2013 Equity Incentive Plan.
10.5+(9)
Form of Stock Option Grant Notice and Stock Option Agreement under 2013 Equity Incentive Plan.
10.6+(10)
Form of Restricted Stock Unit Grant Notice and Restricted Stock Unit Award Agreement under 2013
Equity Incentive Plan.
10.7+(11)
2013 Employee Stock Purchase Plan.
10.8+(12)
Form of Indemnification Agreement.
10.9+(13)
Amended and Restated Executive Employment Agreement, dated as of July 30, 2019, by and between the
Registrant and Rachel King.
10.10+(14) Amended and Restated Executive Employment Agreement, dated as of July 30, 2019, by and between the
Registrant and Brian Hahn.
10.11+(15) Amended and Restated Executive Employment Agreement, dated as of July 30, 2019, by and between the
Registrant and John Magnani.
10.12+(16) Amended and Restated Executive Employment Agreement, dated as of July 30, 2019, by and between the
Registrant and Helen Thackray.
10.13+(17) Amended and Restated Executive Employment Agreement, dated as of July 30, 2019, by and between the
Registrant and Armand Girard.
10.14+(18) Amended and Restated Non-Employee Director Compensation Policy.
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Exhibit
Number
10.15(19)
Lease Agreement, dated July 23, 2014, by and between the Registrant and BMR-Medical Center Drive,
LLC.
Description of Document
10.16(20)
Sales Agreement, dated October 7, 2020 by and between the Registrant and Cowen and Company, LLC.
10.17(21)
First Amendment to Lease, dated March 24, 2016, by and between the Registrant and BMR-Medical
Center Drive LLC.
10.18*(22)
Collaboration and License Agreement, dated January 2, 2020, by and between the Registrant and
Apollomics (Hong Kong) Limited.
10.19+(23) GlycoMimetics, Inc. Inducement Plan.
10.20+(24)
Form of Stock Option Grant Notice and Stock Option Agreement under the GlycoMimetics, Inc.
Inducement Plan.
23.1
24.1
31.1
31.2
32.1ᶺ
Consent of Ernst & Young LLP, independent registered public accounting firm.
Power of Attorney (contained on signature page hereto).
Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) promulgated 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) promulgated 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 and Principal Financial Officer pursuant to Rules 13a-14(b) and
15d-14(b) promulgated under the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350, as adopted
pursuant to section 906 of The Sarbanes-Oxley Act of 2002.
101.INS
XBRL Instance Document (the instance document does not appear in the Interactive Data File because its
XBRL tags are embedded within the Inline XBRL document)
101.SCH
Inline XBRL Taxonomy Extension Schema Document
101.CAL
Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE
Inline XBRL Taxonomy Extension Presentation Linkbase Document
104
ᶺ
+
*
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)
These certifications are being furnished solely to accompany this Annual Report pursuant to 18 U.S.C. Section 1350,
and are not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and are not to
be incorporated by reference into any filing of the registrant, whether made before or after the date hereof, regardless
of any general incorporation language in such filing.
Indicates management contract or compensatory plan.
Certain portions of this exhibit (indicated by asterisks) have been omitted because they are not material and would
likely cause competitive harm to the registrant if publicly disclosed.
(1) Previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with the
Commission on January 15, 2014, and incorporated by reference herein.
(2) Previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with the
Commission on January 15, 2014, and incorporated by reference herein.
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(3) Previously filed as Exhibit 4.2 to Amendment No. 2 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 31, 2013, and incorporated by reference herein.
(4) Previously filed as Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with the
Commission on February 28, 2020, and incorporated by reference herein.
(5) Previously filed as Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filed
with the Commission on October 4, 2013, and incorporated by reference herein.
(6) Previously filed as Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filed
with the Commission on October 4, 2013, and incorporated by reference herein.
(7) Previously filed as Exhibit 10.10 to the Registrant’s Registration Statement on Form S-1 (File No. 333-191567), filed
with the Commission on October 4, 2013, and incorporated by reference herein.
(8) Previously filed as Exhibit 10.11 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.
(9) Previously filed as Exhibit 10.12 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.
(10) Previously filed as Exhibit 10.13 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.
(11) Previously filed as Exhibit 10.14 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.
(12) Previously filed as Exhibit 10.15 to Amendment No. 1 to the Registrant’s Registration Statement on Form S-1
(File No. 333-191567), filed with the Commission on October 28, 2013, and incorporated by reference herein.
(13) Previously filed as Exhibit 10.2 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(14) Previously filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(15) Previously filed as Exhibit 10.4 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(16) Previously filed as Exhibit 10.5 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(17) Previously filed as Exhibit 10.6 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(18) Previously filed as Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-36177), filed with
the Commission on August 1, 2019, and incorporated by reference herein.
(19) Previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with the
Commission on July 28, 2014, and incorporated by reference herein.
(20) Previously filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with the
Commission on October 7, 2020, and incorporated by reference herein.
(21) Previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-36177), filed with the
Commission on March 29, 2016, and incorporated by reference herein.
(22) Previously filed as Exhibit 10.20 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with the
Commission on February 28, 2020, and incorporated by reference herein.
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(23) Previously filed as Exhibit 10.21 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with the
Commission on February 28, 2020, and incorporated by reference herein.
(24) Previously filed as Exhibit 10.22 to the Registrant’s Annual Report on Form 10-K (File No. 001-36177), filed with the
Commission on February 28, 2020, and incorporated by reference herein.
ITEM 16. FORM 10-K SUMMARY
Not applicable.
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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
GLYCOMIMETICS, INC.
By: /s/ Rachel K. King
Rachel K. King
President and Chief Executive Officer
March 2, 2021
KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and
appoints Rachel K. King and Brian M. Hahn, jointly and severally, as his or her true and lawful attorneys-in-fact and
agents, with full power of substitution and resubstitution, for him or her and in his or her name, place and stead, in any and
all capacities, to sign this Annual Report on Form 10-K of GlycoMimetics, Inc., and any or all amendments thereto, and to
file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents full power and authority to do and perform each and every act
and thing requisite or necessary to be done in and about the premises hereby ratifying and confirming all that said
attorneys-in-fact and agents, or his, her or their substitute or substitutes, may lawfully do or cause to be done by virtue
hereof.
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 and in the capacities and on the dates indicated.
Signature
/s/ Rachel K. King
Rachel K. King
/s/ Brian M. Hahn
Brian M. Hahn
Title
President, Chief Executive Officer and Director
(Principal Executive Officer)
Date
March 2, 2021
Chief Financial Officer
(Principal Financial Officer and Principal
Accounting Officer)
March 2, 2021
/s/ Patricia S. Andrews
Patricia S. Andrews
/s/ Mark A. Goldberg M.D.
Mark A. Goldberg M.D.
/s/ Scott T. Jackson
Scott T. Jackson
/s/ Daniel M. Junius
Daniel M. Junius
/s/ Scott Koenig, M.D., Ph.D.
Scott Koenig, M.D., Ph.D.
/s/ Timothy Pearson
Timothy Pearson
Director
Director
Director
Director
Director
Director
72
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
March 2, 2021
Table of Contents
INDEX TO FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Balance Sheets as of December 31, 2020 and 2019
Statements of Operations and Comprehensive Loss for the years ended December 31, 2020, 2019 and 2018
Statements of Stockholders’ Equity for the years ended December 31, 2020, 2019 and 2018
Statements of Cash Flows for the years ended December 31, 2020, 2019 and 2018
Notes to Financial Statements
74
76
77
78
79
80
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of GlycoMimetics, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of GlycoMimetics, Inc. (the Company) as of December 31, 2020 and
2019, the related statements of operations and comprehensive loss, stockholders’ equity and cash flows for each of the
three years in the period ended December 31, 2020, and the related notes (collectively referred to as the “financial
statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the
Company at December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the three years in
the period ended December 31, 2020, in conformity with U.S. generally accepted accounting principles.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement,
whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control
over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal
control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test
basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of
the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
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: (1) relates to accounts or
disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex
judgments. The communication of the critical audit matter 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 account or disclosure to which it relates.
Accrued Clinical Trial Expenses
Description of the
Matter
As discussed in Note 2 to the financial statements, the Company records costs for clinical trial
activities based upon estimates of costs incurred through the balance sheet date that have yet
to be invoiced by the contract research organizations, investigative sites, and other consultants.
The Company’s accrued expenses of $9.4 million at December 31, 2020 include accrued
clinical trial expenses, and the Company’s research and development costs and expenses of
$44.9 million for the year ended December 31, 2020 include 2020 clinical trial expenses.
Auditing the Company’s accruals for clinical trials was challenging due to the multiple sources
of information used to evaluate the Company’s estimated accruals. In addition, in certain
circumstances, the determination of the work that has been completed and measurement of
progress during the reporting period required judgment because the timing and pattern of
vendor invoicing may not correspond to the level of services provided and there may be delays
in receiving clinical information from investigative sites and other consultants.
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How We Addressed
the Matter in Our
Audit
To evaluate the accrual for clinical expenses, our audit procedures included, among others,
reading certain contracts with contract research organizations and clinical study sites to
evaluate financial and certain other contractual terms, testing the completeness and accuracy
of the underlying data used in the estimates, and evaluating the significant assumptions. For
example, we evaluated patient enrollment, patient cycles incurred, clinical site activations,
estimated project duration, and other pass-through costs, that are used by management to
estimate the recorded accruals. We assessed the reasonableness of the significant assumptions.
For example, we corroborated the progress of clinical trials with the Company’s clinical team
and inspected information from third parties related to active patient sites and currently
enrolled patients. We also examined subsequent invoices from the service providers and cash
disbursements to the service providers, to the extent such invoices were received, or payments
were made prior to the date that the consolidated financial statements were issued.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2011.
Baltimore, Maryland
March 2, 2021
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GLYCOMIMETICS, INC.
Balance Sheets
Assets
Current assets:
Cash and cash equivalents
Prepaid expenses and other current assets
Total current assets
Property and equipment, net
Prepaid research and development expenses
Deposits
Operating lease right-of-use asset
Total assets
Liabilities & stockholders’ equity
Current liabilities:
Accounts payable
Accrued expenses
Operating lease liabilities
Total current liabilities
Noncurrent accrued expenses
Noncurrent operating lease liabilities
Total liabilities
Stockholders’ equity:
Preferred stock; $0.001 par value; 5,000,000 shares authorized, no shares issued
and outstanding at December 31, 2020 and December 31, 2019
Common stock; $0.001 par value; 100,000,000 shares authorized; 49,017,622
shares issued and outstanding at December 31, 2020; 43,466,933 shares issued
and outstanding at December 31, 2019
Additional paid-in capital
Accumulated deficit
Total stockholders’ equity
Total liabilities and stockholders’ equity
See accompanying notes.
76
December 31,
2020
2019
$ 137,035,017
1,238,328
138,273,345
620,673
1,560,607
52,320
2,325,224
$ 142,832,169
$ 158,201,441
4,326,322
162,527,763
822,920
1,560,607
52,320
3,006,069
$ 167,969,679
$
$
2,089,939
9,439,881
898,549
12,428,369
264,329
1,920,015
14,612,713
1,435,660
8,710,790
804,126
10,950,576
—
2,818,516
13,769,092
—
—
49,018
437,639,991
(309,469,553)
128,219,456
$ 142,832,169
43,465
412,599,772
(258,442,650)
154,200,587
$ 167,969,679
Table of Contents
GLYCOMIMETICS, INC.
Statements of Operations and Comprehensive Loss
Revenue
Costs and expenses:
Research and development expense
General and administrative expense
Total costs and expenses
Loss from operations
Interest income
Net loss and comprehensive loss
Basic and diluted net loss per common share
Basic and diluted weighted-average number of common shares
See accompanying notes.
77
2020
$ 10,162,935
Year Ended December 31,
2019
2018
$
— $
—
44,929,198
16,743,127
61,672,325
(51,509,390)
482,487
47,029,264
14,360,038
61,389,302
(61,389,302)
3,497,391
40,091,773
11,413,050
51,504,823
(51,504,823)
3,231,190
$ (51,026,903) $ (57,891,911) $ (48,273,633)
(1.18)
$
41,044,621
45,721,139
43,254,782
(1.12) $
(1.34) $
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GLYCOMIMETICS, INC.
Statements of Stockholders’ Equity
Balance at December 31, 2017
Issuance of common stock, net of issuance costs
Exercise of options and warrants and vesting of
restricted stock units
Stock-based compensation
Net loss
Balance at December 31, 2018
Exercise of options and vesting of restricted stock units
Stock-based compensation
Net loss
Balance at December 31, 2019
Issuance of common stock, net of issuance costs
Exercise of options and vesting of restricted stock units
Stock-based compensation
Net loss
Common Stock
Shares
34,359,799
8,050,000
Amount
$ 34,358
8,050
Additional
Paid-In
Capital
$ 271,944,173
128,417,030
Accumulated
Deficit
Total
Stockholders’
Equity
$ (152,277,106) $ 119,701,425
— 128,425,080
750,952
—
—
751
—
—
1,023,774
4,587,098
—
43,160,751
306,182
43,466,933
5,161,502
389,187
43,159
306
—
—
43,465
5,163
390
—
—
—
—
—
—
405,972,075
412,607
6,215,090
—
412,599,772
17,819,554
318,907
6,901,758
—
—
—
—
—
(48,273,633)
(200,550,739)
1,024,525
4,587,098
(48,273,633)
205,464,495
412,913
6,215,090
(57,891,911)
154,200,587
17,824,717
319,297
6,901,758
(51,026,903)
$ (309,469,553) $ 128,219,456
(57,891,911)
(258,442,650)
—
—
—
(51,026,903)
Balance at December 31, 2020
49,017,622
$ 49,018
$ 437,639,991
See accompanying notes.
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GLYCOMIMETICS, INC.
Statements of Cash Flows
Operating activities
Net loss
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation
Loss on disposal of property and equipment
Non-cash lease expense
Stock-based compensation expense
Changes in assets and liabilities:
Prepaid expenses and other current assets
Prepaid research and development expenses
Accounts payable
Accrued expenses
Noncurrent accrued expenses
Deferred rent
Operating lease liabilities
Net cash used in operating activities
Investing activities
Purchases of property and equipment
Net cash used in investing activities
2020
Year Ended December 31,
2019
2018
$ (51,026,903)
$ (57,891,911)
$ (48,273,633)
270,754
—
680,845
6,901,758
279,234
—
620,068
6,215,090
275,123
168
—
4,587,098
3,087,994
(2,059,260)
—
—
654,279
729,091
264,329
—
(804,078)
(39,241,931)
(1,227,919)
2,709,986
—
—
(629,427)
(51,984,139)
943,360
(1,356,243)
16,488
551,146
—
(74,637)
—
(43,331,130)
(68,507)
(68,507)
(144,928)
(144,928)
(125,618)
(125,618)
Financing activities
Proceeds from issuance of common stock, net of issuance costs
Proceeds from exercise of stock options
Net cash provided by financing activities
Net change in cash and cash equivalents
Cash and cash equivalents, beginning of period
Cash and cash equivalents, end of period
17,824,717
319,297
18,144,014
(21,166,424)
158,201,441
$ 137,035,017
412,913
412,913
(51,716,154)
209,917,595
$ 158,201,441
— 128,425,080
1,024,525
129,449,605
85,992,857
123,924,738
$ 209,917,595
See accompanying notes.
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GLYCOMIMETICS, INC.
Notes to Financial Statements
1. Description of the Business
GlycoMimetics, Inc. (the Company), a Delaware corporation headquartered in Rockville, Maryland, was
incorporated in 2003. The company is a clinical stage biotechnology company focused on the discovery and development
of novel glycomimetic drugs to address unmet medical needs resulting from diseases in which carbohydrate biology plays a
key role. Glycomimetics are molecules that mimic the structure of carbohydrates involved in important biological
processes. Using its expertise in carbohydrate chemistry and knowledge of carbohydrate biology, the Company is
developing a pipeline of proprietary glycomimetics that inhibit disease-related functions of carbohydrates, such as the roles
they play in inflammation, cancer and infection.
The Company’s executive personnel have devoted substantially all of their time to date to the planning and
organization of the Company, the process of hiring scientists, initiating research and development programs and securing
adequate capital for anticipated growth and operations. The Company has not commercialized any of its drug candidates
and planned commercial operations have not commenced. The Company has incurred significant losses in the development
of its drug candidates. The Company has not generated revenues from product sales. As a result, the Company has
consistently reported negative cash flows from operating activities and net losses, had an accumulated deficit of $309.5
million at December 31, 2020 and expects to continue incurring losses for the foreseeable future.
2. Summary of Significant Accounting Policies
Basis of Accounting
The accompanying financial statements were prepared based on the accrual method of accounting in accordance with
U.S. generally accepted accounting principles (GAAP).
Segment Information
Operating segments are defined as components of an enterprise about which separate discrete information is available
for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and
in assessing performance. The Company views its operations and manages its business in one segment, which is the
identification and development of glycomimetic compounds.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses during the reporting periods. Although actual
results could differ from those estimates, management does not believe that such differences would be material.
Cash and Cash Equivalents
Cash and cash equivalents consist of investment in money market funds with commercial banks and financial
institutions. The Company considers all investments in highly liquid financial instruments with an original maturity of three
months or less at the date of purchase to be cash equivalents. Cash equivalents are stated at amortized cost, plus accrued
interest, which approximates fair value.
Fair Value Measurements
The Company’s financial instruments include cash and cash equivalents. The fair values of the financial instruments
approximated their carrying values at December 31, 2020 and 2019, due to their short-term maturities. The Company
accounts for recurring and nonrecurring fair value measurements in accordance with ASC 820, Fair Value Measurements.
ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires
expanded disclosures about fair value measurements. The ASC hierarchy ranks the quality of
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reliability of inputs, or assumptions, used in the determination of fair value, and requires assets and liabilities carried at fair
value to be classified and disclosed in one of the following three categories:
● Level 1—Fair value is determined by using unadjusted quoted prices that are available in active markets for
identical assets and liabilities.
● Level 2—Fair value is determined by using inputs, other than Level 1 quoted prices, that are directly and
indirectly observable. Inputs can include quoted prices for similar assets and liabilities in active markets or
quoted prices for identical assets and liabilities in inactive markets. Related inputs can also include those used in
valuation or other pricing models that can be corroborated by observable market data.
● Level 3—Fair value is determined by inputs that are unobservable and not corroborated by market data. Use of
these inputs involves significant and subjective judgments to be made by a reporting entity. In instances where
the determination of the fair value measurement is based on inputs from different levels of fair value hierarchy,
the fair value measurement will fall within the lowest level input that is significant to the fair value measurement
in its entirety.
The Company periodically evaluates financial assets and liabilities subject to fair value measurements to determine
the appropriate level at which to classify them each reporting period. This determination requires the Company to make
subjective judgments as to the significance of inputs used in determining fair value and where such inputs lie within the
ASC 820 hierarchy.
The Company had no assets or liabilities that were measured using quoted prices for similar assets and liabilities or
significant unobservable inputs (Level 2 and Level 3 assets and liabilities, respectively) either on a recurring or non-
recurring basis as of December 31, 2020 and 2019. The carrying value of cash held in money market funds of
approximately $135.0 million and $156.2 million as of December 31, 2020 and 2019, respectively, is included in cash and
cash equivalents and approximates market values based on quoted market prices (Level 1 inputs).
Concentration of Credit Risk
Credit risk represents the risk that the Company would incur a loss if counterparties failed to perform pursuant to the
terms of their agreements. Financial instruments that potentially expose the Company to concentrations of credit risk
consist primarily of cash and cash equivalents. Cash and cash equivalents consist of investment in money market funds
with major financial institutions in the United States. These deposits and funds may be redeemed upon demand and,
therefore, bear minimal risk. The Company does not anticipate any losses on such balances.
Property and Equipment
Property and equipment are recorded at cost and depreciated on a straight-line basis over estimated useful lives
ranging from three to seven years. Upon retirement or disposition of assets, the costs and related accumulated depreciation
are removed from the accounts and any resulting gain or loss is included in the results of operations. Expenditures for
repairs and maintenance are charged to operations as incurred; major replacements that extend the useful life are
capitalized. Depreciation and amortization are computed using the straight-line method over the following estimated useful
lives:
Furniture and fixtures
Laboratory equipment
Office equipment
Computer equipment
Computer software
Leasehold improvements
Impairment of Long-Lived Assets
ESTIMATED USEFUL LIVES
7 years
5 years
5 years
5 years
3 years
Shorter of lease term or useful life
The Company periodically assesses the recoverability of the carrying value of its long-lived assets in accordance with
the provisions of ASC 360, Property, Plant, and Equipment. ASC 360 requires that long-lived assets and certain
identifiable intangible assets be reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of
the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the
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carrying value exceeds the sum of undiscounted cash flows, the Company then determines the fair value of the underlying
asset. Any impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the
estimated fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value,
less costs to sell. As of December 31, 2020 and 2019, the Company determined that there were no impaired assets and it
had no assets held for sale.
Revenue Recognition
The Company applies Accounting Standards Codification, or ASC, Topic 606, Revenue from Contracts with
Customers (Topic 606), to all contracts with customers, except for contracts that are within the scope of other standards,
such as leases, insurance, collaboration arrangements and financial instruments. Under Topic 606, an entity recognizes
revenue when its customer obtains control of promised goods or services in an amount that reflects the consideration which
the entity expects to receive in exchange for those goods and services. To determine revenue recognition for arrangements
that an entity determines are within the scope of Topic 606, the entity performs the following five steps: (i) identify the
contract(s) with the customer(s); (ii) identify the performance obligations in the contract; (iii) determine the transaction
price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or
as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is
probable that the entity will collect the consideration it is entitled to in exchange for the goods and services it transfers to
the customer. At contract inception, the Company assesses the goods or services promised within each contract that falls
under the scope of Topic 606, determines those that are performance obligations and assesses whether each promised good
or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the
respective performance obligation when (or as) the performance obligation is satisfied.
The Company enters into licensing agreements which are within the scope of Topic 606, under which it licenses
certain of its drug candidates’ rights to third parties. The terms of these arrangements typically include payment of one or
more of the following: non-refundable, up-front license fees; development, regulatory and commercial milestone payments;
and royalties on net sales of the licensed product, if and when earned. See Note 10 for additional information regarding a
license agreement entered into during the year ended December 31, 2020.
In determining the appropriate amount of revenue to be recognized as it fulfills its obligation under each of its
agreements, the Company performs the five steps under Topic 606 described above. As part of the accounting for these
arrangements, the Company must develop assumptions that require judgment to determine the stand-alone selling price,
which may include forecasted revenues, development timelines, reimbursement of personnel costs, discount rates and
probabilities of technical and regulatory success.
Licensing of Intellectual Property: If the 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 from non-
refundable, up-front fees allocated to the license when the license is transferred to the licensee and the licensee 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 from non-refundable, up-front fees. The Company evaluates the measure of progress each reporting
period, and, if necessary, adjusts the measure of performance and related revenue recognition.
Milestone Payments: At the inception of each arrangement that includes development milestone payments, the
Company evaluates whether the milestones are considered probable of being reached and estimates the amount to be
included in the transaction price using the most likely amount method. If it is probable that a significant revenue reversal
will not occur, the associated milestone value is included in the transaction price. Milestone payments that are not within
the control of the Company or the licensee, such as regulatory approvals, are not considered probable of being achieved
until those approvals are received. The transaction price is then allocated to each performance obligation on a relative
stand-alone selling price basis, for which the Company recognizes revenue as or when the performance obligations under
the contract are satisfied. At the end of each subsequent reporting period, the Company re-evaluates the probability of
achievement of such development milestones and any related constraint and, if necessary, adjusts its estimate of the overall
transaction price. Any such adjustments are recorded on a cumulative catch-up basis, which would affect license,
collaboration and other revenues and earnings in their period of adjustment.
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Royalties: For arrangements that include sales-based royalties, including milestone payments based on the level of
sales, and for which the license is deemed to be the predominant item to which royalties relate, the Company recognizes
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 royalty
revenue from its license agreements.
Manufacturing and Supply: The promises under the Company’s agreements may include clinical and commercial
manufacturing products to be provided by the Company to the counterparty. The services are generally determined to be
distinct from the other promises or performance obligations identified in the arrangement. The Company recognizes the
transaction price allocated to these services as revenue at a point in time when transfer of control of the related products to
the customer occurs.
Research and Development Costs
Except for payments made in advance of services, research and development costs are expensed as incurred. For
payments made in advance, the Company recognizes research and development expense as the services are rendered.
Research and development costs primarily consist of salaries and related expenses for personnel, laboratory supplies and
raw materials, sponsored research, depreciation of laboratory facilities and leasehold improvements, and utilities costs
related to research space. Other research and development expenses include fees paid to consultants and outside service
providers including clinical research organizations and clinical manufacturing organizations.
Accruals for Clinical Trial Expenses
Clinical trial costs primarily consist of expenses incurred under agreements with contract research organizations
(CROs), investigative sites, laboratory testing expenses, data management and consultants that conduct the Company's
clinical trials. Clinical trial expenses are a significant component of research and development expenses, and the Company
outsources a significant portion of these clinical trial activities to third parties. The accrual for site and patient costs
includes inputs such as estimates of patient enrollment, patient cycles incurred, clinical site activations, estimated project
duration and other pass-through costs. These inputs are required to be estimated due to a lag in receiving the actual clinical
information from third parties. Payments for these activities are based on the terms of the individual arrangements, which
may differ from the pattern of costs incurred, and are reflected on the balance sheets as a prepaid asset or accrued expenses.
These third-party agreements are generally cancellable, and related costs are recorded as research and development
expenses as incurred. Except for payments made in advance of services, clinical trial costs are expensed as incurred. Non-
refundable advance clinical payments for goods or services that will be used or rendered for future research and
development activities are recorded as a prepaid asset and recognized as expense as the related goods are delivered or the
related services are performed. When evaluating the adequacy of the accrued expenses, management assessments include:
(i) an evaluation by the project manager of the work that has been completed during the period; (ii) measurement of
progress prepared internally and/or provided by the third-party service provider; (iii) analyses of data that justify the
progress; and (iv) the Company’s judgment. Significant judgments and estimates may be made in determining the accrued
balances at the end of any reporting period. Actual results could differ from the estimates made. The Company’s historical
clinical accrual estimates have not been materially different from the actual costs. Clinical trial accruals that are due longer
than one year are classified as noncurrent accrued expenses.
Stock-Based Compensation
Stock-based payments are accounted for in accordance with the provisions of ASC 718, Compensation—Stock
Compensation. The fair value of stock-based payments is estimated, on the date of grant, using the Black-Scholes-Merton
model. The resulting fair value is recognized ratably over the requisite service period, which is generally the vesting period
of the option. The Company has elected to account for forfeitures as they occur.
The Company has elected to use the Black-Scholes-Merton option pricing model to value any options granted. The
Company will reconsider use of the Black-Scholes-Merton model if additional information becomes available in the future
that indicates another model would be more appropriate or if grants issued in future periods have characteristics that
prevent their value from being reasonably estimated using this model.
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A discussion of management’s methodology for developing some of the assumptions used in the valuation model
follows:
Expected Dividend Yield—The Company has never declared or paid dividends and has no plans to do so in the foreseeable
future.
Expected Volatility—Volatility is a measure of the amount by which a financial variable such as share price has fluctuated
(historical volatility) or is expected to fluctuate (expected volatility) during a period. Effective January 1, 2020, the
Company bases the expected volatility on the historical volatility of the Company’s publicly traded common stock. Prior to
January 1, 2020, the Company utilized the historical volatilities of a peer group (e.g., several public entities of similar size,
complexity, and stage of development), along with the Company’s historical volatility since its initial public offering, to
determine its expected volatility.
Risk-Free Interest Rate—This is the U.S. Treasury rate for the week of each option grant during the year, having a term that
most closely resembles the expected life of the option.
Expected Term—This is a period of time that the options granted are expected to remain unexercised. Options granted have
a maximum term of 10 years. The Company estimates the expected life of the option term to be 6.25 years. The Company
uses a simplified method to calculate the average expected term.
Income Taxes
The Company accounts for income taxes using the asset and liability method in accordance with ASC 740, Income
Taxes. Deferred income taxes are recognized for the tax consequences in future years of differences between the tax bases
of assets and liabilities and the financial reporting amounts at each year-end based on enacted tax laws and statutory tax
rates applicable to the periods in which the differences are expected to affect taxable income. A valuation allowance is
established when necessary to reduce deferred tax assets to the amount expected to be realized.
The Company accounts for uncertain tax positions pursuant to ASC 740. Financial statement recognition of a tax
position taken or expected to be taken in a tax return is determined based on a more-likely-than-not threshold of that tax
position being sustained. If the tax position meets this threshold, the benefit to be recognized is measured as the tax benefit
having the highest likelihood of being realized upon ultimate settlement with the taxing authority. The Company recognizes
interest accrued related to unrecognized tax benefits and penalties in the provision for income taxes.
Comprehensive Loss
Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the years
ended December 31, 2020, 2019 and 2018, the Company’s net loss was equal to comprehensive loss and, accordingly, no
additional disclosure is presented.
Adopted Accounting Standards
In November 2018, the Financial Accounting Standard Board (FASB) issued Accounting Standards Update (ASU)
No. 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction between Topic 808 and Topic 606. The
Company adopted this update as of January 1, 2020. The amendment clarifies that certain transactions between
collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative
arrangement participant is a customer in the context of a unit of account. In those situations, all the guidance in Topic 606
should be applied, including recognition, measurement, presentation and disclosure requirements. The amendment also
adds unit-of-account guidance in Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service)
when an entity is assessing whether the collaborative arrangement or a part of the arrangement is within the scope of Topic
606. Lastly, the amendment requires that in a transaction with a collaborative arrangement participant that is not directly
related to sales to third parties, presenting the transaction together with revenue recognized under Topic 606 is precluded if
the collaborative arrangement participant is not a customer. The adoption of the standard had no effect on the Company’s
operating results, cash flows or financial position.
Accounting Standards Not Yet Adopted
With the exception of the new standard discussed above, there have been no new accounting pronouncements that
have significance, or potential significance, to the Company’s financial statements.
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3. Net Loss Per Share of Common Stock
Basic net loss per common share is determined by dividing net loss by the weighted-average number of common
shares outstanding during the period, without consideration of common stock equivalents. Diluted net income per share is
computed by dividing net income by the weighted-average number of common stock equivalents outstanding for the
period. The treasury stock method was used to determine the dilutive effect of the Company’s stock option grants, restricted
stock units and warrants.
The following table sets forth the computation of basic and diluted earnings per share for the years ended December
31, 2020, 2019 and 2018:
Net loss
Basic and diluted net loss per common share
Basic and diluted weighted average common shares outstanding
2020
2019
$ (51,026,903) $ (57,891,911) $ (48,273,633)
(1.18)
$
41,044,621
43,254,782
45,721,139
(1.34) $
(1.12) $
2018
The following potentially dilutive securities outstanding at December 31, 2020, 2019 and 2018 have been excluded
from the computation of diluted weighted average shares outstanding, as they would be anti-dilutive:
Stock options and restricted stock units
4. Prepaid Expenses and Other Current Assets
2020
6,143,594
2019
5,106,493
2018
3,937,167
The following is a summary of the Company’s prepaid expenses and other current assets at December 31:
Prepaid research and development expenses
Other prepaid expenses
Other receivables
Prepaid expenses and other current assets
5. Property and Equipment
Property and equipment, net consisted of the following at December 31:
Furniture and fixtures
Laboratory equipment
Office equipment
Computer equipment
Leasehold improvements
Property and equipment
Less accumulated depreciation
Property and equipment, net
2020
965,504
270,675
2,149
1,238,328
2020
345,712
1,446,596
16,755
327,776
616,133
2,752,972
(2,132,299)
620,673
$
$
$
$
$
$
$
$
2019
3,838,835
301,534
185,953
4,326,322
2019
345,712
1,409,526
11,085
302,009
616,133
2,684,465
(1,861,545)
822,920
Depreciation of property and equipment totaled $270,754, $279,234 and $275,123 for the years ended December 31,
2020, 2019 and 2018, respectively.
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6. Accrued Expenses
The following is a summary of the Company’s accrued expenses at December 31:
Accrued research and development expenses
Accrued bonuses
Accrued consulting and other professional fees
Accrued employee benefits
Other accrued expenses
Accrued expenses
7. Operating Leases
2020
5,114,420
3,341,184
194,760
569,048
220,469
9,439,881
$
$
2019
5,149,697
2,677,288
320,935
351,966
210,904
8,710,790
$
$
At the inception of an arrangement, the Company determines whether the arrangement is or contains a lease based on
the circumstances present. The Company determines a lease exists if the contract conveys the right to control an identified
asset for a period of time in exchange for consideration. Control is considered to exist when the lessee has the right to
obtain substantially all of the economic benefits from the use of an identified asset as well as direct the right to use of that
asset. Leases with a term greater than one year are recognized on the balance sheet as right-of-use assets, lease liabilities
and, if applicable, long-term lease liabilities. The Company has elected not to recognize on the balance sheet leases with
terms of one year or less on the lease commencement date. If a contract is considered to be a lease, the Company
recognizes a lease liability based on the present value of the future lease payments over the expected lease term, with an
offsetting entry to recognize a right-of-use asset. The Company has also elected to use the practical expedient and account
for each lease component and related non-lease component as one single component. The lease component results in a
right-of-use asset being recorded on the balance sheet and amortized as lease expense on a straight-line basis.
The interest rate implicit in lease contracts is typically not readily determinable. As such, the Company utilizes the
appropriate incremental borrowing rate, which is the rate incurred to borrow on a collateralized basis over a term similar to
the term of the lease for which the rate is estimated. Certain adjustments to the right-of-use asset may be required for items
such as initial direct costs paid or incentives received.
The Company leases office and research space in Rockville, Maryland under an operating lease with a term from
June 15, 2015 through October 31, 2023 (the Lease) that is subject to annual rent increases. The Company has the right to
sublease or assign all or a portion of the premises, subject to the conditions set forth in the Lease. The Lease may be
terminated early by either the landlord or the Company in certain circumstances. In connection with the Lease, the
Company received rent abatement as a lease incentive in the initial year of the Lease.
In March 2016, the Company amended the Lease (the Lease Amendment) to lease additional space as of June 1,
2016. In May 2016, the Company also paid a security deposit of $52,320 to be held until the expiration or termination of
the Company’s obligations under the Lease. The term of the Lease Amendment for the additional space continues through
October 31, 2023, the same date as for the premises originally leased under the Lease, subject to the Company’s renewal
option set forth in the Lease.
The Company identified and applied the following significant assumptions in recognizing the right-of-use asset and
corresponding liability for the Lease and Lease Amendment:
● Lease term – The lease term includes both the noncancelable period and, when applicable, cancelable option
periods where failure to exercise such option would result in an economic penalty. The Company’s renewal
option to extend is not reasonably certain of being exercised as of December 31, 2020.
● Incremental borrowing rate – As the Company’s lease does not provide an implicit rate, the Company used an
incremental borrowing rate (IBR), which is the rate incurred to borrow on a collateralized basis over a term
similar to the term of the lease for which the rate is estimated. The Company determined the IBR to be 8% based
on an estimated rate that considered the Company’s credit risk in the United States for a collateralized
borrowing and lease term similar to the Lease.
As of December 31, 2020 the weighted-average remaining lease term was 2.8 years. There were no additional
operating leases entered into during the year ended December 31, 2020.
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The components of lease expense and related cash flows were as follows:
Operating lease cost
Variable lease cost
Total operating lease cost
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflows from operating leases
Year Ended December 31,
2019
2020
927,957
927,957
465,028
593,973
1,392,985
1,521,930 $
1,051,190 $
941,089
$
$
Maturities of lease liability due under these lease agreements as of December 31, 2020 were as follows:
2021
2022
2023
2024
2025
Thereafter
Total
Present value adjustment
Present value of lease payments
8. Stockholders’ Equity
Common Stock
At-The-Market Equity Offerings
Operating Lease
Obligation
$
$
1,077,420
1,104,356
940,890
—
—
—
3,122,666
(304,102)
2,818,564
On September 28, 2017, the Company entered into an at-the-market sales agreement (the 2017 Sales Agreement)
with Cowen and Company, LLC (Cowen) to sell up to $100.0 million of the Company’s common stock registered under a
shelf registration statement filed with the U.S. Securities and Exchange Commission in September 2017. During the year
ended December 31, 2020, the Company issued and sold 4,136,742 shares of common stock under the 2017 Sales
Agreement at a weighted average price per share of $3.52, for aggregate net proceeds of $14.1 million, after deducting
commissions and offering expenses. There were no shares sold under the 2017 Sales Agreement during the years ended
December 31, 2018 or 2019. The shelf registration statement under which the shares that could be sold under the 2017
Sales Agreement were registered, expired on October 6, 2020.
On October 7, 2020, the Company filed a prospectus supplement to a new shelf registration statement that it filed in
May 2019 and entered into a new at-the-market sales agreement (the 2020 Sales Agreement) with Cowen. Under the 2020
Sales Agreement, the Company may sell up to $100.0 million of the Company’s common stock registered under the shelf
registration statement that was filed in May 2019. The 2020 Sales Agreement replaces the 2017 Sales Agreement between
the Company and Cowen, and the $100.0 million that may be sold under the 2020 Sales Agreement excludes any amounts
that were sold under the 2017 Sales Agreement. During the year ended December 31, 2020, the Company issued and sold
1,024,760 shares of common stock under the 2020 Sales Agreement at a weighted average price per share of $3.74, for
aggregate net proceeds of $3.7 million, after deducting commissions and offering expenses. Subsequent to December 31,
2020 and through February 26, 2021, the Company sold an additional 2,475,949 shares of common stock under the 2020
Sales Agreement at a weighted average price of $3.92, for aggregate net proceeds of $9.4 million, after deducting
commissions and offering expenses.
Public Offerings of Common Stock
In March 2018, the Company completed a public offering in which the Company sold 8,050,000 shares of its
common stock at a price to the public of $17.00 per share. The Company received net proceeds of $128.4 million from this
offering, after deducting underwriting discounts, commissions and other offering expenses.
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Warrants to Acquire Company Stock
In connection with the prior issuance of convertible unsecured promissory notes, the Company issued warrants to
purchase shares of common stock. During the year ended December 31, 2018, all of the outstanding warrants for an
aggregate of 553,868 shares were exercised at an exercise price of $0.33; a total of 536,564 shares of common stock were
issued to stockholders upon the net exercise of 546,709 outstanding warrants, and 7,159 shares of common stock were
issued to stockholders upon the cash exercise of outstanding warrants, for total proceeds to the Company of $2,336. The
Company no longer has any outstanding warrants to purchase shares of its capital stock.
2003 Stock Incentive Plan
The 2003 Stock Incentive Plan (the 2003 Plan) provided for the grant of incentives and nonqualified stock options
and restricted stock awards. The exercise price for incentive stock options must be at least equal to the fair value of the
common stock on the grant date. Unless otherwise stated in a stock option agreement, 25% of the shares subject to an
option grant will vest upon the first anniversary of the vesting start date and thereafter at the rate of one forty-eighth of the
option shares per month as of the first day of each month after the first anniversary. Upon termination of employment by
reasons other than death, cause, or disability, any vested options shall terminate 60 days after the termination date. Stock
options terminate 10 years from the date of grant. The 2003 Plan expired on May 21, 2013.
A summary of the Company’s stock option activity under the 2003 Plan for the year ended December 31, 2020 is as
follows:
Outstanding as of December 31, 2019
Options exercised
Options forfeited
Outstanding, Vested and Exercisable as of
December 31, 2020
OUTSTANDING
OPTIONS
382,337
(285,087)
$
—
97,250
WEIGHTED-
AVERAGE
EXERCISE
PRICE
WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
AGGREGATE
INTRINSIC
VALUE
(IN
TERM (YEARS) THOUSANDS)
1.33
1.12
—
1.96
1.3
1.3
$
175
During 2020, 2019 and 2018 the Company issued 285,087, 284,743 and 46,131 shares of common stock,
respectively, in conjunction with exercises of stock options granted under the 2003 Plan. The Company received cash
proceeds from the exercise of these stock options of $319,297, $318,912 and $59,659 during 2020, 2019 and 2018,
respectively. Total intrinsic value of the options exercised during the years ended December 31, 2020, 2019 and 2018 was
$921,168, $924,688 and $716,920, respectively.
As of December 31, 2020, the options under the 2003 Plan were fully expensed and all options outstanding under the
2003 Plan were fully vested. There were no options granted under the 2003 Plan in 2020, 2019 or 2018.
2013 Equity Incentive Plan
The Company’s board of directors adopted, and its stockholders approved, its 2013 Equity Incentive Plan (the 2013
Plan) effective on January 9, 2014. The 2013 Plan provides for the grant of incentive stock options within the meaning of
Section 422 of the Internal Revenue Code (the Code), to the Company’s employees and its parent and subsidiary
corporations’ employees, and for the grant of nonstatutory stock options, restricted stock awards, restricted stock unit
awards, stock appreciation rights, performance stock awards and other forms of stock compensation to its employees,
including officers, consultants and directors. The 2013 Plan also provides for the grant of performance cash awards to the
Company’s employees, consultants and directors. Unless otherwise stated in a stock option agreement, 25% of the shares
subject to an option grant will typically vest upon the first anniversary of the vesting start date and thereafter at the rate of
one forty-eighth of the option shares per month as of the first day of each month after the first anniversary. Upon
termination of employment by reasons other than death, cause, or disability, any vested options shall terminate 90 days
after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10
years from the date of grant.
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Authorized Shares
The maximum number of shares of common stock that may be issued under the 2013 Plan was 1,000,000 shares, plus
any shares subject to stock options or similar awards granted under the 2003 Plan that expire or terminate without having
been exercised in full or are forfeited to or repurchased by the Company. The number of shares of common stock reserved
for issuance under the 2013 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015 and
ending on January 1, 2023, by 3% of the total number of shares of common stock outstanding on December 31 of the
preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. The
maximum number of shares that may be issued pursuant to exercise of incentive stock options under the 2013 Plan is
20,000,000.
Shares issued under the 2013 Plan may be authorized but unissued or reacquired shares of common stock. Shares
subject to stock awards granted under the 2013 Plan that expire or terminate without being exercised in full, or that are paid
out in cash rather than in shares, will not reduce the number of shares available for issuance under the 2013 Plan.
Additionally, shares issued pursuant to stock awards under the 2013 Plan that the Company repurchases or that are
forfeited, as well as shares reacquired by the Company as consideration for the exercise or purchase price of a stock award
or to satisfy tax withholding obligations related to a stock award, will become available for future grant under the 2013
Plan.
Stock Options
A summary of the Company’s stock option activity under the 2013 Plan for the year ended December 31, 2020 is as
follows:
Outstanding as of December 31, 2019
Options granted
Options exercised
Options forfeited
Outstanding as of December 31, 2020
Vested or expected to vest as of
December 31, 2020
Exercisable as of December 31, 2020
WEIGHTED-
AVERAGE
WEIGHTED-
AVERAGE
REMAINING
AGGREGATE
INTRINSIC
OUTSTANDING
OPTIONS
EXERCISE
PRICE
CONTRACTUAL
VALUE (IN
TERM(YEARS) THOUSANDS)
$
4,399,606
1,473,100
—
(119,495)
5,753,211
5,753,211
3,588,799
10.43
4.49
—
8.65
8.93
8.93
9.87
6.8
6.6
6.6
5.3
$
$
$
101
101
—
As of December 31, 2020, there was $9,417,298 of total unrecognized compensation expense related to unvested
options that will be recognized over a weighted-average period of approximately 2.2 years. The total fair value of options
that vested in the years ended December 31, 2020, 2019 and 2018 was $7,347,548, $6,159,610 and $3,003,632,
respectively. During the years ended December 31, 2019 and 2018, the Company received cash of $94,001 and $962,530,
respectively, and issued 16,606 and 144,182 shares of common stock, respectively, in conjunction with exercises of stock
options granted under the 2013 Plan. The intrinsic value of the options exercised for the years ended December 31, 2019
and 2018 was $97,429 and $1,344,026, respectively. There were no shares exercised under the 2013 Plan in 2020.
Restricted Stock Units (RSUs)
A restricted stock unit (RSU) is a stock award that entitles the holder to receive shares of the Company’s common
stock as the award vests. The fair value of each RSU is based on the closing price of the Company’s common stock on the
date of grant. In September 2019, the Company granted an aggregate of 332,106 RSUs with service conditions to the
Company’s non-executive employees. The RSUs granted in September 2019 vest over a two-year period, with one-third
vesting on the first anniversary of the date of grant and the remaining two-thirds vesting on the second anniversary of the
date of grant, provided that the employee remains employed with the Company at the applicable vesting date. As of
December 31, 2020, there was $464,263 of total unrecognized compensation expense associated with these RSU grants that
will be recognized over a weighted-average period of approximately 0.7 years.
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The following is a summary of RSU activity for the 2013 Plan for the year ended December 31, 2020:
Unvested at December 31, 2019
Granted
Forfeited
Vested
Unvested at December 31, 2020
Inducement Plan
Number of Shares
Underlying RSUs
Weighted-Average
Grant Date
Fair Value
324,550
$
—
(27,917)
(104,100)
192,533
4.53
—
4.53
4.53
4.53
In January 2020, the Company’s board of directors adopted the GlycoMimetics, Inc. Inducement Plan (the
Inducement Plan). The Inducement Plan provides for the grant of nonstatutory stock options, restricted stock awards,
restricted stock unit awards, stock appreciation rights and other forms of stock awards to individuals not previously an
employee or director of the Company as an inducement for such individuals to join the Company. Unless otherwise stated
in an applicable stock option agreement, one-fourth of the shares subject to an option grant under the Inducement Plan will
typically vest upon the first anniversary of the vesting start date, with the balance of the shares vesting in a series of thirty-
six successive equal monthly installments as of the first day of each month measured from the first anniversary of the
vesting start date, subject to the new employee’s continued service with the Company through the applicable vesting dates.
Upon termination of employment by reasons other than death, cause or disability, any vested options will terminate 90 days
after the termination date, unless otherwise set forth in a stock option agreement. Stock options generally terminate 10
years from the date of grant. There were 500,000 shares of common stock reserved under the Inducement Plan at its
adoption date.
A summary of the Company’s stock option activity under the Inducement Plan for the year ended December 31, 2020
is as follows:
Outstanding as of December 31, 2019
Options granted
Options exercised
Options forfeited
Outstanding as of December 31, 2020
Vested or expected to vest as of December 31, 2020
Exercisable as of December 31, 2020
OUTSTANDING
OPTIONS
— $
100,600
—
—
100,600
100,600
—
WEIGHTED-
AVERAGE
EXERCISE
PRICE
—
3.09
—
—
3.09
3.09
—
WEIGHTED-
AVERAGE
REMAINING
CONTRACTUAL
AGGREGATE
INTRINSIC
VALUE
(IN
TERM (YEARS) THOUSANDS)
—
$
9.5
9.5
$
— $
71
71
—
As of December 31, 2020, there was $194,687 of total unrecognized compensation expense related to unvested
options under the Inducement Plan that will be recognized over a weighted-average period of approximately 3.5 years.
There were no options vested or exercised under the Inducement Plan during the year ended December 31, 2020.
The weighted-average fair value of the options granted during the years ended December 31, 2020, 2019 and 2018
was $3.17, $7.17 and $12.90 per share, respectively, applying the Black-Scholes-Merton option pricing model utilizing the
following weighted-average assumptions:
Expected term
Expected volatility
Risk-free interest rate
Expected dividend yield
2019
6.25 years
71.15%
2.54%
0%
2018
6.25 years
73.75%
2.55%
0%
2020
6.25 years
84.40%
1.41%
0%
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Total stock-based compensation expense associated with stock options and RSUs was classified as follows on the
statement of operations for the years ended December 31:
Research and development expense
General and administrative expense
Total stock-based compensation expense
9. Income Taxes
2020
2,946,952
3,954,806
6,901,758
$
$
2019
2,402,242
3,812,848
6,215,090
$
$
2018
1,709,390
2,877,708
4,587,098
$
$
The components of the gross deferred tax asset and related valuation allowance at December 31 were as follows:
Deferred income tax assets:
Net operating loss carryforward
Capitalized start-up costs
Patent amortization
Research and orphan drug credits
Stock-based compensation
Operating lease liabilities
Accrued bonus
Other
Gross deferred income tax assets
Valuation allowance
Net deferred income tax assets
Deferred income tax liabilities:
Operating lease right-of-use assets
Property and equipment
Gross deferred income tax liabilities
Net deferred income tax asset/(liability)
2020
2019
$
63,830,866
1,114,309
88,949
42,008,797
6,778,569
775,598
919,410
283,751
115,800,249
(115,016,323)
783,926
$ 53,391,629
1,308,102
104,419
35,211,702
4,935,232
996,861
736,723
136,641
96,821,309
(95,850,031)
971,278
(639,843)
(144,083)
(783,926)
$
— $
(827,195)
(144,083)
(971,278)
—
Based on the Company’s operating history and management’s expectation regarding future profitability, management
believes the Company’s deferred tax assets will not be realizable under ASC 740, Income Taxes. Accordingly, a full
valuation allowance has been established as of December 31, 2020 and 2019.
As of December 31, 2020, the Company had $232.0 million of U.S. Federal and state net operating losses, $9.6
million of research and development tax credits and $32.4 million of orphan drug tax credits available to carry forward. A
portion of the net operating loss carryforwards will begin to expire in 2026, the research and development tax credits in
2023 and the orphan drug tax credit in 2033. Under current federal income tax laws, federal net operating losses incurred in
2020 and in future years may be carried forward, indefinitely, but the deductibility of such federal net operating losses is
limited.
The Company’s tax attributes, including net operating losses and credits, are subject to any ownership changes as
defined under Internal Revenue Code Sections 382 and 383. A change in ownership could affect the Company’s ability to
utilize its net operating losses and credits. As of December 31, 2020, the Company does not believe that an ownership
change has occurred. Any future ownership changes may cause a limitation on the Company’s ability to utilize existing tax
attributes.
The Company files income tax returns in the U.S. federal jurisdiction and in the State of Maryland. The Company’s
federal income tax returns for tax years 2003 and after remain subject to examination by the U.S. Internal Revenue Service.
The Company’s Maryland income tax returns for the tax years 2006 and thereafter remain subject to examination by the
Comptroller of Maryland. In addition, all of the net operating losses, research and development tax credit and orphan drug
credit carryforwards that may be used in future years are still subject to adjustment.
The Company did not have unrecognized tax benefits as of December 31, 2020 and 2019, and does not anticipate this
to change significantly over the next 12 months. The Company will recognize interest and penalties accrued on any
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Table of Contents
unrecognized tax benefits as a component of income tax expense. Reconciliations between the statutory federal income tax
rate and the effective income tax rate of income tax expense is as follows as of December 31:
U.S. Federal statutory tax rate
State taxes
Research credit
Orphan drug credit
Other
Stock-based compensation
Change in valuation allowance
Provision for income taxes
10. Research and License Agreements
Apollomics
2020
2019
2018
21.0 %
5.7
0.7
9.8
0.4
—
(37.6)
— %
21.0 %
5.7
0.8
8.8
(0.1)
—
(36.2)
— %
21.0 %
5.7
0.8
10.4
0.6
(0.1)
(38.4)
— %
In January 2020, the Company entered into a collaboration and license agreement (the Agreement) with Apollomics
(Hong Kong), Limited (Apollomics) for the development, manufacture and commercialization of products derived from
two of the Company’s compounds, GMI-1271 and GMI-1687 (the Products) for therapeutic and prophylactic uses (the
Field) in China, Taiwan, Hong Kong and Macau (the Territory). Under the terms of the Agreement, the Company granted
Apollomics:
● an exclusive license, with the right to sublicense, to develop, manufacture and have manufactured, distribute,
market, promote, sell, have sold, offer for sale, import, label, package and otherwise the Products in the Field in
the Territory; and
● a non-exclusive license to conduct preclinical research with respect to Products in the Field outside of the
Territory for the purposes of developing such Products for use in the Territory.
In June 2020, the Company and Apollomics entered into a clinical supply agreement pursuant to which the Company
will manufacture and supply the Products at agreed upon prices. Apollomics has the option to begin manufacture of the
Products after appropriate material transfer requirements are met.
The Company evaluated the Agreement under the provisions of ASC 606 and identified two performance
obligations under this revenue arrangement: the (i) delivery of functional licenses and (ii) manufacture and supply of the
Products. The initial transaction price consists of a $9.0 million non-refundable up-front payment which was allocated to
the delivered functional licenses and recognized in full as revenue in the first quarter of 2020 given that the performance
obligation was satisfied upon inception. The Agreement contains various forms of variable consideration, including (i) up
to $75.0 million in development milestones based on achievement of certain clinical and regulatory events, (ii) up to $105.0
million of sales-based commercial milestones based on achievement of certain annual net sales targets, (iii) sales-based
royalties at specified percentages of net sales ranging from the high single digits to 15%, and (iv) manufacture and supply
of clinical and commercial Products. The Company has fully constrained the development milestone consideration using
the most likely amount method and will recognize that revenue when it is probable that recognition of revenue related to
the milestone will not result in a significant reversal in amounts recognized in future periods, and as such have been
excluded from the transaction price. In September 2020, the Company received a non-refundable $1.0 million development
milestone payment upon acceptance by Chinese regulatory authorities of a Phase 3 bridging study design to support
registration in China. The Company recognized this $1.0 million payment as revenue in the quarter ended September 30,
2020. The Company will recognize revenue related to the sales-based commercial and royalty milestones and royalties 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), as they were determined to relate predominantly to the licenses
granted to Apollomics and, therefore, have been excluded from the transaction price. Lastly, the Company has determined
that the consideration for the manufacturing and supply is all variable and is fully constrained. Variable consideration
allocated to manufacturing and supply will be recognized at a point in time when the Product is delivered and when the title
to the Product is transferred to the customer pursuant to the agreement. The Company reassesses the transaction price in
each reporting period and upon the occurrence of a change in circumstances or final resolution of any particular event.
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Pfizer
The Company previously entered into an exclusive license agreement with Pfizer Inc. (the Pfizer Agreement), under
which the Company granted Pfizer an exclusive worldwide license to develop and commercialize products containing the
Company’s product candidate, rivipansel, for all fields and uses, and further agreed to refrain from commercializing
products for treatment or prevention of vaso-occlusive crisis in sickle cell disease. In August 2019, Pfizer announced that
its pivotal Phase 3 clinical trial of rivipansel did not meet its primary or key secondary efficacy endpoints. Pfizer terminated
the Pfizer Agreement, effective as of April 5, 2020, and the Company now holds all rights to the potential future
development and commercialization of rivipansel and is free to commercialize any product in sickle cell disease. The
Company did not earn any revenue or receive any payments from Pfizer during the year ended December 31, 2020 or 2019
and will not be eligible to receive any future payments from Pfizer following the termination of the Pfizer Agreement.
In August 2020, the Company entered into a separate agreement with Pfizer with respect to certain post-termination
commitments, including, among other things, Pfizer’s transfer of certain raw materials and inventory that could potentially
be utilized in subsequent development or commercialization activities. Pursuant to the terms of the agreement, Pfizer may
be eligible to receive a milestone payment of $25.0 million upon achievement of specified levels of cumulative net sales of
rivipansel, as well as a low single-digit royalty on net sales of the product for a period of ten years from first commercial
sale.
11. Employee Benefit Plan
The Company has a defined contribution plan under the Internal Revenue Code Section 401(k). This plan covers
substantially all employees who meet minimum age and service requirements and allows participants to defer a portion of
their annual compensation on a pre-tax basis. For the years ended December 31, 2020 and 2019, the Company matched
50% up to the first 6% of employee contributions. For the year ended December 31, 2018, the Company made a
discretionary match of 50% up to the first 3% of employee contributions. All matching contributions have been paid by the
Company. The Company’s matching contributions vest in full immediately. The total Company matching contributions
were approximately $252,000, $219,000 and $94,000 for the years ended December 31, 2020, 2019 and 2018, respectively.
12. Risks and Uncertainties
COVID-19
In March 2020, the World Health Organization declared the novel coronavirus disease 2019, or COVID-19, outbreak
a pandemic. In order to mitigate the spread of COVID-19, governments have imposed unprecedented restrictions on
business operations, travel and gatherings, resulting in a global economic downturn and other adverse economic and
societal impacts. The COVID-19 pandemic has also overwhelmed or otherwise led to changes in the operations of many
healthcare facilities.
The impact of the COVID-19 pandemic on the Company’s business and financial performance is uncertain and
depends on various factors, including the scope and duration of the pandemic, government restrictions and other actions,
including relief measures, implemented to address the impact of the pandemic, and resulting impacts on the financial
markets and overall economy. The imposition of “lockdown,” “social distancing” and “shelter in place” directives by state
and federal governments in the United States as well as governments in other regions of the world in response to the
COVID-19 pandemic, including in locations in which its Phase 3 clinical trial of uproleselan is being conducted, resulted in
slowed clinical site initiation, patient recruitment and enrollment rates early in the pandemic. Enrollment rates have
returned to forecasted levels since the lockdowns. However, the COVID-19 infection rates continue to fluctuate which
could negatively affect enrollment going forward. The Company is unable to determine the extent of the impact of the
pandemic on its operations and financial condition going forward. These developments are highly uncertain and
unpredictable, and may materially adversely affect the Company’s financial position and results of operations. The
Company continues to closely monitor the COVID-19 situation and any potential impact to its planned activities.
93
Exhibit 23.1
Consent of Independent Registered Public Accounting Firm
We consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No. 333-193317) pertaining to the 2003 Stock Incentive
Plan, as amended, 2013 Equity Incentive Plan and 2013 Employee Stock Purchase Plan of
GlycoMimetics, Inc.,
(2) Registration Statement (Form S-8 No. 333-206166) pertaining to the 2013 Equity Incentive
Plan and 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,
(3) Registration Statement (Form S-8 No. 333-209814) pertaining to the 2013 Equity Incentive
Plan and 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,
(4) Registration Statement (Form S-8 No. 333-216366) pertaining to the 2013 Equity Incentive
Plan and 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,
(5) Registration Statement (Form S-8 No. 333-223462) pertaining to the 2013 Equity Incentive
Plan and 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,
(6) Registration Statement (Form S-8 No. 333-230117) pertaining to the 2013 Equity Incentive
Plan and 2013 Employee Stock Purchase Plan of GlycoMimetics, Inc.,
(7) Registration Statement (Form S-3 No. 333-231577) of GlycoMimetics, Inc., and
(8) Registration Statement (Form S-8 No. 333-236754) pertaining to the 2013 Equity Incentive
Plan, 2013 Employee Stock Purchase Plan, and Inducement Plan of GlycoMimetics, Inc.;
of our report dated March 2, 2021, with respect to the financial statements of GlycoMimetics, Inc.
included in this Annual Report (Form 10-K) of GlycoMimetics, Inc. for the year ended December 31,
2020.
/s/ Ernst & Young LLP
Baltimore, Maryland
March 2, 2021
EXHIBIT 31.1
CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Rachel K. King, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of GlycoMimetics, Inc. (the “registrant”);
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 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: March 2, 2021
/s/ Rachel K. King
Rachel K. King
President & Chief Executive Officer
(principal executive officer)
EXHIBIT 31.2
CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Brian M. Hahn, certify that:
1.
2.
3.
4.
I have reviewed this annual report on Form 10-K of GlycoMimetics, Inc. (the “registrant”);
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 15d-15(e)) and internal
control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant
and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in
which this report is being prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report
our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period
covered by this report based on such evaluation; and
(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred
during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control
over financial reporting; and
5.
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process,
summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant
role in the registrant’s internal control over financial reporting.
Date: March 2, 2021
/s/ Brian M. Hahn
Brian M. Hahn
Chief Financial Officer and Senior Vice President
(principal financial officer)
CERTIFICATIONS OF
PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
EXHIBIT 32.1
Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Rachel K.
King, Chief Executive Officer of GlycoMimetics, Inc. (the “Company”), and Brian M. Hahn, Chief Financial Officer
and Senior Vice President of the Company, each hereby certifies that, to the best of his or her knowledge:
1.
2.
The Company’s Annual Report on Form 10-K for the year ended December 31, 2020 (the “Annual
Report”), to which this Certification is attached as Exhibit 32.1, fully complies with the requirements of
Section 13(a) or Section 15(d) of the Exchange Act, and
The information contained in the Annual Report fairly presents, in all material respects, the financial
condition of the Company as of the end of the period covered by the Annual Report and results of
operations of the Company for the periods covered by the Annual Report.
In Witness Whereof, the undersigned have set their hands hereto as of the 2nd day of March 2021.
/s/ Rachel K. King
Rachel K. King
President & Chief Executive Officer
/s/ Brian M. Hahn
Brian M. Hahn
Chief Financial Officer and Senior Vice President
* This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and
Exchange Commission and is not to be incorporated by reference into any filing of GlycoMimetics, Inc. under the
Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or
after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.