A
L ET’S
LAU NC H
MORE
SOLUTIONS
FO R
PATIENTS
2023
A NNUAL
R EPORT
NASDAQ:
SWTX
B
ANTWAN,
LIVING
WITH
NF1-PN
WE ARE DELIVERING
the first and only FDA-approved
therapy for adults with desmoid tumors.
WE ARE ADVANCING
a potentially best-in-class treatment
for children and adults with NF1-PN.
WE ARE DRIVEN
to change the lives of people suffering from
devastating rare diseases and cancers.
LET’S GO
1
DEA R FELLOW
SHAREHOLDERS,
2023 was a pivotal year for SpringWorks and the patients who
are the inspiration for our hard work.
On November 27, 2023, the United States
Food and Drug Administration (FDA)
approved OGSIVEO® (nirogacestat),
making it the first and only approved
therapy for adult patients with desmoid
tumors. This was a watershed moment
for the desmoid tumor community, which
had been waiting for decades for an
effective treatment, and the culmination
of a collaborative effort between the
patient community, academia and the
biopharmaceutical industry, who worked
together with tenacity and persistence
to advance this promising medicine.
In addition to the FDA approval of
OGSIVEO, we recently initiated the
New Drug Application (NDA) process
for our second therapy, mirdametinib,
for pediatric and adult patients with
neurofibromatosis type 1-associated
plexiform neurofibromas (NF1-PN),
which positions us to potentially have
two products on the market by 2025.
SpringWorks is just getting started in our
ambition to transform the lives of patients
with devastating rare diseases and cancers,
and in this letter, I am proud to share our
2023 accomplishments and our priorities
for 2024 and beyond.
OGSIVEO® (nirogacestat)
Our team is honored to have delivered
the first approved therapy to adults with
desmoid tumors. Desmoid tumors are
pernicious and persistent soft-tissue
tumors. Their tendril-like growths can
invade surrounding parts of the body
and cause severe, long-lasting pain and
disfigurement. When growing near vital
organs, they can be life-threatening as
well. We’ve heard time and again how the
unpredictable nature and high likelihood
of recurrence of these tumors cause a
great deal of fear and anxiety and upend
people’s lives, often leaving them unable
to work and look after their families.
WE EXPECT
TO HAVE
2
PRO DUCTS ON
THE M ARKET
B Y 2 02 5
With OGSIVEO, adult desmoid tumor
patients now have an oral pill that can
not only stop tumors from growing, but
can also shrink tumors and reduce pain.
We are very pleased that the broad
FDA-approved label enables us to serve
adult desmoid tumor patients at any
stage of their treatment journey.
Our top priority for 2024 is to continue
executing on a successful U.S. launch as
we seek to quickly establish OGSIVEO
as the standard-of-care treatment for
adults with desmoid tumors, and we are
very pleased with the strong start to our
launch. We had drug in channel and
available for patients within 5 business
days of approval. Additionally, NCCN
Clinical Practice Guidelines in Oncology
2
(NCCN Guidelines®) were updated to
recommend nirogacestat as an NCCN
Category 1, Preferred treatment option
for desmoid tumors within two weeks
of approval.1 We also have also seen
strong reimbursement aligned to the
approved label across commercially
insured, Medicare, and Medicaid patients.
Our field teams are actively educating
physicians on desmoid tumors and on
the benefits of OGSIVEO, and we are
gaining traction across both academic
and community settings.
In addition to our U.S. launch, in February
2024, the European Medicines Agency
(EMA) validated our Marketing
Authorization Application for nirogacestat,
which begins the centralized review
process in the European Union. Desmoid
tumor patients in Europe have a pressing
need for a new treatment, and we look
forward to making progress on our
commitment to expanding the reach of
nirogacestat into additional geographies
outside of the United States.
U.S. D ESMOID
T U MOR PATIENT
POPULA TION
~1,000-1,650
NEW PATIENTS DIAGNOSED ANNUALLY
~5,500-7,000
PATIENTS ACTIVELY MANAGED ANNUALLY
30,000+
TOTAL DIAGNOSED PREVALENT PATIENTS
MIRDAMETINIB
Our second therapeutic candidate,
mirdametinib, is an investigational MEK
inhibitor. Our most advanced program
is for patients with NF1-PN, which are
devastating tumors that can grow
aggressively along peripheral nerves,
and can cause severe disfigurement,
pain, and functional impairment. NF1-PN
are very difficult to remove surgically,
and attempting resections in proximity
to nerves carries a high risk of permanent
nerve damage and disfigurement. Systemic
therapies are rapidly becoming the
foundation of NF1-PN treatment, and
MEK inhibitors, as a class, represent the
most validated treatment option to date.
In November 2023, we presented positive
topline data from our Phase 2b ReNeu
trial of mirdametinib in adult and pediatric
patients with NF1-PN, which showed
favorable confirmed objective response
rates by blinded independent central
review and robust depth of response, as
well as a favorable tolerability profile that
allowed patients to stay on therapy for
extended durations of time. On the
primary endpoint, as of the data cutoff
date of September 20, 2023, mirdametinib
treatment resulted in 52% of patients
in the pediatric cohort and 41% in
the adult cohort having a confirmed
objective response within the 24-cycle
treatment period, as assessed by blinded
independent central review. Responses
were deep and durable, with a median
best percentage reduction from baseline
in tumor volume of 42% in pediatrics and
41% in adults. In addition, patients on
mirdametinib achieved improvements
across key patient-reported outcomes,
including pain and quality of life.
Mirdametinib was also generally
well-tolerated in both children and adults,
1 Referenced with permission from the NCCN Clinical Practice
Guidelines in Oncology (NCCN Guidelines®) for Soft Tissue
Sarcoma V.3.2023. © National Comprehensive Cancer Network,
Inc. 2023. All rights reserved. Accessed March 27, 2024. To view
the most recent and complete version of the guideline, go
online to NCCN.org. NCCN makes no warranties of any kind
whatsoever regarding their content, use or application and
disclaims any responsibility for their application or use in any way.
We have waited for so long.
Words cannot express what it
means to know that OGSIVEO
is available for people with
desmoid tumors. It is as if
someone has turned on a light
in a room that has been dark
for many years.”
DANA,
LIVING WITH A
DESMOID TUMOR
3
3
I was diagnosed with NF
as a baby when I developed a
plexiform neurofibroma on my
leg. I’ve had many complications
related to my NF1-PN. Having
an approved therapy for adults
would be a much-needed
advance for those of us who
have been told for years that
there are no options that have
been rigorously studied in
adults with our condition.”
LINDSEY,
LIVING WITH
NFI-PN
4
with the majority of adverse events being
Grade 1 or 2. We believe these data are
very meaningful for the NF1-PN community
as they illustrate mirdametinib’s potential
to become a differentiated treatment
option with a best-in-class profile for
pediatric patients and the first approved
therapy for adult patients with NF1-PN.
in combination with BCMA-directed
agents across modalities through clinical
collaborations with industry-leading
developers of BCMA therapies. The data
that we and our partners have presented
to date support our belief that nirogacestat
has an important role to play across lines
of treatment in multiple myeloma.
In March 2024, we initiated the submission
of our rolling NDA for mirdametinib in
children and adults with NF1-PN, which
we expect to complete by the end of
June. This brings us one step closer to our
goal of having two approved therapies
for patients with devastating diseases
by 2025.
EMERGING PORTFOLIO
We continue to make strong progress
across our broader targeted oncology
pipeline. Our Phase 2 trial of nirogacestat
in patients with ovarian granulosa cell
tumors (OvGCT) is fully enrolled, and
we expect to report initial data in the
second half of 2024. OvGCT accounts for
approximately 5% of all ovarian cancers,
and similar to desmoid tumors, represents
a meaningful patient population with
significant unmet need, as there are no
approved therapies for these patients. We
are also continuing to evaluate nirogacestat
THERE ARE
~100,000
INDIVIDUALS WITH AN
NF1 DIAGNOSIS IN THE U.S.
~40,000
PATIENTS LIVING WITH
NF1-PN IN THE U.S.
Similar to our approach with nirogacestat,
we are expanding our opportunity set for
mirdametinib. We have several studies
underway across biomarker-defined solid
tumors and rare oncology, all guided by
mirdametinib’s potential value as a potent
and selective MEK inhibitor. We are also
very excited about the opportunities
we see for brimarafenib (BGB-3245),
an investigational next-generation RAF
dimer inhibitor that is being developed
by MapKure, our joint-venture with
BeiGene, to potentially serve patients
with MAPK-aberrant solid tumors whose
needs are not addressed with available
treatments. We believe that up to 7% of
solid tumors harbor oncogenic BRAF
aberrations that could potentially be
targetable with brimarafenib.
At the American Association for Cancer
Research Annual Meeting 2023, we
presented strong results from the dose
escalation portion of the Phase 1
monotherapy study of brimarafenib in
MAPK-mutant solid tumors, which
showed a manageable safety profile and
encouraging anti-tumor activity in a
heavily pre-treated patient population.
These results drove the program’s
advancement into the dose exploration
portion of the study, which is ongoing.
We expect to present additional data from
the program in the second half of 2024.
In addition, we are enrolling patients in the
dose escalation phase of our Phase 1/2a
combination study of brimarafenib and
mirdametinib, and we are also supporting
MapKure in a Phase 1b combination trial
with Amgen’s panitumumab in colorectal
and pancreatic cancer patients with
known MAPK pathway mutations.
5
Turning to SW-682, our novel,
oral, potent, and selective
investigational TEAD inhibitor
designed to treat tumors driven
by Hippo pathway mutations,
we are on track to initiate a
Phase 1a trial in Hippo mutant
solid tumors in the first half of
2024. The Hippo pathway is
genetically altered in up to 10% of
cancers and we believe SW-682 has the
potential to be a best-in-class therapy.
As we advance and optimize our
pipeline, our approach is to pursue
expansion opportunities in the capital
efficient manner we have used thus far in
working with collaborators that expand
the scientific, operational, and financial
strength that we can bring to our
programs. We see substantial upside
potential for our early-stage programs
and look forward to providing updates
as our development efforts mature.
FOUNDATION AND CLEAR DRIVERS IN
PLACE FOR LONG-TERM SUCCESS
We believe that we have the foundation
in place to position SpringWorks for
long-term success. Our OGSIVEO launch
is off to a great start, and we are working
with urgency to bring mirdametinib to
children and adults with NF1-PN as
rapidly as possible while also unlocking
opportunities across our emerging
portfolio. Our lead molecules have
durable intellectual property protections
into 2043, and we have a robust balance
sheet with $663 million in cash, cash
equivalents and marketable securities
as of December 31, 2023, which we
expect will fund us through profitability.
Importantly, we have an experienced
team with a track record of successful
product launches, and expertise from
drug discovery through regulatory
approval and commercialization.
I would like to thank the patients and
their family members who make our
clinical trials possible, the investigators
throughout our portfolio of clinical studies,
our patient advocacy partners, our
collaborators, our team of SpringWorkers,
and our shareholders for their support of
our mission. Together, we hope to make
a profound impact on the lives of people
suffering from devastating rare diseases
and cancers.
SAQIB ISLAM
CHIEF EXEC UT IV E O FFICER
6
THE
NIROGACESTAT
DEVELOPMENT
JOURNE Y
IT STARTED WITH
PATIENTS. THE INSP IR ATIO N FO R
OUR SCIENCE.
2012
Phase 1 trial results
presented at a
medical meeting
caught the eye
of Dr. Shivaani
Kummar, an
investigator from
the National
Cancer Institute
(NCI)
2014
Dr. Kummar led
an open-label,
Phase 2 NCI-
sponsored trial
of nirogacestat
in adults with
progressing
desmoid tumors
The Desmoid
Tumor Research
Foundation
helped enroll the
17-patient trial in
under 6 months
2009
Phase 1 solid
tumor trial
sponsored by
Pfizer, Inc.
included a small
number of
desmoid tumor
patients who
had a positive
response to
nirogacestat
2017
SEPTEMBER
SpringWorks
Therapeutics
saw the
groundbreaking
potential in
nirogacestat,
in-licensed
the program
from Pfizer,
and launched
a company
with a mission
to ignite
promising
science for
underserved
patient
populations
2018
MARCH
SpringWorks held
an end of Phase 2
meeting with the
U.S. Food and Drug
Administration (FDA)
JUNE
SpringWorks
manufactured the
first batch of
nirogacestat pills
for use in its
company-sponsored
Phase 3 clinical trial
NOVEMBER
FDA granted Fast
Track designation
for nirogacestat for
the treatment of
adult patients with
desmoid tumors
THE FDA APPROVAL OF OGSIVEO® (nirogacestat)
was the culmination of a collaborative effort between the
patient community, academia and the biopharmaceutical
industry, who worked together with tenacity and
persistence to advance promising science.
2019
MAY
SpringWorks
announced that
the first patient
was dosed in the
Phase 3 DeFi trial
AUGUST
FDA granted
Breakthrough
Therapy
designation for
nirogacestat
2022
MAY
Positive topline
results from the
Phase 3 DeFi trial
were announced
2020
JULY
Enrollment was
completed in the
Phase 3 DeFi trial
SpringWorks Therapeutics
Announces Full Enrollment
of Phase 3 DeFi Trial
Evaluating Nirogacestat
in Adult Patients with
Desmoid Tumors
SpringWorks Therapeutics
Announces Nirogacestat
Achieved Primary
and All Key Secondary
Endpoints in Phase 3
DeFi Trial in Adult
Patient with Progressing
Desmoid Tumors
SEPTEMBER
DeFi data were
presented as
a late-breaking
oral presentation
during a Presiden-
tial Symposium
at the European
Society for Medical
Oncology (ESMO)
Congress
SEPTEMBER
First-ever disease
state education
campaign focused
on desmoid tumors
was launched
DECEMBER
SpringWorks
submitted an
NDA to the FDA
for nirogacestat
for the treatment
of adults with
desmoid tumors
7
2023
MARCH
Phase 3 DeFi data
were published in
the New England
Journal of Medicine
NOVEMBER 27
FDA approved
OGSIVEO®
(nirogacestat)
as the first and
only treatment
for adults with
desmoid tumors
SpringWorks
launched
CareConnections™,
a comprehensive
patient support
program that
offers personalized
services to eligible
OGSIVEO patients
WE A RE
TENACIOUS
SpringWorkers thrive in an atmosphere of
passion for science and relentless persistence to
help more patients. We give it our all every day
because we know that families with severe rare
diseases and cancer are counting on us to find
the answers they need.
A GREAT PLACE TO WORK –
AND ALWAYS STRIVING TO BE EVEN BETTER
In 2023, we were proud to be recognized as a Great Place to
Work® and ranked #3 on Fortune’s Best Workplaces in
BioPharma ™ (Small and Medium). We also received the Increase
Diversity™ Award, which recognizes workplaces moving the
needle to increase diversity and promote a culture of inclusion
for individuals from historically underrepresented backgrounds.
8
OUR VALUES
CARE HARD
AMBITION
WITHOUT EGO
THINK DEEPLY,
ACT QUICKLY
GOOD ENOUGH IS
NEVER ENOUGH
IN IT
TOGETHER
9
LEADERSHIP TEAM
Saqib Islam
Chief Executive Officer
Badreddin Edris, Ph.D.
Chief Operating Officer
Francis I. Perier, Jr.
Chief Financial Officer
Bhavesh Ashar
Chief Commercial Officer
James Cassidy, M.D., Ph.D.
Chief Medical Officer
Daniel Pichl
Chief People Officer
Tai-An Lin, Ph.D.
Chief Scientific Officer
Herschel S. Weinstein, J.D.
General Counsel and Secretary
Kristin Patterson, Ph.D.
Chief Technical Operations Officer
BOARD OF DIRECTORS
Saqib Islam
Chief Executive Officer
Carlos Albán
Former Vice Chairman and
Chief Commercial Officer
AbbVie, Inc.
Alan Fuhrman
Chief Financial Officer
Tyra Biosciences, Inc.
CORPORATE INFORMATION
Corporate Headquarters
100 Washington Boulevard
Stamford, CT 06902
Independent Registered
Public Accounting Firm
Ernst & Young LLP
20 Church Street, 19th Floor
Hartford, CT 06103
Julie Hambleton, M.D.
Former Chief Medical Officer
IDEAYA Biosciences and
Five Prime Therapeutics
Freda Lewis-Hall, M.D., DFAPA
Former Chief Medical Officer
Pfizer, Inc.
Daniel S. Lynch
Executive Venture Partner
GV
Transfer Agent
Computershare Trust Company, N.A.
250 Royall Street
Canton, MA 02021
Investor Relations
SpringWorks Therapeutics, Inc.
100 Washington Boulevard
Stamford, CT 06902
investors@springworkstx.com
10
SPRINGWORKS
THERAPEUTICS, INC.
FORM
10-K
FOR THE
FISCAL YEAR ENDED
DECEMBER 31, 2023
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
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2023
OR
Commission file number: 001-39044
SPRINGWORKS THERAPEUTICS, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of Other Jurisdiction of incorporation or Organization)
83-4066827
(I.R.S. Employer Identification No.)
100 Washington Blvd Stamford CT
(Address of principal executive offices)
06902
(Zip code)
Registrant’s telephone number, including area code: (203) 883-9490
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
Common Stock, $0.0001 Par Value per Share
Trading Symbol(s)
SWTX
Name Of Each Exchange On Which Registered
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically; every Interactive Data File required to be submitted pursuant
to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was
required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting
company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,”
and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☒
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 has filed a report on and attestation to its management’s assessment of the effectiveness of
its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public
accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant
included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based
compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The aggregate market value of the registrant’s common stock held by non-affiliates of the registrant based on the closing price on
June 30, 2023 (the last business day of the registrant’s most recently completed second fiscal quarter) was $1,600,965,538.
The number of outstanding shares of the registrant’s common stock as of February 21, 2024 was 73,786,845.
The registrant’s definitive proxy statement relating to the annual meeting of shareholders will be filed with the Securities and Exchange
Commission within 120 days after the close of the registrant’s fiscal year ended December 31, 2023 and is incorporated by reference in Part III
to the extent described herein.
Documents Incorporated by Reference
SpringWorks Therapeutics
Annual Report on Form 10-K
Table of Contents
PART I
Item 1.
Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1A. Risk Factors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1B. Unresolved Staff Comments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 1C. Cybersecurity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 2.
Item 3.
Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Legal Proceedings
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 4. Mine Safety Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer
Purchases of Equity Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 6.
[Reserved] . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of
Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 7A. Quantitative and Qualitative Disclosures About Market Risk . . . . . . . . . . . . . . . . . . . .
Item 8.
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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections . . . . . . . . . . . . . . .
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 and Financial Statement Schedules . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Item 16. Form 10-K Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
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i
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report on Form 10-K, or Annual Report, contains forward-looking statements that
involve risks and uncertainties. We make such forward-looking statements pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. All
statements other than statements of historical facts contained in this Annual Report are forward-looking
statements. In some cases, these forward-looking statements can be identified by the use of words such as
“may”, “will”, “should”, “expects”, “intends”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”,
“potential”, “continue” or the negative of these terms or other comparable terminology. These forward-
looking statements include, but are not limited to, statements about:
• the success, cost and timing of our product development activities and clinical trials, the initiation
and completion of any other clinical trials and related preparatory work, the expected timing of the
availability of results of our clinical trials, and the potentially registrational nature of the Phase 2b
clinical trial of mirdametinib in patients with neurofibromatosis type 1-plexiform neurofibromas,
or NF1-PN;
• our ability to commercialize OGSIVEO™ (nirogacestat), including our ability to successfully
establish and maintain commercial manufacturing and supply chains for OGSIVEO, and our
expectations regarding the size and growth potential of the commercial markets for OGSIVEO;
• our plans to rely on the results from our potentially registrational Phase 2b clinical trial of
mirdametinib for patients with NF1-PN to support a New Drug Application, or NDA, and timing
in connection therewith;
• our ability and our partners’ ability to successfully complete clinical trials of our product candidates
for additional uses, and in combination with other agents;
• the fact that topline or interim data from our clinical studies may not be predictive of the final or
more detailed results of such study or the results of other ongoing or future studies;
• the potential attributes and benefits of our product candidates;
• our plans to commercialize any of our product candidates that achieve approval either alone or in
partnership with others;
• the period over which we anticipate our existing cash, cash equivalents and marketable securities,
will be sufficient to fund our operating expenses and capital expenditure requirements;
• the potential for our business development efforts to maximize the potential value of our portfolio;
• our ability to identify, in-license or acquire additional product candidates;
• the ability and willingness of our third-party collaborators to continue research and development
activities relating to our product candidates, including those that are being developed as combination
therapies;
• our ability to obtain and maintain regulatory approval for our product candidates, and any related
restrictions, limitations or warnings in the label of an approved product;
• the timing of our planned regulatory submissions and interactions, including our NDA for
mirdametinib planned for submission in the first half of 2024 and the timing and outcome of
decisions made by the European Medicines Agency, or EMA, including the decision on the Marketing
Authorisation Application, or MAA, filing for nirogacestat that we submitted in February 2024, as
well as those by other regulatory authorities, investigational review boards at clinical trial sites and
publication review bodies;
• the potential benefit of orphan drug exclusivity, Orphan Drug Designation, Fast Track Designation,
Breakthrough Therapy Designation, and Rare Pediatric Disease Designation for nirogacestat,
mirdametinib and any other of our product candidates that may receive one or more of these
designations;
• our ability to compete with companies currently marketing or engaged in the development of
treatments for desmoid tumors, NF1-PN and other oncology and rare disease indications;
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• our expectations regarding our ability to obtain and maintain intellectual property protection or
market exclusivity for our product candidates and the duration of such protection;
• our ability and the potential to successfully manufacture our product candidates for preclinical
studies, clinical trials and, if approved, for commercial use, the capacity of our current contract
manufacturing organizations, or CMOs, to support clinical supply and commercial-scale production
for product candidates and our potential election to pursue additional CMOs for manufacturing
supplies of drug substance and finished drug product in the future;
• the size and growth potential of the markets for our product candidates, and our ability to serve
those markets, either alone or in partnership with others;
• the rate and degree of market acceptance of our product candidates, if approved;
• regulatory developments in the United States and foreign countries;
• our ability to contract with third-party suppliers and manufacturers and their ability to perform
adequately;
• the success of competing products that are or may become available;
• risks associated with global economic conditions, including inflation or uncertainty caused by
political violence and unrest, including the ongoing global and regional conflicts;
• our ability to attract and retain key scientific, medical, commercial and management personnel;
• our estimates regarding expenses, future revenue, capital requirements and needs for additional
financing;
• our financial performance; and
• developments and projections relating to our competitors or our industry.
Any forward-looking statements in this Annual Report reflect our current views with respect to future
events and future financial performance, and involve known and unknown risks, uncertainties and other
factors that may cause our actual results, performance or achievements to be materially different from any
future results, performance or achievements expressed or implied by these forward-looking statements. Factors
that may cause actual results to differ materially from current expectations include, among other things,
those described under Item 1A, Risk Factors and elsewhere in this Annual Report. Given these uncertainties,
you should not place undue reliance on these forward-looking statements. Except as required by law, we
assume no obligation to update or revise these forward-looking statements for any reason, even if new
information becomes available in the future.
We may from time to time provide estimates, projections and other information concerning our
industry, the general business environment, and the markets for certain diseases, including estimates
regarding the potential size of those markets and the estimated incidence and prevalence of certain medical
conditions. Information that is based on estimates, forecasts, projections, market research or similar
methodologies is inherently subject to uncertainties, and actual events, circumstances or numbers, including
actual disease prevalence rates and market size, may differ materially from the information provided.
Unless otherwise expressly stated, we obtained this industry information, business information, market
data, prevalence information and other data from reports, research surveys, studies and similar data prepared
by market research firms and other third parties, industry, medical and general publications, government
data, and similar sources, in each case, from sources we consider to be reliable, and in some cases applying
our own assumptions and analysis that may, in the future, prove not to have been accurate.
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PART I
Item 1. Business
Company overview
We are a commercial-stage biopharmaceutical company applying a precision medicine approach to
developing and commercializing life-changing medicines for underserved patient populations suffering from
devastating rare diseases and cancer. We have a differentiated portfolio of small molecule targeted oncology
assets, including one approved product and several clinical candidates, and are advancing programs in both
rare tumor types as well as highly prevalent, genetically defined cancers.
OGSIVEO™ (nirogacestat) is our first commercial product. OGSIVEO was approved by the United
States Food and Drug Administration, or FDA, on November 27, 2023. OGSIVEO is a novel, oral, selective
gamma secretase inhibitor that is the first and only FDA-approved therapy for the treatment of adult
patients with progressing desmoid tumors who require systemic treatment. Nirogacestat is also in clinical
development as a monotherapy for the treatment of ovarian granulosa cell tumors, or GCT, a subtype of
ovarian cancer; we are also evaluating novel combination regimens of nirogacestat alongside B-cell maturation
antigen, or BCMA, directed therapies for the treatment of multiple myeloma.
Mirdametinib is an investigational oral, small molecule MEK inhibitor that is currently in late-stage
development for the treatment of neurofibromatosis type 1-associated plexiform neurofibromas, or NF1-PN.
On November 16, 2023, we announced positive topline results from our potentially registrational Phase 2b
ReNeu trial of mirdametinib in adult and pediatric patients with NF1-PN. We expect these positive data to
support submission of a New Drug Application, or NDA, to the FDA in the first half of 2024 for
mirdametinib for the treatment of NF1-PN. Further, we are evaluating mirdametinib for the treatment of
solid tumors harboring mitogen activated protein kinase, or MAPK, pathway aberrations in both
monotherapy and combination approaches.
Brimarafenib is an investigational oral, small molecule, next-generation RAF dimer inhibitor that we
are also advancing in the clinic in a distinct set of genetically defined BRAF mutated tumors via MapKure,
LLC, an entity jointly owned by us and BeiGene, Ltd.
SW-682 is an investigational oral, small molecule TEA Domain, or TEAD, inhibitor that we are
evaluating in Hippo-mutant solid tumors. In the first quarter of 2024, the FDA cleared our investigational
New Drug Application, or IND, for SW-682 for clinical evaluation, and we anticipate commencing our
Phase 1a trial in the first half of 2024.
We have additional discovery programs that represent potentially first-in-class and best-in-class
product candidates designed to address tumors where no or limited treatment options exist. We continue to
invest in our R&D infrastructure in a focused manner in order to support both our drug discovery
capabilities and our translational medicine activities for development programs. We also plan to continue
entering into shared-value partnerships to maximize the potential of our therapies to transform the lives of
oncology patients.
Our strategy
Our goal is to be an industry leader in rare diseases and targeted oncology to improve the lives of
patients suffering from such illnesses.
We have set the following strategic priorities for the business:
• Successfully commercialize OGSIVEO in the United States, and seek regulatory approval for
OGSIVEO in other jurisdictions to further serve the global desmoid tumor patient community;
• Efficiently advance mirdametinib towards marketing approval for the treatment of adults and
children with NF1-PN based upon the positive topline data from our potentially registrational
Phase 2b ReNeu trial that was disclosed on November 16, 2023;
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• Expand the opportunity for nirogacestat and mirdametinib to serve patients in rare oncology
indications and more prevalent, genetically defined cancers, either alone or in partnership with
others;
• Deliver new medicines to underserved patient populations using a focused and efficient approach
including through the continued development of earlier stage product candidates, such as brimarafenib,
SW-682, and our preclinical portfolio; and
• Maximize the potential of our portfolio through strategic partnerships and continue to deploy our
value-driven approach to discovering, acquiring and developing new medicines to further expand our
pipeline.
We believe that strong execution of these prioritized activities will position SpringWorks to realize our
mission of developing and delivering life-changing medicines for people with devastating cancers.
Our product and product candidates
Our product portfolio consists of OGSIVEO, our first approved product, and several clinical-stage
candidates under investigation for additional underserved patient populations.
OGSIVEO (nirogacestat)
OGSIVEO is a commercially available, novel, oral, selective gamma secretase inhibitor that has
received FDA approval in the United States for the treatment of adult patients with progressing desmoid
tumors who require systemic treatment.
Gamma secretase is a protease complex that cleaves numerous transmembrane proteins, including
amyloid precursor protein, or APP, Notch, HER4, E-cadherin, N-cadherin, BCMA and CD44. Cleavage of
these transmembrane proteins by gamma secretase leads to a variety of signaling events that result from
the untethering of the cytoplasmic domains of these proteins. Several of gamma secretase’s substrates have
been implicated in a variety of diseases, including APP in Alzheimer’s disease and BCMA and Notch in
cancer, forming the rationale for evaluating gamma secretase as a therapeutic target in various rare diseases,
and more prevalent cancer types.
OGSIVEO approval and launch
On November 27, 2023, the FDA approved OGSIVEO (nirogacestat) for the treatment of adult
patients with progressing desmoid tumors who require systemic treatment. The FDA previously granted
Fast Track and Breakthrough Therapy designations to nirogacestat for the treatment of adult patients with
progressive, unresectable, recurrent or refractory desmoid tumors or deep fibromatosis; nirogacestat also
received Orphan Drug Designation from the FDA for the treatment of desmoid tumors and from the
European Commission for the treatment of soft tissue sarcoma.
The FDA approval of OGSIVEO was based on the results from the Phase 3 DeFi trial, which were
published in the March 9, 2023 edition of the New England Journal of Medicine. DeFi is a global,
randomized (1:1), double-blind, placebo-controlled Phase 3 trial evaluating the efficacy, safety and
tolerability of nirogacestat in adult patients with progressing desmoid tumors. The study randomized
142 patients to receive 150 mg of nirogacestat or placebo twice daily. OGSIVEO met the primary endpoint
of improving progression-free survival (PFS), demonstrating a statistically significant improvement over
placebo with a 71% reduction in the risk of disease progression (hazard ratio (HR) = 0.29 (95% CI: 0.15, 0.55);
p< 0.001). Median PFS was not reached in the OGSIVEO arm and was 15.1 months in the placebo arm.
Confirmed objective response rate (ORR) based on RECIST v1.1 was 41% with OGSIVEO versus 8% with
placebo (p<0.001); the complete response rate was 7% in the OGSIVEO arm and 0% in the placebo arm.
The median time to first response was 5.6 months with OGSIVEO and 11.1 months with placebo. PFS and
ORR improvements were in favor of OGSIVEO regardless of baseline characteristics including sex, tumor
location, tumor focality, treatment status, previous treatments, mutational status, and history of familial
adenomatous polyposis. OGSIVEO also demonstrated early and sustained improvements in patient-reported
outcomes (PROs), including pain, desmoid tumor-specific symptoms, physical/role function, and overall
health-related quality of life. OGSIVEO exhibited a manageable safety and tolerability profile. The most
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common adverse events (>15%) reported in patients receiving OGSIVEO were diarrhea, ovarian toxicity,
rash, nausea, fatigue, stomatitis, headache, abdominal pain, cough, alopecia, upper respiratory tract infection,
and dyspnea. Warnings & Precautions include diarrhea, ovarian toxicity, hepatotoxicity, non-melanoma
skin cancers, electrolyte abnormalities, and embryo-fetal toxicity.
OGSIVEO is the first and only FDA-approved treatment indicated specifically for desmoid tumors. In
December 2023, the NCCN Clinical Practice Guidelines in Oncology, or NCCN Guidelines®, were updated
to recommend nirogacestat as an NCCN Category 1, Preferred treatment option for desmoid tumors.
We are advancing a targeted launch strategy focused on positioning OGSIVEO as the potential standard
of care for adult desmoid tumor patients. To support commercialization of OGSIVEO, we have assembled
a U.S. commercial field organization of 35 territory business managers plus regional business directors.
We are also seeking to expand the reach of OGSIVEO to additional geographies and submitted a
Marketing Authorisation Application, or MAA, to the European Medicines Agency, or EMA, in
February 2024. Beyond the United States and Europe, we continue to evaluate additional territories in
which to potentially commercialize OGSIVEO.
Ongoing development
We are also developing nirogacestat for the potential treatment of ovarian GCT and, in combination
with agents that target BCMA, multiple myeloma, where significant unmet medical need exists despite
currently available therapies.
Nirogacestat for treatment of ovarian granulosa cell tumors
Ovarian GCT are the most common type of sex cord stromal tumor, accounting for approximately
5 – 7% of all ovarian cancers, and are driven by activating mutations in the FOXL2 transcription factor.
There are currently no FDA-approved treatments for ovarian GCT. Gamma secretase inhibitors, or GSIs,
have been shown to be inhibitors of the Notch signaling pathway. Preclinically, inhibition of the Notch
pathway by a gamma secretase inhibitor was shown to decrease proliferation and viability of the
FOXL2-mutated granulosa tumor cell line. Based on this rationale, we are evaluating nirogacestat’s potential
as a treatment for patients with ovarian GCT. In September 2022, we announced that the first patient had
been dosed in a Phase 2 trial evaluating nirogacestat as a monotherapy in adult patients with recurrent ovarian
GCT, and in May 2023, we announced full enrollment of the trial. We expect to report initial data from the
trial in the second half of 2024.
Nirogacestat in combination with BCMA-targeted agents
BCMA is a cell surface protein universally expressed on multiple myeloma, or MM, cells, and the
clinical activity of monotherapy BCMA-targeted agents have been demonstrated in this indication. GSIs
have been shown to increase BCMA expression on MM cells. Activity of this combination mechanism has
been observed in multiple preclinical models of MM using BCMA-directed therapies in combination with
GSIs, as well as in initial clinical data. We believe this combination, as compared to BCMA-directed
therapies alone, may provide a meaningful clinical benefit to MM patients by improving response rates,
prolonging the duration of clinical benefit, or reducing the side effect profile by enabling administration at a
lower dose.
We are evaluating this novel combination therapy approach through clinical collaborations with several
industry partners. In June 2019, we entered a clinical collaboration with GlaxoSmithKline, or GSK, or the
GSK Collaboration Agreement, to explore the combination of nirogacestat with their BCMA-targeted ADC,
belantamab mafodotin, or belamaf, in patients with relapsed or refractory multiple myeloma, or RRMM.
In September 2022, we expanded the GSK Collaboration Agreement to include the potential for continued
development and commercialization of the combination of belamaf and nirogacestat in earlier lines of
treatment, including in newly diagnosed MM patients.
We have entered into other separate non-exclusive clinical collaborations with several industry partners,
each of whom is developing one or more BCMA-targeted therapies. Each partner is responsible for the
conduct and expenses of a clinical trial to evaluate the combination of nirogacestat with its respective BCMA
agent in RRMM.
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In September 2023, Regeneron initiated a Phase 1b study arm evaluating nirogacestat in combination
with linvoseltamab, a bispecific antibody targeting BCMA and CD3. In July 2023, the Hellenic Society of
Haematology, through a co-supported collaborative study agreement with GSK and SpringWorks, initiated
a Phase 1/2 study evaluating low-dose belamaf and nirogacestat in combination with lenalidomide and
dexamethasone in transplant-ineligible newly diagnosed MM patients.
In June 2023, updated clinical data from the GSK-sponsored Phase 1/2 trial of nirogacestat in
combination with low-dose belamaf and initial clinical data from the Janssen Research and Development,
LLC, or Janssen, -sponsored Phase 1b clinical trial evaluating nirogacestat in combination with teclistamab,
a bispecific antibody targeting BCMA and CD3, were presented at the European Hematology Association
2023 Congress. The updated clinical data from the GSK-sponsored trial, as of the December 9, 2022 data
cut-off date, continued to support that combining nirogacestat with a low dose of belamaf may result in
comparable efficacy to a higher monotherapy belamaf dose, while substantially reducing the frequency of
high-grade ocular adverse events. The initial clinical data from the Janssen-sponsored trial, as of the
December 16, 2022 data cut-off date, represented the first clinical data set of nirogacestat in combination
with a BCMA bispecific agent, with the results demonstrating high and deep response rates for the nirogacestat
plus teclistamab combination across all dose levels assessed and an optimized safety profile with delayed
administration of lower-dose nirogacestat.
Mirdametinib
Mirdametinib is an investigational oral, small molecule inhibitor of MEK1 and MEK2. MEK proteins
occupy a pivotal position in the MAPK pathway, a key signaling network that regulates cell growth and
survival and plays a central role in multiple oncology and rare disease indications.
We are initially investigating mirdametinib as a monotherapy for the potential treatment of patients
with NF1-PN, a rare disorder characterized by mutations in the MAPK pathway that lead to the growth of
peripheral nerve sheath tumors, which cause significant pain, disfigurement and morbidity. In October 2018
and July 2019, the FDA and European Commission, respectively, granted mirdametinib Orphan Drug
Designation for the treatment of NF1, and in May 2019, the FDA granted mirdametinib Fast Track
Designation for the treatment of NF1-PN. In July 2023, the FDA also granted mirdametinib Rare Pediatric
Disease Designation for the treatment of NF1, and as such, if approved, mirdametinib will be eligible to
receive a priority review voucher. On November 16, 2023, we announced positive topline results from our
potentially registrational Phase 2b ReNeu trial.
In addition to our monotherapy program in NF1-PN, we believe that mirdametinib holds promise as
part of targeted combination therapies in oncology and for the treatment of other genetically defined tumors,
with multiple regimens currently in clinical development.
Phase 2b ReNeu trial in NF1-PN
In the fourth quarter of 2019, we initiated the potentially registrational ReNeu clinical trial. The
ReNeu trial is a Phase 2b, longitudinal, open-label clinical trial designed to evaluate the efficacy, safety and
tolerability of mirdametinib in patients at least two years of age with an inoperable NF1-PN that is causing
significant morbidity or major deformity. Mirdametinib was administered orally at a 2 mg/m2 BID dose
with a maximum dose of 4 mg BID (without regard to food). Dosing occurred on a four-week cycle with a
three weeks-on, one week-off schedule, lasting for up to 24 cycles.
The ReNeu trial enrolled 114 patients in two cohorts (pediatric and adult) across 50 sites in the United
States. The primary endpoint was confirmed objective response rate (ORR), defined as ≥ 20% reduction in
target tumor volume as measured by MRI and assessed by Blinded Independent Central Review (BICR). On
November 16, 2023, we announced positive topline results from ReNeu. As of the data cutoff date of
September 20, 2023, 52% (29/56) of pediatric patients and 41% (24/58) of adult patients had BICR confirmed
objective responses within the 24-cycle treatment period (cycle length: 28 days). An additional pediatric
patient and two additional adult patients achieved confirmed objective responses after Cycle 24 in the
long-term follow up phase of the trial, where patients continue to receive mirdametinib treatment. Median
best percent change from baseline in target tumor volume was -42% and -41% in the pediatric and adult
cohorts, respectively. As of the data cut-off, the median duration of treatment was 22 months in both the
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pediatric and adult cohorts. Median duration of response was not reached in either cohort. Pediatric and
adult patients in the ReNeu trial also experienced statistically significant improvements from baseline in pain,
quality of life, and physical function, as assessed across multiple patient-reported outcome (PRO) tools.
Mirdametinib was generally well tolerated in the ReNeu trial, with the majority of adverse events
(AEs) being Grade 1 or Grade 2. The most frequently reported AEs were rash, diarrhea, and vomiting in
the pediatric cohort and rash, diarrhea, and nausea in the adult cohort. 25% of pediatric patients and 16%
of adult patients experienced a Grade 3 or higher treatment-related AE.
We believe the results from the ReNeu trial demonstrate a compelling clinical profile and potentially
transformative benefit across measures of both safety and efficacy. With these data, we believe mirdametinib
has the potential to be the best-in-class therapy for children and the first approved treatment for adults
with NF1-PN. We plan to submit an NDA for mirdametinib to the FDA in the first half of 2024. Additional
data are expected to be presented at an upcoming medical conference in the first half of 2024 and to be
submitted for publication in a peer-reviewed journal.
Ongoing development
The MAPK pathway, which relies upon the RAS-RAF-MEK-ERK signaling cascade, represents a
central biological pathway in all human cells that is responsible for helping to regulate cellular transcription,
proliferation and survival. Given its direct regulation of ERK, which directly controls downstream signaling
through the MAPK pathway, MEK occupies a pivotal position in this signaling cascade and represents a
rational therapeutic target for addressing indications where overactivation of the MAPK pathway
contributes significantly to disease onset and/or progression. We believe that by vertically inhibiting two
key, adjacent constituents of the MAPK pathway, the combination of mirdametinib and a RAF inhibitor
can potentially address the resistance mechanisms and feedback loops that have prevented development of
therapies for many devastating cancers harboring MAPK pathway gene mutations, such as those in RAS,
RAF and NF1.
As such, additional efforts are underway to assess mirdametinib as part of combination regimens in
oncology and for the treatment of other genetically defined tumors where the MAPK pathway is implicated.
Our first effort is evaluating mirdametinib in combination with BeiGene’s RAF dimer inhibitor, lifirafenib
(BGB-283). A Phase 1b/2 clinical trial being conducted by BeiGene was initiated in May 2019, enrolling
patients in the United States and Australia with advanced or refractory solid tumors harboring relevant
genetic mutations in the MAPK pathway. We most recently presented clinical data from this trial at the
American Association for Cancer Research, or AACR, Annual Meeting 2023. The dose expansion portion
of the study was initiated in the third quarter of 2023 in NRAS-mutated solid tumors.
In February 2023, we also dosed the first patient in a Phase 1/2a open-label, dose escalation and
expansion trial evaluating mirdametinib in combination with brimarafenib (BGB-3245) in patients with
advanced solid tumors harboring MAPK-activating mutations. This trial is currently enrolling patients in
the United States and Australia.
We are also evaluating mirdametinib for the treatment of solid tumors harboring other MAPK
aberrations, in both monotherapy and combination approaches, including for the treatment of pediatric
and young adult patients with low-grade gliomas, in an ongoing Phase 1/2 clinical trial being conducted by
St. Jude Children’s Research Hospital.
Brimarafenib (BGB-3245)
In June 2019, we announced the formation of MapKure, which is jointly owned by us and BeiGene.
BeiGene licensed to MapKure exclusive rights to brimarafenib, a novel, investigational oral, selective small
molecule inhibitor of monomeric and dimeric forms of activating BRAF mutations, including V600 BRAF
mutations, non-V600 BRAF mutations and RAF fusions. MapKure is advancing brimarafenib through
clinical development for solid tumor patients harboring BRAF driver mutations and BRAF fusions that were
observed to be sensitive to the compound in preclinical studies. We believe that BGB-3245 may be unique
in its BRAF binding and disassociation properties, potentially enabling differentiated antitumor activity as
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compared to other known RAF inhibitors. Furthermore, BRAF fusion proteins have recently been
described as drivers of cancer cell growth, with recent literature suggesting that these mutations may
account for 0.3% of all human cancers.
In February 2020, MapKure, BeiGene and SpringWorks announced the initiation of a Phase 1 dose-
escalation and expansion clinical trial evaluating brimarafenib in adult patients with advanced or refractory
solid tumors harboring specific genetic mutations that based on preclinical results are predicted to be
sensitive to treatment with brimarafenib. We most recently presented clinical data from the ongoing
Phase 1a/1b trial evaluating brimarafenib in patients with advanced or refractory solid tumors harboring
MAPK pathway aberrations at the AACR Annual Meeting in April 2023. These clinical data showed
manageable safety profiles and clinical activity in various solid tumors with MAPK pathway aberrations.
Dose expansion studies are currently ongoing and we anticipate sharing updated data in the second half of
2024.
In August 2023, MapKure submitted an IND application for a combination study of brimarafenib
with panitumumab, a monoclonal antibody targeting EGFR, in colorectal and pancreatic cancer patients
with known MAPK pathway mutations; MapKure expects to initiate a Phase 1b trial in the first quarter of
2024.
In addition to our significant, but non-controlling equity ownership in MapKure, we have one seat on
each of MapKure’s joint steering committee and its board of directors. We are also contributing to the clinical
development of brimarafenib and other operational activities through a service agreement with MapKure.
Other pipeline programs
We intend to continue to build our portfolio with assets that have strong biological rationales and
validated mechanisms of action. Our early-stage pipeline includes SW-682, an investigational oral, small
molecule TEA Domain, or TEAD, inhibitor that we in-licensed from Katholieke Universiteit Leuven and
the Flanders Institute for Biotechnology in 2021 and are evaluating in Hippo-mutant solid tumors. We believe
TEAD inhibition represents an emerging approach for addressing multiple biomarker-defined cancers
characterized by aberrant Hippo pathway signaling, which is genetically altered in up to 10% of cancers. In
the fourth quarter of 2023, we filed an IND for SW-682, which was cleared by the FDA in the first quarter of
2024. We plan to initiate a Phase 1 trial of SW-682 in Hippo mutant solid tumors in the first half of 2024.
Additionally, we are pursuing development of discovery programs that represent potentially first-in-class and
best-in-class product candidates designed to address tumors where no or limited treatment options exist.
Disease and market overview
Our portfolio of small molecule targeted oncology product candidates is designed to address both rare
tumor types and highly prevalent, genetically defined cancers where we believe there is a significant unmet
need. Information on the diseases and related markets that may be addressed by our programs is set forth
below.
Desmoid tumors
Desmoid tumors, also referred to as aggressive fibromatosis or desmoid-type fibromatosis, are rare,
locally aggressive, invasive soft tissue tumors that can occur in both children and adults. These tumors are
characterized by a growth pattern that can invade surrounding healthy tissues, including joints, muscle and
viscera. Depending on tumor size, aggressiveness of growth pattern and location, desmoid tumors can cause
severe morbidities such as pain, disfigurement, internal bleeding and debilitating impairment on range of
motion. Desmoid tumors typically occur in patients between the ages of 15 and 60 years old and are more
commonly diagnosed in the third and fourth decades of life, with a two-to-three times higher prevalence in
females. The annual incidence is estimated to be 1,000 to 1,650 new desmoid tumor patients diagnosed
each year in the United States. Desmoid tumors are generally routine to diagnose and are usually first noted
upon physical examination or by using various imaging techniques, such as ultrasound, computed
tomography, or CT, or magnetic resonance imaging, or MRI. Desmoid tumors, despite being highly morbid,
typically have a limited impact on mortality. Due to this limited impact on overall lifespan and historical
8
lack of effective treatment options, we believe that there is a sizable prevalent pool of desmoid tumor
patients who could potentially benefit from an effective, FDA-approved treatment.
Prior to the approval of OGSIVEO, treatment options for desmoid tumors were limited and often had
low success rates. Historically, many desmoid tumors were treated with surgical resection. However, up to
77% of patients undergoing surgery will relapse depending on patient age, tumor location and tumor size. In
recent years, desmoid tumor treatment guidelines have increasingly shifted towards recommending systemic
treatment as the first-line intervention for desmoid tumors, instead of surgery, for most tumor locations.
Systemic therapies have been used off-label to treat desmoid tumors, with varying degrees of activity and
tolerability. These therapies include chemotherapeutic agents, such as liposomal doxorubicin and vinblastine/
methotrexate, non-steroidal anti-inflammatory drugs, anti-hormonal therapies and tyrosine kinase inhibitors.
Based on market research studies with feedback from over 400 physicians who manage patients with
desmoid tumors, we believe that approximately 50% of patients receiving a locoregional intervention, such
as surgery, or off-label systemic therapies will not have a satisfactory treatment outcome and will require
subsequent treatment for their desmoid tumors. Additionally, we believe that up to 90% or more of patients
will eventually receive an active intervention. Based on this market research, we estimate that, in any given
year over the next decade, approximately 5,500 to 7,000 desmoid tumor patients will be actively managed
in the United States.
OGSIVEO is the first and only FDA-approved therapy for desmoid tumors, with approval received on
November 27, 2023. OGSIVEO is indicated for adult patients with progressing desmoid tumors who require
systemic treatment. In December 2023, the NCCN Guidelines® were updated to recommend nirogacestat
as an NCCN Category 1, Preferred treatment option for desmoid tumors.
Ovarian granulosa cell tumors
Ovarian GCT are the most common type of sex cord stromal tumor, accounting for approximately
5 – 7% of all ovarian cancers. The annual incidence of ovarian GCT patients in the United States is
approximately 1,000 to 1,500 patients. These tumors can be divided into two subtypes: adult ovarian GCT
and juvenile ovarian GCT, which occur in patients under the age of 30 years old. Approximately 95% of
diagnosed ovarian GCT are adult ovarian GCT. Both subtypes are characterized by indolent growth, and
the majority of adult ovarian GCT are diagnosed at an early stage. Symptoms of ovarian GCT include
abdominal pain and abnormal vaginal bleeding, and some cases may also present with menorrhagia, irregular
menstruation, or amenorrhea in women of reproductive age. There are currently no FDA-approved
treatments for ovarian GCT. Surgery is the primary treatment option and aims to achieve histological
diagnosis, an appropriate staging and complete debulking of disease. In patients with early-stage disease
and those in reproductive age, unilateral salpingo-oophorectomy with peritoneal staging is indicated. The
probability of post-surgical recurrence in adult ovarian GCT patients is high, approximately 44%, typically
occurring within the first 10 years of diagnosis. Platinum-based chemotherapy and/or radiotherapy are used
in advanced or unresectable disease, although with modest benefit. Therefore, additional treatment options
are needed for recurrent disease.
Multiple myeloma
MM is a plasma cell neoplasm with substantial morbidity and mortality and is the second most
common hematologic malignancy in the United States accounting for approximately 10% of all hematologic
cancers. The NCI surveillance, epidemiology and end results program estimated that in 2016 there were
approximately 130,000 patients in the United States living with MM. MM is characterized by the expansion
and abnormal accumulation of malignant plasma cells in the bone marrow, which disrupts normal bone
marrow function and over time can lead to anemia, hypercalcemia, thrombocytopenia, bone pain, fatigue
and weight loss. As the disease progresses, it destroys the surrounding bone marrow and can lead to renal
failure, increased susceptibility to infection, skeletal deterioration and neurologic disease.
Treatment of MM has advanced significantly in the past decade, driven by a deeper understanding of
disease processes and a sequenced or polypharmacy approach. Newly diagnosed patients with MM are
treated with either stem cell transplants or multiple classes of therapeutic agents, either alone or in
combination, to attempt to control their disease progression. These agents include proteasome inhibitors
such as bortezomib, immunomodulatory drugs such as lenalidomide, monoclonal antibodies such as
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daratumumab, histone deacetylase inhibitors such as panobinostat, alkylating agents such as melphalan, anti-
inflammatories such as dexamethasone and chemotherapeutic agents such as doxorubicin. Despite these
current options, the durability of clinical response and benefit is often brief. As there are no therapies that
currently are considered curative, nearly all patients who survive initial treatments are eventually deemed
resistant or refractory to available therapies and their disease continues to progress. By the time these
heavily pretreated patients reach this advanced state, they are often directed to clinical trials for treatment
with experimental agents. Due to the advanced condition of these patients, the refractory nature of their
disease and the toll prior treatments have taken on their health, responses to treatment are generally poor.
BCMA-directed agents have emerged as a potentially promising approach for the treatment of RRMM
patients due to the restriction of BCMA’s expression solely on the surface of plasmablasts and differentiated
plasma cells, with several such agents having received regulatory approval in the last few years.
NF1-PN
NF1 is a rare, autosomal dominant tumor predisposition disorder that arises from mutations in the
NF1 gene, which encodes for neurofibromin, a key negative regulator of the MAPK pathway. NF1 is the
most common form of neurofibromatosis, with an estimated global birth incidence of approximately 1 in
2,500 individuals. NF1 patients are at risk of developing plexiform neurofibromas, or PN, which are tumors
that grow in an infiltrative pattern along the peripheral nerve sheath and that can cause severe disfigurement,
pain and functional impairment; in rare cases, NF1-PN may be fatal. We estimate that there are approximately
100,000 patients living with NF1 and approximately 40,000 NF1-PN patients in the United States. NF1-PN
are most often diagnosed in the first two decades of life and can be confirmed using routine imaging
techniques. These tumors are characterized by aggressive growth, which is typically more rapid during
childhood. NF1-PN typically do not spontaneously regress.
A MEK inhibitor, Koselugo (selumetinib), was approved by the FDA in April 2020 for the treatment
of pediatric patients two years of age and older with NF1 who have symptomatic, inoperable PN. While
surgical resection is another treatment option for NF1-PN patients, wide margins are required to resect the
tumors, and this is an outcome that can rarely be achieved in NF1-PN patients. Off-label systemic treatments,
such as chemotherapy and immunotherapy, are also used to treat NF1-PN, but have not been shown to
consistently confer a clinical benefit.
MAPK-aberrant cancers
Constitutive activation of the MAPK pathway has been reported in approximately 25% of human
cancers, including colon, lung, breast, pancreatic, ovarian and renal tumors. The cause of pathway activation
is varied and tissue-specific, but is driven by one or more of the following mechanisms: (i) upstream
activation of one or more receptor tyrosine kinases, such as EGFR, (ii) mutations in a RAS isoform, such
as KRAS and (iii) other mutations or aberrations within the pathway, such as in BRAF and NF1.
RAS mutations are one of the most common genetic aberrations found in human cancers and these
driver mutations are found in approximately 25% of all solid tumors, representing over 200,000 new patients
diagnosed in the United States each year. RAS proteins, which are comprised of the KRAS, HRAS and
NRAS isoforms, are central to the transduction of receptor tyrosine kinase signaling and lead to downstream
activation of the canonical RAF-MEK-ERK signaling cascade of the MAPK pathway.
RAF mutations have been reported in up to 7% of all solid tumors, with the most widely described
being the BRAF V600 mutations, commonly found in patients with metastatic melanoma. While there are
approved MEK-RAF targeted combination therapies for patients with BRAF V600 mutations, patients
eventually progress on these therapies representing a significant unmet clinical need.
Patients with mutations and aberrations in the MAPK pathway aside from RAS and RAF mutations
also represent a substantial unmet clinical need owing to a lack of approved therapies. Such tumors include
malignant cancers driven by NF1 mutations, such as malignant peripheral nerve sheath tumors, or MPNST.
We are aware of a limited number of approved therapies for the treatment of solid tumors with specific
MAPK mutations. These approved treatments are limited for use only in subsets of patients with specific
mutation types (for example, KRAS G12C and BRAF V600) and address just a fraction of all patients with
MAPK mutations.
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License and collaboration agreements
Pfizer license agreements
Nirogacestat license agreement
In August 2017, we entered into a license agreement, or the Nirogacestat License Agreement, with
Pfizer, pursuant to which we acquired exclusive (including as to Pfizer) worldwide sublicensable rights to
research, develop and manufacture nirogacestat for the treatment, diagnosis and prevention of all diseases
and commercialize nirogacestat for the treatment, diagnosis and prevention of all diseases other than
Alzheimer’s disease, breast cancer and prostate cancer. Additionally, Pfizer agreed that, for ten years, it
would not conduct a clinical trial of a gamma secretase inhibitor for desmoid tumors. Pfizer retained rights
to commercialize nirogacestat for the treatment of Alzheimer’s disease, breast cancer and prostate cancer.
We subsequently amended the Nirogacestat License Agreement in July 2019 with regard to certain provisions
relating to intellectual property.
Pursuant to the Nirogacestat License Agreement, as amended, we are obligated to use commercially
reasonable efforts to develop and seek regulatory approval for at least one product in the United States and
if regulatory approval is obtained, to commercialize such product in the United States. If, following regulatory
approval in the United States, we reasonably anticipate that the product will receive a certain level of
reimbursement in certain countries, then we are obligated to use commercially reasonable efforts to develop
and seek regulatory approval for the product in such country and if regulatory approval is obtained, to
commercialize such product in such country.
We are required to pay Pfizer up to an aggregate of $232.5 million upon achievement of certain
commercial milestone events. One such milestone event was achieved upon the first commercial sale of
OGSIVEO in December 2023, and the related milestone payment of $11.3 million will be due to Pfizer in
the second quarter of 2024.
We will also pay Pfizer tiered royalties on sales of nirogacestat at percentages ranging from the mid-
single digits to the low 20s, that may be subject to deductions for expiration of valid claims, amounts due
under third-party licenses and generic competition.
Unless earlier terminated, the Nirogacestat License Agreement will expire upon the expiration of all
royalty obligations. The royalty period will expire on a country-by-country basis upon the later of (i) ten years
from the first commercial sale, (ii) the expiration of all regulatory or data exclusivity and (iii) the expiration
of the last-to-expire valid patent claim. Following expiration of the applicable royalty period for a country,
we will continue to have a perpetual, fully paid-up, non-exclusive license to all IP licensed during the royalty
period for such country. We have the right to terminate the Nirogacestat License Agreement for convenience
upon thirty (30) days’ prior written notice. Pfizer may not terminate the agreement for convenience. Either we
or Pfizer may terminate the Nirogacestat License Agreement if the other party is in material breach and
such breach is not cured within the specified cure period. In addition, either we or Pfizer may terminate the
Nirogacestat License Agreement in the event of specified insolvency events involving the other party. If
Pfizer terminates the agreement as a result of our uncured material breach or our insolvency, our rights to
nirogacestat would revert to Pfizer and Pfizer would retain its licenses to intellectual property relating to
targets for which it has exercised an option (unless Pfizer elects otherwise), subject to reduced payment
obligations.
Mirdametinib license agreement
In August 2017, we entered into a license agreement, or the Mirdametinib License Agreement with
Pfizer pursuant to which we acquired exclusive (including as to Pfizer) worldwide sublicensable rights to
research, develop, manufacture and commercialize mirdametinib for the treatment of all diseases. Additionally,
Pfizer agreed, that for ten years, it will not conduct a clinical trial with a MEK inhibitor for NF1, but
excluding a MEK inhibitor owned or controlled by a third party that acquires, or is acquired by, Pfizer. We
subsequently amended the Mirdametinib License Agreement in August 2019 with regard to certain
provisions relating to intellectual property.
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Pursuant to the Mirdametinib License Agreement, as amended, we are obligated to use commercially
reasonable efforts to develop and seek regulatory approval for at least one product in the United States and
if regulatory approval is obtained, to commercialize such product in the United States. If, following regulatory
approval in the United States, we reasonably anticipate that the product will receive a certain level of
reimbursement in certain countries, then we will use commercially reasonable efforts to develop and seek
regulatory approval for the product in such country and if regulatory approval is obtained, to commercialize
such product in such country.
We are required to pay Pfizer up to an aggregate of $229.8 million upon achievement of certain
commercial milestone events.
We will also pay Pfizer tiered royalties on sales of mirdametinib at percentages ranging from the mid-
single digits to the low 20s, that may be subject to deductions for expiration of valid claims, amounts due
under third-party licenses and generic competition.
Unless earlier terminated, the Mirdametinib License Agreement will expire upon the expiration of all
royalty obligations. The royalty period will expire on a country-by-country basis upon the later of (i) ten years
from the first commercial sale, (ii) the expiration of all regulatory or data exclusivity and (iii) the expiration
of the last-to-expire valid patent claim. Following expiration of the applicable royalty period for a country,
we will continue to have a perpetual, fully paid-up, non-exclusive license to all IP licensed during the royalty
period for such country. We have the right to terminate the Mirdametinib License Agreement for
convenience upon thirty (30) days’ prior written notice. Pfizer may not terminate the agreement for
convenience. Either we or Pfizer may terminate the Mirdametinib License Agreement if the other party is in
material breach and such breach is not cured within the specified cure period. In addition, either we or
Pfizer may terminate the Mirdametinib License Agreement in the event of specified insolvency events
involving the other party. If Pfizer terminates the agreement as a result of our uncured material breach or
our insolvency, our rights to nirogacestat would revert to Pfizer and Pfizer would retain its licenses to
intellectual property relating to targets for which it has exercised an option (unless Pfizer elects otherwise),
subject to reduced payment obligations.
BeiGene clinical collaboration agreement
In August 2018, we entered into a clinical collaboration agreement with BeiGene, or the BeiGene
Collaboration Agreement, to evaluate the safety, tolerability and preliminary efficacy of combining
BeiGene’s investigational RAF dimer inhibitor, lifirafenib (BGB-283), and mirdametinib, in a Phase 1b
clinical trial for patients with advanced or refractory solid tumors.
GlaxoSmithKline clinical collaboration agreement and amendment
In June 2019, we entered into a clinical trial collaboration and supply agreement with GSK, or the
GSK Collaboration Agreement, to evaluate nirogacestat in combination with belantamab mafodotin
(belamaf), GSK’s BCMA ADC, in an adaptive Phase 1b clinical trial in patients with RRMM.
In October 2021, we amended the GSK Collaboration Agreement to add additional dosing regimens to
the ongoing clinical trial evaluating the combination of nirogacestat and belamaf and to collaborate on
additional trials evaluating the combination with other pharmaceutical agents for relapsed and refractory
MM. With this amendment, we announced the initiation of an expanded Phase 2 cohort from the first
combination dose level that evaluated 0.95 mg/kg Q3W belamaf plus nirogacestat based on encouraging
preliminary data observed in the Phase 1 cohort. The expanded Phase 2 cohort is further exploring the
safety and efficacy profile compared to a 2.5 mg/kg Q3W belamaf monotherapy control arm, which is the
same as the FDA-approved monotherapy dose and schedule of belamaf. We also announced the addition of
two new sub-studies that will explore belamaf plus nirogacestat in combination with pomalidomide and
dexamethasone and in combination with lenalidomide plus dexamethasone in patients with RRMM. We
believe that data from these sub-studies may enable future clinical trials in earlier lines of MM. The amendment
did not amend or modify the operational or financial responsibilities of the parties.
In September 2022, we expanded the GSK Collaboration Agreement to include the potential for
continued development and commercialization of the combination of belamaf and nirogacestat in earlier
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lines of treatment, including in newly diagnosed MM patients. Under the expanded agreement, we continue
to retain full commercial rights to nirogacestat. Additionally, we will continue to supply nirogacestat for
future belamaf clinical trials and will seek to make nirogacestat commercially available in markets where
approval has been sought by GSK for a combination with belamaf. GSK funds all development costs related
to the combination regimen study, except for those related to the supply of nirogacestat and certain
expenses related to intellectual property rights. We are responsible for costs to commercialize nirogacestat as
part of the combination regimen.
Other clinical collaboration agreements related to nirogacestat and BCMA-directed therapy combination
development
In addition to the GSK Collaboration Agreement, we have entered into several other clinical trial
collaboration and supply agreements with industry partners to evaluate nirogacestat in combination with
BCMA-directed therapies of various modalities, including CAR T-cell therapies, bispecific antibodies and
monoclonal antibodies, in patients with RRMM.
Each partner is responsible for administering the clinical trials to evaluate its respective BCMA-directed
therapy in combination with nirogacestat and is responsible for all costs associated with the direct conduct
of the clinical trial, other than the manufacture and supply of nirogacestat and certain expenses related to
intellectual property rights. Each collaboration is managed by a joint committee of our representatives
and those of the respective partners.
Unless earlier terminated, each collaboration agreement will expire upon completion of the analyses
contemplated by the clinical trial. Either we or the respective counterparty may terminate the collaboration
agreement for other reasons specified within the collaboration agreement.
Jazz Pharmaceuticals asset purchase and exclusive license agreement
In October 2020, we announced an asset purchase and exclusive license agreement with Jazz
Pharmaceuticals Ireland Limited, or Jazz, the Jazz Agreement, pursuant to which Jazz acquired our fatty
acid amide hydrolase, or FAAH, inhibitor program including PF-04457845. Jazz made an upfront payment
of $35 million to us with potential future payments of up to $375 million based upon the achievement of
certain clinical development, regulatory, and commercial milestones. In addition, Jazz is obligated to pay us
sales-based royalties on future net sales of PF-04457845.
Pursuant to the Jazz Agreement, Jazz is obligated to use commercially reasonable efforts to develop
and seek regulatory approval for at least one product in the United States and if regulatory approval is
obtained, to commercialize such product in the United States.
Unless earlier terminated, the Jazz Agreement shall remain in effect on a product-by-product and country-
by-country basis until the expiration of the royalty term for such product in such country, as defined in the
Jazz Agreement. Either party may terminate the Jazz Agreement if either party commits a material breach of
the Jazz Agreement that is not cured within a certain time period. Jazz may terminate the Jazz Agreement
for any reason so long as it provides advance written notice to us as specified in the agreement.
Pursuant to the development plan under the Jazz Agreement, Jazz initially studied PF-04457845, now
known as JZP150, as a treatment for post-traumatic stress disorder, or PTSD. On December 21, 2023, Jazz
announced topline results from its Phase 2 trial of JZP150 in PTSD. The trial did not meet its primary or
secondary endpoints. Jazz disclosed plans to further evaluate the data, but does not anticipate moving
forward with additional JZP150 development in PTSD.
TEAD inhibitor portfolio license agreement
In May 2021, we announced an exclusive worldwide license agreement with Katholieke Universiteit
Leuven, or KU Leuven, and the Flanders Institute for Biotechnology, or VIB, pursuant to which we in-
licensed a portfolio of novel small molecule inhibitors of the TEA Domain, or TEAD, family of transcription
factors, designed for the potential treatment of biomarker-defined solid tumors driven by aberrant Hippo
pathway signaling. Under the terms of the agreement, we made an upfront payment of $11 million to
KU Leuven and VIB. Pursuant to the terms of the agreement, KU Leuven and VIB are also eligible to receive,
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in the aggregate, up to $120 million in development milestones, up to $165 million in commercial milestones
and tiered single-digit percentage royalties based on any future net sales of products developed based on
the in-licensed technology.
EGFR inhibitor portfolio license agreement and sponsored research agreement
In October 2021, we announced an exclusive worldwide license agreement with Dana-Farber Cancer
Institute, or Dana-Farber, pursuant to which we in-licensed a portfolio of novel small molecule inhibitors of
Epidermal Growth Factor Receptor, or EGFR, designed for the treatment of EGFR-mutant lung cancers.
Under the terms of the agreement, we made an upfront payment of $0.3 million to Dana-Farber. Pursuant to
the terms of the agreement, Dana-Farber is also eligible to receive up to $2.3 million in development
milestones, up to $39 million in commercial milestones and single-digit percentage royalties based on any
future net sales of products developed based on the in-licensed technology.
Concurrent with this license agreement, we entered a multi-year sponsored research agreement with
Stanford Medicine to fund continued research and development in a laboratory at Stanford Medicine as
well as collaborating laboratories at Dana-Farber. This sponsored research agreement is intended to support
lead optimization and translational biology efforts as the EGFR inhibitor portfolio advances towards
development candidate nomination.
Intellectual property
Our success depends in part on our ability to obtain and maintain proprietary protection for our
product candidates, manufacturing and process discoveries and other know-how, to operate without
infringing the proprietary rights of others, and to prevent others from infringing our proprietary rights. We
plan to protect our proprietary position using a variety of methods, which include pursuit of U.S. and
foreign patent applications related to proprietary technology, inventions and improvements, such as
compositions of matter and methods-of-use, that we determine are important to the development and
execution of our business. For example, we, our licensors, or our collaborators currently have, or are pursuing,
patents covering the composition of matter for our product candidates and we plan to generally pursue
patent protection covering methods-of-use for one or more clinical programs. We also rely on trade secrets,
trademarks, know-how, continuing technological innovation and potential in-licensing opportunities to
develop and maintain our proprietary position.
Patents
At the time we were formed in August 2017, we entered into license agreements with Pfizer for our lead
product candidates, pursuant to which we acquired exclusive worldwide rights under Pfizer patents and know-
how to develop, manufacture and commercialize our lead product candidates.
We have exclusive licenses under the Nirogacestat License Agreement to patent rights in the United
States and numerous foreign jurisdictions relating to nirogacestat. The patent rights in-licensed under the
Nirogacestat License Agreement include patents granted in the United States and foreign jurisdictions,
including Australia, Canada, China, France, Germany, Spain, the United Kingdom and Japan. U.S. patents
covering nirogacestat as a composition of matter have a statutory expiration date in 2025, U.S. patents
that cover the drug substance and drug product, including polymorphic forms of nirogacestat, expire in
2039, U.S. patents that cover pharmaceutical compositions expire in 2042, and a U.S. patent that covers
methods of treating desmoid tumors expires in 2043, in each case, not including patent term adjustment or
any regulatory extensions, with foreign counterparts pending. Orphan drug exclusivity has been granted by
the FDA and will provide seven years of marketing exclusivity in the United States until October 27, 2030.
If we are successful in obtaining regulatory approval of nirogacestat for the treatment of desmoid tumors in
Europe we expect to rely on orphan drug exclusivity, which grants 10 years of marketing exclusivity. See
“License and collaboration agreements-Pfizer license agreements” above for additional information on our
rights under the Nirogacestat License Agreement. Nirogacestat was granted Orphan Drug Exclusivity in the
United States for the treatment of desmoid tumors and received Orphan Drug Designation from the
European Commission for the treatment of soft tissue sarcoma.
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We have exclusive licenses under the Mirdametinib License Agreement to patent rights in the United
States and numerous foreign jurisdictions relating to mirdametinib. The patent rights in-licensed under the
Mirdametinib License Agreement include granted patents based on work conducted by us and Pfizer and
include U.S. patents that cover polymorphic forms of mirdametinib, including the form that is currently
in clinical development, that expire in 2041, a U.S. patent that covers pharmaceutical compositions that
expires in 2041, and U.S. patents directed to methods of treatment that expire in 2041 and 2043, in each case
not including any regulatory extensions, with foreign counterparts pending. If we are successful in obtaining
regulatory approval of mirdametinib for the treatment of NF1, we expect to rely on orphan drug
exclusivity, which generally grants seven years of marketing exclusivity in the United States and 10 years of
marketing exclusivity in Europe. See “License and collaboration agreements-Pfizer license agreements” above
for additional information on our rights under the Mirdametinib License Agreement. The FDA has
granted mirdametinib Orphan Drug Designation for NF1-PN, and the European Commission has granted
mirdametinib Orphan Drug Designation for NF1.
For combination therapeutics involving nirogacestat or mirdametinib, there may be opportunities to
enhance our patent estate, which we will explore. There can be no assurance that patents will issue from any
of these efforts.
Trade secrets
In addition to patents, we rely on trade secrets and know-how to develop and maintain our competitive
position. We typically rely on trade secrets to protect aspects of our business that are not amenable to, or
that we do not consider appropriate for, patent protection. We protect trade secrets and know-how by
establishing confidentiality agreements and invention assignment agreements with our employees, consultants,
scientific advisors, contractors and partners. These agreements generally provide that all confidential
information developed or made known during the course of an individual or entity’s relationship with us
must be kept confidential during and after the relationship. These agreements also generally provide that all
inventions resulting from work performed for us or relating to our business and conceived or completed
during the period of employment or assignment, as applicable, shall be our exclusive property. In addition,
we take other appropriate precautions, such as physical and technological security measures, to guard against
misappropriation of our proprietary information by third parties.
Manufacturing
We rely on third parties to manufacture all of our requirements of drug substance and drug product.
We have entered into agreements with contract manufacturing organizations, or CMOs, to produce drug
substance and drug product for the nirogacestat, mirdametinib and TEAD programs. We require all of our
CMOs to conduct manufacturing activities in compliance with current good manufacturing practice, or
cGMP, requirements. We currently rely on these CMOs for scale-up and process development work and to
produce sufficient quantities of our product candidates for use in preclinical studies, clinical trials and
commercial distribution requirements. We anticipate that these CMOs will have the capacity to support
both clinical supply and commercial-scale production. We have entered into agreements for the commercial
supply of nirogacestat drug substance and finished product. We will seek to enter into additional CMO
arrangements, including potentially for back-up sources of supply, as needed.
Commercial operations
To support commercialization of OGSIVEO, we have assembled a U.S. commercial field organization
of business managers and directors, including 35 territory business managers and regional business directors.
Many desmoid tumor and NF1-PN patients in the United States are managed by specialist physicians,
including oncologists, medical geneticists and neurologists, and therefore we believe these care teams can be
reached with targeted sales forces.
For our product candidates being explored in combination with other agents or in highly prevalent
diseases, we intend to establish commercialization strategies for each in collaboration with our partner as we
approach potential marketing approval and will share responsibilities in a manner that takes into account
our respective commercial infrastructures, competencies and country-specific expertise.
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Customers
We are currently approved to sell OGSIVEO for the treatment of desmoid tumors in adult patients
who require systemic treatment in the U.S. market. We distribute OGSIVEO principally through third party
specialty drug distributors and specialty pharmacies. We currently do not have and do not expect to have a
disproportionate concentration with any one of these distributors and we expect our sales volume to be
relatively evenly distributed across these distributors.
Competition
The pharmaceutical industry is characterized by rapid evolution of technologies and intense
competition. While we believe that our approved product, product candidates, technology, knowledge,
experience and scientific resources provide us with competitive advantages, we face competition from major
pharmaceutical and biotechnology companies, academic institutions, governmental agencies and public
and private research institutions, among others.
OGSIVEO and any other product candidates that we successfully develop and commercialize will
compete with approved treatment options, including off-label therapies, and new therapies that may become
available in the future. Key considerations that would impact our ability to effectively compete with other
therapies include the efficacy, safety, method of administration, cost, level of promotional activity and
intellectual property protection of our products. Many of the companies against which we may compete
have significantly greater financial resources and expertise than we do in research and development,
manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing
approved products.
OGSIVEO in desmoid tumors
OGSIVEO is the first and only FDA-approved therapy for desmoid tumors, with approval received on
November 27, 2023. We are aware that other companies are, or may be, developing products for this
indication, including, but not limited to, Ayala Pharmaceuticals, Inc., who announced the sale of their gamma
secretase inhibitor AL102, currently in a Phase 3 clinical trial for treatment of desmoid tumors to
Immunome, Inc. on February 6, 2024, Bayer Corporation, Eisai Co., LTD. and Iterion Therapeutics, Inc.
We are also aware of several therapies, some of which are generic, that are used off-label for the treatment of
desmoid tumors. These therapies include chemotherapeutic agents, such as liposomal doxorubicin and
vinblastine/methotrexate, non-steroidal anti-inflammatory drugs, anti-hormonal therapies and tyrosine
kinase inhibitors, such as sorafenib, imatinib and pazopanib.
Mirdametinib in NF1-PN
AstraZeneca PLC’s Koselugo is currently the only therapy approved by the FDA for the treatment of
pediatric NF1-PN. We are aware that other companies are, or may be, developing products for this indication,
including, but not limited to, Array BioPharma Inc. (a subsidiary of Pfizer), Chia Tai Tianqing
Pharmaceutical Group Co., LTD, Infixion Bioscience, Inc., NFlection Therapeutics, Inc., Novartis
International AG, Pasithea Therapeutics Corp. and Shanghai Fosun Pharmaceutical (Group) Co., Ltd. We
are also aware of several therapies, some of which are generic, that are used off-label for the treatment of
NF1-PN. These therapies include radiotherapy and various systemic treatments, such as chemotherapy
and immunotherapy.
BCMA-targeted therapies and GSI combinations in multiple myeloma
We are aware of efforts by others to combine a GSI and a BCMA-directed agent to treat RRMM.
Celgene, a subsidiary of Bristol-Myers Squibb Company, is currently evaluating a BCMA-directed ADC,
CC-99712, in combination with crenigacestat, a GSI licensed from Eli Lilly and Company in December 2017;
this combination is currently in Phase 1 clinical testing. Celgene is also evaluating crenigacestat in
combination with its approved autologous BCMA-directed CAR T-cell therapy, ABECMA (ide-cel), in an
ongoing Phase 1/2 clinical trial.
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Mirdametinib and brimarafenib in MAPK-aberrant cancers
For our biomarker-defined solid tumor portfolio, we are aware that other companies are or may be
developing products for the treatment of solid tumors with specific mutations or aberrations that are being
targeted by our programs. Multiple products are in development targeting RAS mutations, RAF mutations
and other MAPK aberrations, including, but not limited to, those from Amgen Inc., AstraZeneca PLC,
Black Diamond Therapeutics, Inc., Boehringer Ingelheim International GmbH, BridgeBio Inc., Chugai
Pharmaceutical Co Ltd, Day One Biopharmaceuticals, Inc., Eli Lilly and Company, Erasca, Inc.,
F. Hoffmann-La Roche Ltd., Fore Biotherapeutics Inc., Hanmi Pharmaceutical Co., Ltd., Kinnate
Biopharma Inc., Merck & Co., Inc., Mirati Therapeutics, Inc., Moderna Inc., Novartis International AG,
Pfizer and Revolution Medicines, Inc. There may be additional companies with programs suitable for
addressing these patient populations that could be competitive with our efforts but that have not yet disclosed
specific clinical development plans.
TEAD inhibitor program
We are aware of other TEAD palmitoylation inhibitors in early-stage development, including, but not
limited to, product candidates from Ikena Oncology, Inc., Inventiva S.A., Genentech, Inc. and Vivace
Therapeutics, Inc.
Smaller or early-stage companies, including oncology-focused therapeutics companies, may also prove
to be significant competitors, particularly through collaborative arrangements with large and established
companies. These companies may also compete with us in recruiting and retaining qualified scientific and
management personnel, establishing clinical trial sites, enrolling patients in clinical trials and acquiring
technologies complementary to, or necessary for, our programs.
The availability of reimbursement from government and private payors will also significantly impact
the pricing and competitiveness of our products. Our competitors may obtain FDA or other regulatory
approvals for their products more rapidly than we may obtain approvals for our product candidates, which
could result in our competitors establishing a strong market position before we are able to commercialize our
product candidates.
Coverage, pricing and reimbursement
Successful commercialization of new drug products depends in part on the extent to which
reimbursement for those drug products will be available from government health administration authorities,
private health insurers and other organizations. Government authorities and other third-party payors,
such as private health insurers and health maintenance organizations, decide which drug products they will
pay for and establish reimbursement levels. The availability and extent of reimbursement by governmental and
private payors is essential for most patients to be able to afford a drug product. Sales of drug products
depend substantially, both domestically and abroad, on the extent to which the costs of drug products are
paid for by health maintenance, managed care, pharmacy benefit and similar healthcare management
organizations, or reimbursed by government health administration authorities, private health coverage
insurers and other third-party payors.
A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government
authorities and other third-party payors have attempted to control costs by limiting coverage and the
amount of reimbursement for particular drug products. In many countries, the prices of drug products are
subject to varying price control mechanisms as part of national health systems. In general, the prices of drug
products under such systems are substantially lower than in the United States. Other countries allow
companies to fix their own prices for drug products, but monitor and control company profits. Accordingly,
in markets outside the United States the reimbursement for drug products may be reduced compared with
the United States.
In the United States, the principal decisions about reimbursement for new drug products are typically
made by the Centers for Medicare & Medicaid Services, or CMS, an agency within the Department of Health
and Human Services, or HHS. CMS decides whether and to what extent a new drug product will be
covered and reimbursed under certain federal governmental healthcare programs, such as Medicare, and
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private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and
reimbursement for drug products exists among third-party payors and coverage and reimbursement levels
for drug products can differ significantly from payor to payor. In the United States, the process for determining
whether a third-party payor will provide coverage for a biological product typically is separate from the
process for setting the price of such product or for establishing the reimbursement rate that the payor will
pay for the product once coverage is approved. With respect to biologics, third-party payors may limit coverage
to specific products on an approved list, also known as a formulary, which might not include all of the FDA-
approved products for a particular indication, or place products at certain formulary levels that result in
lower reimbursement levels and higher cost sharing obligation imposed on patients. A decision by a third-party
payor not to cover our product candidates could reduce physician utilization of a product.
Moreover, a third-party payor’s decision to provide coverage for a product does not imply that an
adequate reimbursement rate will be approved. Adequate third-party reimbursement may not be available
to enable a manufacturer to maintain price levels sufficient to realize an appropriate return on its investment
in product development. Additionally, coverage and reimbursement for products can differ significantly
from payor to payor. One third-party payor’s decision to cover a particular medical product does not ensure
that other payors will also provide coverage for the medical product, or will provide coverage at an adequate
reimbursement rate. As a result, the coverage determination process usually requires manufacturers to provide
scientific and clinical support for the use of their products to each payor separately and is a time-
consuming process. Factors payors consider in determining reimbursement are based on whether the
product is:
• a covered benefit under its health plan;
• safe, effective and medically necessary;
• appropriate for the specific patient;
• cost-effective; and
• neither experimental nor investigational.
Coverage policies and third-party reimbursement rates may change at any time. Even if favorable
coverage and reimbursement status is attained for one or more products for which we receive regulatory
approval, less favorable coverage policies and reimbursement rates may be implemented in the future.
Third-party payors are increasingly challenging the prices charged for medical products and services,
examining the medical necessity and reviewing the cost-effectiveness of pharmaceutical products, in addition
to questioning safety and efficacy. If third-party payors do not consider a product to be cost-effective
compared to other available therapies, they may not cover that product after FDA approval or, if they do,
the level of payment may not be sufficient to allow a manufacturer to sell its product at a profit.
In addition, in many foreign countries, the proposed pricing for a drug must be approved before it may
be lawfully marketed. The requirements governing drug pricing and reimbursement vary widely from country
to country. In the European Union, or EU, governments influence the price of products through their
pricing and reimbursement rules and control of national healthcare systems that fund a large part of the
cost of those products to consumers. Some jurisdictions operate positive and negative list systems under
which products may only be marketed once a reimbursement price has been agreed to by the government. To
obtain reimbursement or pricing approval, some of these countries may require the completion of clinical
trials that compare the cost effectiveness of a particular product to currently available therapies. Other member
states allow companies to fix their own prices for medicines, but monitor and control company profits.
There can be no assurance that any country that has price controls or reimbursement limitations for
pharmaceutical products will allow favorable reimbursement and pricing arrangements for any of our
products. The downward pressure on healthcare costs in general, particularly prescription products, has
become very intense. As a result, increasingly high barriers are being erected to the entry of new products. In
addition, in some countries, cross border imports from low-priced markets exert a commercial pressure on
pricing within a country.
Government regulation
Government authorities in the United States at the federal, state and local level and in other countries
and jurisdictions, including the EU, extensively regulate, among other things, the research, development,
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testing, manufacture, quality control, approval, labeling, packaging, storage, record-keeping, promotion,
advertising, distribution, post-approval monitoring and reporting, marketing and export and import of drug
products, such as nirogacestat, mirdametinib and our other product candidates. Generally, before a new
drug can be marketed, considerable data demonstrating its quality, safety and efficacy must be obtained,
organized into a format specific for each regulatory authority and submitted for review and approved by the
regulatory authority.
Clinical trials
The clinical stage of development involves the administration of the investigational product to healthy
volunteers or patients under the supervision of qualified investigators, generally physicians not employed
by, or under control of, the trial sponsor, in accordance with Good Clinical Practices, or GCPs, which include
the requirement that all research subjects provide their informed consent for their participation in any
clinical trial. Clinical trials are conducted under protocols detailing, among other things, the objectives of
the clinical trial, dosing procedures, subject selection and exclusion criteria and the parameters to be used to
monitor subject safety and assess efficacy. Each protocol, and any subsequent amendments to the protocol,
must be submitted to the FDA as part of the IND. Furthermore, each clinical trial must be reviewed and
approved by an Institutional Review Board, or IRB, for each institution at which the clinical trial will be
conducted to ensure that the risks to individuals participating in the clinical trials are minimized and are
reasonable in relation to anticipated benefits. The IRB also approves the informed consent form that must be
provided to each clinical trial subject or their legal representative, and must monitor the clinical trial until
completed. There also are requirements governing the reporting of ongoing clinical trials and completed
clinical trial results to public registries. Information about most clinical trials must be submitted within specific
timeframes for publication on the www.clinicaltrials.gov website. Information related to the product,
patient population, phase of investigation, trial sites and investigators and other aspects of the clinical trial
is made public as part of the registration of the clinical trial. Sponsors are also obligated to discuss the results
of their clinical trials after completion. Disclosure of the results of these trials can be delayed in some
cases for up to two years after the date of completion of the trial. Competitors may use this publicly available
information to gain knowledge regarding the progress of development programs. Human clinical trials are
typically conducted in three sequential phases, which may overlap or be combined:
• Phase 1 clinical trials generally involve a small number of healthy volunteers or disease-affected
patients who are initially exposed to a single dose and then multiple doses of the product candidate.
The primary purpose of these clinical trials is to assess the metabolism, pharmacologic action, side
effect tolerability and safety of the drug.
• Phase 2 clinical trials involve studies in disease-affected patients to determine the dose required to
produce the desired benefits. At the same time, safety and further pharmacokinetic and
pharmacodynamic information is collected, possible adverse effects and safety risks are identified,
and a preliminary evaluation of efficacy is conducted.
• Phase 3 clinical trials generally involve a larger number of patients at multiple sites and are designed
to provide the data necessary to demonstrate the effectiveness of the product for its intended use, its
safety in use and to establish the overall benefit/risk relationship of the product and provide an
adequate basis for product approval. These trials may include comparisons with placebo and/or other
comparator treatments. The duration of treatment is often extended to mimic the actual use of a
product during marketing.
A registrational trial is a clinical trial that adequately meets regulatory agency requirements for the
evaluation of a drug candidate’s efficacy and safety such that it can be used to justify the approval of the
drug. Generally, registrational trials are Phase 3 trials but may be Phase 2 trials if the trial design provides a
reliable assessment of clinical benefit, particularly in situations where there is an unmet medical need.
Post-approval trials, sometimes referred to as Phase 4 clinical trials, may be conducted after initial
marketing approval. These trials are used to gain additional experience from the treatment of patients in the
intended therapeutic indication, particularly for long-term safety follow up. In certain instances, the FDA
may mandate the performance of Phase 4 clinical trials as a condition of approval of a Biologics License
Application, or BLA.
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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. The FDA or the sponsor may suspend or terminate
a clinical trial at any time, or the FDA may impose other sanctions on various grounds, including a finding
that the research patients 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 requirements of the IRB or if the drug has been associated with unexpected serious harm to
patients. There are also requirements related to registration and reporting of certain clinical trials and
completed clinical trial results to public registries.
U.S.-FDA regulation
Approval process
In the United States, pharmaceutical products are subject to extensive regulation by the FDA. The
Federal Food, Drug, and Cosmetic Act, or the FDCA, and other federal and state statutes and regulations,
govern, among other things, the research, development, testing, manufacture, storage, recordkeeping,
approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting,
sampling, and import and export of pharmaceutical products. Failure to comply with applicable U.S.
requirements may subject a company to a variety of administrative or judicial sanctions, such as FDA refusal
to approve pending New Drug Applications, or NDAs, warning or untitled letters, product recalls, product
seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties and criminal
prosecution.
Pharmaceutical product development for a new product or certain changes to an approved product in
the United States typically involves preclinical laboratory and animal tests, the submission to the FDA of
an IND, which must become effective before clinical testing may commence, and adequate and well-controlled
clinical trials to establish the safety and effectiveness of the drug for each indication for which FDA approval
is sought. Satisfaction of FDA pre-market approval requirements typically takes many years and the actual
time required may vary substantially based upon the type, complexity and novelty of the product or disease.
Preclinical tests include laboratory evaluation of product chemistry, formulation and toxicity, as well as
animal studies to assess the characteristics and potential safety and efficacy of the product. The conduct of
the preclinical tests must comply with federal regulations and requirements, including good laboratory
practices. The results of preclinical testing are submitted to the FDA as part of an IND along with other
information, including information about product chemistry, manufacturing and controls and a proposed
clinical trial protocol. Long term preclinical tests, such as animal tests of reproductive toxicity and
carcinogenicity, may continue after the IND is submitted.
A 30-day waiting period after the submission of each IND is required prior to the commencement of
clinical testing in humans. If the FDA has neither commented on nor questioned the IND within this 30-day
period, the clinical trial proposed in the IND may begin.
Clinical trials involve the administration of the investigational new drug to healthy volunteers or
patients under the supervision of a qualified investigator. Clinical trials must be conducted: (i) in compliance
with federal regulations; (ii) in compliance with GCP, an international standard meant to protect the rights
and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; as well as
(iii) under protocols detailing the objectives of the trial, the parameters to be used in monitoring safety,
and the effectiveness criteria to be evaluated. Each protocol involving testing on U.S. patients and subsequent
protocol amendments must be submitted to the FDA as part of the IND.
The FDA may order the temporary, or permanent, discontinuation of a clinical trial at any time, or
impose other sanctions, if it believes that the clinical trial either is not being conducted in accordance with
FDA requirements or presents an unacceptable risk to the clinical trial patients. The trial protocol and
informed consent information for patients in clinical trials must also be submitted to an IRB for approval.
An IRB may also require the clinical trial at the site to be halted, either temporarily or permanently, for failure
to comply with the IRB’s requirements, or may impose other conditions. Clinical trials to support NDAs
for marketing approval are typically conducted in three sequential phases, but the phases may overlap. In
Phase 1, the initial introduction of the drug into healthy human subjects or patients, the drug is tested to assess
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metabolism, pharmacokinetics, pharmacological actions, side effects associated with increasing doses, and,
if possible, early evidence on effectiveness. Phase 2 usually involves trials in a limited patient population to
determine the effectiveness of the drug for a particular indication, dosage tolerance and optimum dosage,
and to identify common adverse effects and safety risks. If a compound demonstrates evidence of effectiveness
and an acceptable safety profile in Phase 2 evaluations, Phase 3 trials are undertaken to obtain the additional
information about clinical efficacy and safety in a larger number of patients, typically at geographically
dispersed clinical trial sites, to permit the FDA to evaluate the overall benefit-risk relationship of the drug
and to provide adequate information for the labeling of the drug. In most cases, the FDA requires two
adequate and well-controlled Phase 3 clinical trials to demonstrate the efficacy of the drug. A single Phase 3
trial with other confirmatory evidence may be sufficient in rare instances where the trial is a large multi-
center trial demonstrating internal consistency and a statistically very persuasive finding of a clinically
meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious
outcome and confirmation of the result in a second trial would be practically or ethically impossible.
Pursuant to the 21st Century Cures Act, which was enacted on December 13, 2016, the manufacturer of
an investigational drug for a serious or life-threatening disease is required to make available, such as by posting
on its website, its policy on evaluating and responding to requests for expanded access. This requirement
applies on the later of 60 days after the date of enactment or the first initiation of a Phase 2 or Phase 3 trial
of the investigational drug. After completion of the required clinical testing, an NDA is prepared and
submitted to the FDA. FDA approval of the NDA is required before marketing of the product may begin
in the United States. The NDA must include the results of all preclinical, clinical and other testing and a
compilation of data relating to the product’s pharmacology, chemistry, manufacture and controls. The cost of
preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to
a substantial application user fee, currently $3,242,026 for fiscal year 2023, and the manufacturer and/or
sponsor under an approved NDA are also subject to annual program fees for eligible products, which are
currently $393,933 for fiscal year 2023.
The FDA has 60 days from its receipt of an NDA to determine whether the application will be
accepted for filing based on the agency’s threshold determination that it is sufficiently complete to permit
substantive review. Once the submission is accepted for filing, the FDA begins an in-depth review. The FDA
has agreed to certain performance goals in the review of new drug applications. Most such applications for
standard review drug products are reviewed within ten to twelve months; most applications for priority review
drugs are reviewed in six to eight months. Priority review can be applied to drugs that the FDA determines
offer major advances in treatment or provide a treatment where no adequate therapy exists. The review process
for both standard and priority review may be extended by the FDA for three additional months to consider
certain late-submitted information, or information intended to clarify information already provided in
the submission.
The FDA may also refer applications for novel drug products, or drug products that present difficult
questions of safety or efficacy, to an advisory committee-typically a panel that includes clinicians and other
experts-for review, evaluation and a recommendation as to whether the application should be approved.
The FDA is not bound by the recommendation of an advisory committee, but it generally follows such
recommendations. Before approving an NDA, the FDA will typically inspect one or more clinical sites to
assure compliance with GCP. Additionally, the FDA will inspect the facility or the facilities at which the drug
is manufactured. The FDA will not approve the product unless compliance with cGMP is satisfactory and
the NDA contains data that provide substantial evidence that the drug is safe and effective in the indication
studied.
After the FDA evaluates the NDA and the manufacturing facilities, it issues either an approval letter or
a complete response letter. A complete response letter generally outlines the deficiencies in the submission
and may require substantial additional testing, or information, in order for the FDA to reconsider the
application. If, or when, those deficiencies have been addressed to the FDA’s satisfaction in a resubmission
of the NDA, the FDA will issue an approval letter. The FDA has committed to reviewing such resubmissions
in two or six months depending on the type of information included.
An approval letter authorizes commercial marketing of the drug with specific prescribing information
for specific indications. As a condition of NDA approval, the FDA may require a risk evaluation and
mitigation strategy, or REMS, to help ensure that the benefits of the drug outweigh the potential risks. REMS
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can include medication guides, communication plans for healthcare professionals and elements to assure
safe use, or ETASU. ETASU can include, but are not limited to, special training or certification for prescribing
or dispensing, dispensing only under certain circumstances, special monitoring and the use of patient
registries. The requirement for a REMS can materially affect the potential market and profitability of the
drug. Moreover, product approval may require substantial post-approval testing and surveillance to monitor
the drug’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with
regulatory standards is not maintained or problems are identified following initial marketing.
Changes to some of the conditions established in an approved application, including changes in
indications, labeling or manufacturing processes or facilities, require submission and FDA approval of a
new NDA or NDA supplement before the change can be implemented. An NDA supplement for a new
indication typically requires clinical data similar to that in the original application, and the FDA uses the same
procedures and actions in reviewing NDA supplements as it does in reviewing NDAs.
Exclusivity
Upon NDA approval of a new chemical entity, or NCE, which is a drug that contains no active moiety
that has been approved by FDA in any other NDA, that drug receives five years of marketing exclusivity.
Except in the circumstances described in the following paragraph, an Abbreviated New Drug Application, or
ANDA, seeking approval of a generic version of that drug may not be submitted to the FDA during the
five-year market exclusivity period. Certain changes to a drug, such as the addition of a new indication to
the package insert, are associated with a three-year period of exclusivity during which FDA cannot approve
an ANDA for a generic drug that includes the change.
An ANDA may be submitted one year before NCE exclusivity expires if a Paragraph IV certification is
filed. If there is no listed patent in the Orange Book, there may not be a Paragraph IV certification, and,
thus, no ANDA may be filed before the expiration of the exclusivity period.
Patent term extension
After NDA approval, owners of relevant drug patents may apply for up to a five-year patent extension
for one patent. The allowable patent term extension is calculated as half of the drug’s testing phase-the time
between IND and NDA submission-and all of the review phase-the time between NDA submission and
approval up to a maximum of five years. The time can be shortened if FDA determines that the applicant
did not pursue approval with due diligence. The total patent term after the extension may not exceed 14 years
from approval.
For patents that might expire during the application phase, the patent owner may request an interim
patent extension. An interim patent extension increases the patent term by one year and may be renewed up
to four times. For each interim patent extension granted, the post-approval patent extension is reduced by
one year. The director of the U.S. Patent and Trademark Office must determine that approval of the drug
covered by the patent for which a patent extension is being sought is likely. Interim patent extensions are not
available for a drug for which an NDA has not been submitted.
Orphan drugs
Under the Orphan Drug Act, the FDA may grant Orphan Drug Designation to drugs or biologics
intended to treat a rare disease or condition-generally a disease or condition that affects fewer than 200,000
individuals in the United States or affects more than 200,000 individuals in the United States where there
is no reasonable expectation that the cost of developing the drug or therapeutic biologic will be recovered
from sales in the U.S. Orphan Drug Designation must be requested before submitting an NDA. Among the
other benefits of Orphan Drug Designation are tax credits for certain research and a waiver of the NDA
application user fee. After the FDA grants Orphan Drug Designation, the generic identity of the drug and
its potential orphan use are disclosed publicly by the FDA. Orphan Drug Designation does not convey any
advantage in, or shorten the duration of, the regulatory review and approval process. The first NDA
applicant to receive FDA approval for a particular active ingredient to treat a particular disease with FDA
Orphan Drug Designation is entitled to a seven-year exclusive marketing period in the United States for that
product, for that indication. During the seven-year exclusivity period, the FDA may not approve any other
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applications to market the same drug for the same disease, except in limited circumstances, such as a
showing of clinical superiority to the product with orphan drug exclusivity or if the FDA finds that the
holder of the orphan exclusivity has not shown that it can assure the availability of sufficient quantities of
the orphan product to meet the needs of patients with the disease or condition for which the drug was
designated. Orphan drug exclusivity does not prevent the FDA from approving a different drug for the
same disease or condition, or the same drug for a different disease or condition. Such a designation, may
also be revoked by the FDA in certain circumstances, such as if the agency finds that the applicant’s request
for designation request omitted material information required under the Orphan Drug Act and its
implementing regulations.
Fast Track Designation and accelerated approval
The FDA is required to facilitate the development, and expedite the review, of drugs that are intended
for the treatment of a serious or life-threatening disease or condition for which there is no effective treatment,
and which demonstrate the potential to address unmet medical needs for the condition. Under the Fast
Track program, the sponsor of a new drug candidate may request that the FDA designate the drug candidate
for a specific indication as a Fast Track drug concurrent with, or after, the filing of the IND for the drug
candidate. The FDA must determine if the drug candidate qualifies for Fast Track Designation within 60 days
of receipt of the sponsor’s request.
In addition to other benefits such as the ability to engage in more frequent interactions with the FDA,
the FDA may initiate review of sections of a Fast Track drug’s NDA before the application is complete.
This rolling review is available if the applicant provides, and the FDA approves, a schedule for the submission
of the remaining information and the applicant pays applicable user fees. However, the FDA’s time period
goal for reviewing an application does not begin until the last section of the NDA is submitted. Additionally,
the Fast Track Designation may be withdrawn by the FDA if the FDA believes that the designation is no
longer supported by data emerging in the clinical trial process.
Under the FDA’s accelerated approval regulations, the FDA may approve a drug for a serious or life-
threatening illness that provides meaningful therapeutic benefit to patients over existing treatments based
upon 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.
In clinical trials, a surrogate endpoint is a measurement of laboratory or clinical signs of a disease or
condition that substitutes for a direct measurement of how a patient feels, functions or survives. Surrogate
endpoints can often be measured more easily or more rapidly than clinical endpoints. A drug candidate
approved on this basis is subject to rigorous post-marketing compliance requirements, including the
completion of Phase 4 or post-approval clinical trials to confirm the effect on the clinical endpoint and,
under the Food and Drug Omnibus Reform Act of 2022, or FDORA, the FDA is now permitted to require,
as appropriate, that such trials be underway prior to approval or within a specific time period after the
date of approval for a product granted accelerated approval. Failure to conduct required post-approval
studies, or confirm a clinical benefit during post-marketing studies, will allow the FDA to withdraw the drug
from the market on an expedited basis, and under FDORA, the FDA has increased authority for expedited
procedures to do so. In addition, for products being considered for accelerated approval, the FDA generally
requires, unless otherwise informed by the agency, that all advertising and promotional materials intended for
dissemination or publication within 120 days of marketing approval be submitted to the agency for review
during the pre-approval review period.
Breakthrough Therapy Designation
Breakthrough Therapy Designation by the FDA provides more extensive development consultation
opportunities with FDA senior staff, allows for the rolling review of the drug’s application for approval and
indicates that the product could be eligible for priority review, if supported by clinical data at the time of
application submission for drugs that are intended to treat a serious or life-threatening disease or condition
where preliminary clinical evidence indicates that the drug may demonstrate substantial improvement
over existing therapies on one or more clinically significant endpoints. Under the Breakthrough Therapy
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Program, the sponsor of a new drug candidate may request that the FDA designate the drug candidate for a
specific indication as a breakthrough therapy concurrent with, or after, the filing of the IND for the drug
candidate. The FDA must determine if the drug candidate qualifies for Breakthrough Therapy Designation
within 60 days of receipt of the sponsor’s request.
Disclosure of clinical trial information
Sponsors of clinical trials of FDA regulated products, including drugs, are required to register and
disclose certain clinical trial information. Information related to the product, patient population, phase of
investigation, trial sites and investigators and other aspects of the clinical trial is then made public as part of
the registration of the trial on clinicaltrials.gov. Sponsors are also obligated to disclose the results of their
clinical trials after completion. Disclosure of the results of these trials can be delayed in certain circumstances
for up to two years after the date of completion of the trial. Competitors may use this publicly available
information to gain knowledge regarding the progress of development programs.
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, reporting of adverse experiences
with the product, and compliance with applicable tracking and tracing requirements. After approval, most
changes to the approved product, such as adding new indications or other labeling claims are subject to
prior FDA review and approval. There are continuing, annual user fee requirements for any marketed
products.
The FDA may impose a number of post-approval requirements as a condition of approval of an NDA.
For example, the FDA may require post-marketing testing, including Phase 4 clinical trials, and surveillance
to further assess and monitor the product’s safety and effectiveness after commercialization.
FDA regulations require that products be manufactured in specific facilities and in accordance with
cGMP regulations which require, among other things, quality control and quality assurance, the maintenance
of records and documentation and the obligation to investigate and correct any deviations from cGMP. In
addition, drug manufacturers and other entities involved in the manufacture and distribution of approved
drugs, and those supplying products, ingredients and components of them, 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 requirements 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.
In addition, the Drug Supply Chain Security Act, or DSCSA, was enacted in 2013 with the aim of
building an electronic system to identify and trace certain prescription drugs and biologics distributed in the
United States. The law’s requirements include the quarantine and prompt investigation of a suspect product,
to determine if it is illegitimate, notifying trading partners and the FDA of any illegitimate product, and
compliance with product tracking and tracing requirements. The DSCSA mandates phased-in and resource-
intensive obligations for pharmaceutical manufacturers, wholesale distributors, and dispensers over a 10-year
period that culminated in November 2023. However, in August 2023, the FDA twice issued compliance policy
guidance that establishes a one-year stabilization period from November 2023 to November 2024 for
trading partners to continue to build and validate interoperable systems and processes to meet certain
requirements of the DSCSA, thereby providing one additional year to achieve DSCSA compliance during
which FDA does not intend to enforce its requirements for the electronic package-level exchange of
information between trading partners.
Once an approval of a drug 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
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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. Any of these limitations on approval or marketing could restrict
the commercial promotion, distribution, prescription or dispensing of products. Other potential
consequences include, among other things:
• Restrictions on the marketing or manufacturing of the product, complete withdrawal of the product
from the market or product recalls;
• Fines, warning letters or holds on post-approval clinical trials;
• Refusal of the FDA to approve pending NDAs or supplements to approved NDAs, or suspension or
withdrawal of product approvals;
• Product seizure or detention, or refusal to permit the import or export of products; and
• Injunctions or the imposition of civil or criminal penalties.
The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed
on the market. Drugs may be promoted by a manufacturer and any third parties acting on behalf of a
manufacturer only for the approved indications and in a manner consistent with the approved label for the
product. 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.
EU regulation
In the EU, our product candidates also may be subject to extensive regulatory requirements. As in the
United States, medicinal products can be marketed only if a marketing authorization from the competent
regulatory agencies has been obtained.
Similar to the United States, the various phases of preclinical and clinical research in the EU are
subject to significant regulatory controls.
In April 2014, the new Clinical Trials Regulation, (EU) No 536/2014 was adopted, and it came into
effect on January 31, 2022, repealing the Clinical Trials Directive 2001/20/EC. The Clinical Trials Regulation
is directly applicable in all the EU Member States meaning no national implementing legislation in each
EU Member State is required. The transitory provisions of the new Clinical Trials Regulation provide that
ongoing clinical trials previously authorized under the Directive can remain under the Directive, or they can
transition to the Regulation. By January 31, 2025, all ongoing clinical trials must have transitioned to the
new Regulation.
The Clinical Trials Regulation aims to simplify and streamline the approval of clinical trials in the EU.
The main characteristics of the Regulation include: a streamlined application procedure via a single-entry
point through the Clinical Trials Information System, or CTIS; a single set of documents to be prepared and
submitted for the application as well as simplified reporting procedures for clinical trial sponsors; and a
harmonized procedure for the assessment of applications for clinical trials, which is divided in two parts
(Part I contains scientific and medicinal product documentation and Part II contains the national and patient-
level documentation). Part I is assessed by a coordinated review by the competent authorities of all EU
Member States in which an application for authorization of a clinical trial has been submitted (Member States
concerned) of a draft report prepared by a Reference Member State. Part II is assessed separately by each
Member State concerned. Strict deadlines have been established for the assessment of clinical trial applications.
The role of the relevant ethics committees in the assessment procedure continues to be governed by the
national law of the concerned EU Member State, however, overall related timelines are defined by the Clinical
Trials Regulation.
To obtain a marketing authorization of a product in the EU, we may submit MAAs, either under the
so-called centralized or national authorization procedures.
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Centralized procedure
The centralized procedure provides for the grant of a single marketing authorization following a
favorable opinion by the EMA that is valid in all EU Member States, as well as in the additional Member
States of the European Economic Area (Iceland, Liechtenstein and Norway). The centralized procedure is
compulsory for medicines produced by specified biotechnological processes, products designated as orphan
medicinal products, advanced therapy medicines (such as gene-therapy, somatic cell-therapy or tissue-
engineered medicines) and products with a new active substance indicated for the treatment of specified
diseases, such as HIV/AIDS, cancer, diabetes, neurodegenerative disorders or autoimmune diseases and other
immune dysfunctions and viral diseases. The centralized procedure is optional for products with a new
active substance indicted for other diseases, or products that represent a significant therapeutic, scientific or
technical innovation, or whose authorization would be in the interest of public health. Under the centralized
procedure the maximum timeframe for the evaluation of an MAA by the EMA, is 210 days, excluding clock
stops, when additional written or oral information is to be provided by the applicant in response to questions
asked by the Committee of Medicinal Products for Human Use, or the CHMP. Accelerated assessment might
be granted by the CHMP in exceptional cases, when a medicinal product is expected to be of a major public
health interest, particularly from the point of view of therapeutic innovation. The timeframe for the
evaluation of an MAA under the accelerated assessment procedure is of 150 days, excluding clock stops.
National authorization procedures
There are also two other possible routes to authorize medicinal products in several EU countries, which
are available for investigational medicinal products that fall outside the scope of the centralized procedure:
• Decentralized procedure. Using the decentralized procedure, an applicant may apply for simultaneous
authorization in more than one EU country of medicinal products that have not yet been authorized
in any EU country and that do not fall within the mandatory scope of the centralized procedure.
• Mutual recognition procedure. In the mutual recognition procedure, a medicine is first authorized in
one EU Member State, in accordance with the national procedures of that country. Following this,
further marketing authorizations can be sought from other EU countries in a procedure whereby the
countries concerned agree to recognize the validity of the original, national marketing authorization.
Under the above described procedures, before granting a marketing authorization, the EMA or the
competent authorities of the EU Member States make an assessment of the risk-benefit balance of the
product on the basis of scientific criteria concerning its quality, safety and efficacy.
EU regulatory exclusivity
In the EU, new products authorized for marketing (i.e., reference products) on the basis of a complete
independent data package may qualify for eight years of data exclusivity and an additional two years of
market exclusivity upon marketing authorization. The data exclusivity period prevents generic applicants
from relying on the preclinical and clinical trial data contained in the dossier of the reference product when
applying for a generic marketing authorization in the EU during a period of eight years from the date on
which the reference product was first authorized in the EU. The market exclusivity period prevents a
successful generic applicant from commercializing its product in the EU until ten years have elapsed from
the initial authorization of the reference product in the EU. The ten-year market exclusivity period can be
extended to a maximum of eleven years if, during the first eight years of those ten years, the marketing
authorization holder obtains an authorization for one or more new therapeutic indications which, during
the scientific evaluation prior to their authorization, are held to bring a significant clinical benefit in
comparison with existing therapies.
EU orphan designation and exclusivity
The criteria for designating an orphan medicinal product in the EU, are similar in principle to those in
the United States. Under Article 3 of Regulation (EC) 141/2000, a medicinal product may be designated as
an orphan product if (i) it is intended for the diagnosis, prevention or treatment of a life-threatening or
chronically debilitating condition; (ii) either (a) such condition affects no more than five in 10,000 persons
in the EU when the application is made, or (b) the product, without the benefits derived from orphan status,
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is unlikely to generate sufficient return in the EU to justify the necessary investment in its development; and
(iii) there exists no satisfactory method of diagnosis, prevention or treatment of such condition authorized
for marketing in the EU, or if such a method exists, the product will be of significant benefit to those affected
by the condition, as defined in Regulation (EC) 847/2000. Orphan medicinal products are eligible for
financial incentives such as reduction of fees or fee waivers and are, upon grant of a marketing authorization,
entitled to ten years of market exclusivity for the approved therapeutic indication. The application for
orphan designation must be submitted before the application for marketing authorization. The applicant
will receive a fee reduction for the MAA if the orphan designation has been granted, but not if the designation
is still pending at the time the marketing authorization is submitted. Orphan designation does not convey
any advantage in, or shorten the duration of, the regulatory review and approval process.
In the EU, orphan designation entitles a party to financial incentives such as reduction of fees or fee
waivers and ten years of market exclusivity is granted following the grant of a marketing authorization.
During this market exclusivity period, neither the EMA nor the European Commission nor any of the
competent authorities in the EU Members States can accept an application or grant a marketing authorization
for a “similar medicinal product.” A “similar medicinal product” is defined as a medicinal product
containing a similar active substance or substances as contained in an authorized orphan medicinal product,
and which is intended for the same therapeutic indication. This period maybe reduced to six years if, at the
end of the fifth year, it is established that the product no longer meets the criteria for orphan designation, for
example, if the product is sufficiently profitable not to justify maintenance of market exclusivity.
Additionally, marketing authorization may be granted to a similar medicinal product for the same indication
as an authorized orphan product at any time if:
• the second applicant can establish that its product, although similar, is safer, more effective or
otherwise clinically superior than the authorized orphan product;
• the marketing authorization holder for the authorized orphan product consents to a second orphan
medicinal product application; or
• the marketing authorization holder for the authorized orphan product cannot supply enough
orphan medicinal product.
EU pediatric investigation plan
In the EU, companies developing a new medicinal product must agree upon a pediatric investigation
plan, or PIP, with the EMA’s Pediatric Committee, or the PDCO, and must conduct pediatric clinical trials
in accordance with that PIP, unless the EMA has granted a product-specific waiver, a class waiver, or a
deferral for one or more of the measures included in the PIP. This requirement also applies when a company
wants to add a new indication, pharmaceutical form or route of administration for a medicine that is already
authorized. The PIP sets out the timing and measures proposed to generate data to support a pediatric
indication of the drug for which a marketing authorization is being sought. The PDCO can grant a deferral
of the obligation to implement some or all of the measures of the PIP until there are sufficient data to
demonstrate the efficacy and safety of the product in adults. Further, the obligation to provide pediatric
clinical trial data can be waived by the PDCO when this data is not needed or appropriate because the product
is likely to be ineffective or unsafe in children, the disease or condition for which the product is intended
occurs only in adult populations, or when the product does not represent a significant therapeutic benefit
over existing treatments for pediatric patients. Products that are granted a marketing authorization with the
results of the pediatric clinical trials conducted in accordance with the PIP (even where such results are
negative) are eligible for six months’ supplementary protection certificate extension, provided an application
for such extension is made at the same time as filing the SPC application for the product, or at any point
up to two years before the SPC expires. In the case of orphan medicinal products, a two-year extension of the
orphan market exclusivity may be available. This pediatric reward is subject to specific conditions and is
not automatically available when data in compliance with the PIP are developed and submitted.
Post-Approval Controls
The holder of a marketing authorization must establish and maintain a pharmacovigilance system and
appoint an individual qualified person for pharmacovigilance who is responsible for oversight of that system.
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Key obligations include expedited reporting of suspected serious adverse reactions and submission of
periodic safety update reports, or PSURs.
All new MAAs must include a risk management plan, or RMP, describing the risk management system
that the company will put in place and documenting measures to prevent or minimize the risks associated
with the product. The regulatory authorities may also impose specific obligations as a condition of the
marketing authorization. Such risk-minimization measures or post-authorization obligations may include
additional safety monitoring, more frequent submission of PSURs, or the conduct of additional clinical
trials or post-authorization safety studies. RMPs and PSURs are routinely available to third parties requesting
access, subject to limited redactions.
All advertising and promotional activities for the product must be consistent with the approved
summary of product characteristics, and therefore all off-label promotion is prohibited. Direct-to-consumer
advertising of prescription medicines is also prohibited in the EU. Although general requirements for
advertising and promotion of medicinal products are established under EU directives, the details are governed
by regulations in each Member State and can differ from one country to another.
The aforementioned EU rules are generally applicable in the European Economic Area.
Reform of the Regulatory Framework in the European Union
The European Commission introduced legislative proposals in April 2023 that, if implemented, will
replace the current regulatory framework in the EU for all medicines (including those for rare diseases and
for children). The European Commission has provided the legislative proposals to the European Parliament
and the European Council for their review and approval. In October 2023, the European Parliament
published draft reports proposing amendments to the legislative proposals, which will be debated by the
European Parliament. Once the European Commission’s legislative proposals are approved (with or without
amendment), they will be adopted into EU law.
Other regulations — rest of the world
For other countries outside of the EU and the United States, such as countries in Eastern Europe,
Latin America or Asia, the requirements governing the conduct of clinical trials, product licensing, pricing
and reimbursement vary from jurisdiction to jurisdiction. Additionally, the clinical trials must be conducted in
accordance with cGCP requirements and the applicable regulatory requirements and the ethical principles
that have their origin in the Declaration of Helsinki.
If we fail to comply with applicable foreign regulatory requirements, we may be subject to, among
other things, fines, suspension or withdrawal of regulatory approvals, product recalls, seizure of products,
operating restrictions and criminal prosecution.
Other healthcare laws
Pharmaceutical companies are subject to additional healthcare regulation and enforcement by the
federal government and by authorities in the states and foreign jurisdictions in which they conduct their
business that may constrain the financial arrangements and relationships through which we research, as well
as sell, market and distribute any products for which we obtain marketing authorization. Such laws include,
without limitation, state and federal anti-kickback, fraud and abuse, false claims, and transparency laws and
regulations related to drug pricing and payments and other transfers of value made to physicians and other
healthcare providers. If our operations are found to be in violation of any of such laws or any other
governmental regulations that apply, we may be subject to penalties, including, without limitation,
administrative, civil and criminal penalties, damages, fines, disgorgement, the curtailment or restructuring
of operations, integrity oversight and reporting obligations, exclusion from participation in federal and state
healthcare programs and responsible individuals may be subject to imprisonment.
Manufacturing, sales, promotion and other activities following product approval are also subject to
regulation by numerous regulatory authorities in the United States in addition to the FDA, including CMS,
the HHS Office of Inspector General and HHS Office for Civil Rights, other divisions of the HHS and
the Department of Justice.
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Healthcare providers, physicians, and third-party payors will play a primary role in the recommendation
and prescription of any products for which we obtain marketing approval. Our current and future
arrangements with third-party payors, healthcare providers and physicians may expose us to broadly
applicable fraud and abuse and other healthcare laws and regulations that may constrain the business or
financial arrangements and relationships through which we market, sell and distribute any drugs for which
we obtain marketing approval. In the United States, these laws include, without limitation, state and federal
anti-kickback, false claims, physician transparency, and patient data privacy and security laws and
regulations, including but not limited to those described below.
The U.S. federal Anti-Kickback Statute, or AKS, prohibits, among other things, any person or entity
from knowingly and willfully offering, paying, soliciting, receiving or providing any remuneration, directly
or indirectly, overtly or covertly, to induce or in return for purchasing, leasing, ordering or arranging for or
recommending the purchase, lease or order of any good, facility, item or service reimbursable, in whole or
in part, under Medicare, Medicaid or other federal healthcare programs. The term “remuneration” has been
broadly interpreted to include anything of value. The AKS has been interpreted to apply to arrangements
between pharmaceutical and medical device manufacturers on the one hand and prescribers, purchasers,
formulary managers and beneficiaries on the other hand. Although there are a number of statutory exceptions
and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe
harbors are drawn narrowly. Failure to meet all of the requirements of a particular applicable statutory
exception or regulatory safe harbor does not make the conduct per se illegal under the AKS. Instead, the
legality of the arrangement will be evaluated on a case-by-case basis based on a cumulative review of all its
facts and circumstances. 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. In addition, a person or entity does not need to have actual knowledge
of the statute or specific intent to violate it in order to have committed a violation. Moreover, a claim
including items or services resulting from a violation of the AKS constitutes a false or fraudulent claim for
purposes of the federal civil False Claims Act.
Although we would not submit claims directly to payors, drug manufacturers can be held liable under
the federal False Claims Act, which imposes civil penalties, including through civil whistleblower or qui tam
actions, against individuals or entities (including manufacturers) for, among other things, knowingly
presenting, or causing to be presented to federal programs (including Medicare and Medicaid) claims for
items or services, including drugs, that are false or fraudulent, claims for items or services not provided as
claimed, or claims for medically unnecessary items or services. The government may deem manufacturers to
have “caused” the submission of false or fraudulent claims by, for example, providing inaccurate billing or
coding information to customers or promoting a product off-label. Several biopharmaceutical, medical device
and other healthcare companies have been prosecuted under federal false claims and civil monetary
penalty laws for, among other things, allegedly providing free product to customers with the expectation
that the customers would bill federal programs for the product. Other companies have been prosecuted for
causing false claims to be submitted because of the companies’ marketing of products for unapproved (e.g., or
off-label), and thus non-covered, uses. In addition, the civil monetary penalties statute imposes penalties
against any person 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. The federal False Claims Act also permits a private individual acting as a
“whistleblower” to bring actions on behalf of the federal government alleging violations of the federal False
Claims Act and to share in any monetary recovery.
Our future marketing and activities relating to the reporting of wholesaler or estimated retail prices for
our products, the reporting of prices used to calculate Medicaid rebate information and other information
affecting federal, state and third-party reimbursement for our products, and the sale and marketing of our
product candidates, are subject to scrutiny under these laws. Additionally, we will comply with federal and
state consumer protection laws, which broadly regulate marketplace activities and activities that potentially
harm consumers.
The federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, created additional
federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting
to execute, a scheme to defraud or to obtain, by means of false or fraudulent pretenses, representations or
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promises, any money or property owned by, or under the control or custody of, any healthcare benefit
program, including private third-party payors, knowingly and willfully embezzling or stealing from a
healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense and
knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false,
fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items
or services. Similar to the AKS, a person or entity does not need to have actual knowledge of the statute or
specific intent to violate it in order to have committed a violation.
In addition, there has been a recent trend of increased federal and state regulation of payments made
to physicians and certain other healthcare providers. The Affordable Care Act, or the ACA, imposed, among
other things, new annual reporting requirements through the Physician Payments Sunshine Act for covered
manufacturers for certain payments and “transfers of value” provided to physicians (defined to include
doctors, dentists, optometrists, podiatrists and chiropractors), certain other licensed health care practitioners
and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate
family members. Failure to submit timely, accurately and completely the required information for all
payments, transfers of value and ownership or investment interests may result in civil monetary penalties.
Covered manufacturers must submit reports by the 90th day of each subsequent calendar year and the
reported information is publicly made available on a searchable website.
We may also 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, impose specified requirements relating to the
privacy, security and transmission of individually identifiable health information held by covered entities
and their business associates. Among other things, HITECH made 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, although it is unclear that we would be considered a “business associate” in
the normal course of our business. 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 differ
from each other in significant ways and may not have the same requirements, thus complicating compliance
efforts. See “European data collection” below for a discussion of data privacy and security enactments of
the EU.
For example, California’s Consumer Privacy Act, or CCPA, went into effect in January 2020, and the
California Attorney General has since promulgated final regulations. The law provides broad rights to
California consumers with respect to the collection and use of their personal information and imposes data
protection obligations on certain businesses. While the CCPA does not apply to protected health
information that is subject to HIPAA or personal information collected, used or disclosed in research, as
defined by federal law, the CCPA may still affect our business activities. Moreover, on November 3, 2020,
California voters passed the California Privacy Rights Act, or CPRA, under a ballot initiative. The CPRA
amends the existing CCPA to include new consumer rights and additional data protection obligations. The
new data protection requirements under the CPRA apply to information collected on or after January 1,
2022. With the promulgation of final regulations, the California State Attorney General has commenced
enforcement actions against CCPA violators. The uncertainty surrounding the implementation of CCPA and
the amendments under the CPRA exemplifies the vulnerability of our business to the evolving regulatory
environment related to personal data and protected health information. The California law further expands
the need for privacy and process enhancements and commitment of resources in support of compliance.
Moreover, more than ten states have proposed bills in the last year with provisions similar to the CCPA
and CPRA. It is likely that other states will pass laws similar to the CCPA and the CPRA in the near future
and a federal data protection law may also be on the horizon.
Similar state and foreign fraud and abuse laws and regulations, such as state anti-kickback and false
claims laws, may apply to sales or marketing arrangements and claims involving healthcare items or services.
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Such laws are generally broad and are enforced by various state agencies and private actions. Also, many
states have similar fraud and abuse statutes or regulations that may be broader in scope and may apply
regardless of payor, in addition to items and services reimbursed under Medicaid and other state programs.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant federal government compliance guidance, and require drug
manufacturers to report information related to payments and other transfers of value to physicians and
other healthcare providers, marketing expenditures or drug pricing.
In order to distribute products commercially, we must comply with state laws that require the registration
of manufacturers and wholesale distributors of drug and biological products in a state, including, in certain
states, manufacturers and distributors who ship products into the state even if such manufacturers or
distributors have no place of business within the state. Some states also impose requirements on manufacturers
and distributors to establish the pedigree of product in the chain of distribution, including some states
that require manufacturers and others to adopt new technology capable of tracking and tracing product as
it moves through the distribution chain. Several states have enacted legislation requiring pharmaceutical and
biotechnology companies to establish marketing compliance programs, file periodic reports with the state,
make periodic public disclosures on sales, marketing, pricing, clinical trials and other activities, and/or register
their sales representatives, as well as to prohibit pharmacies and other healthcare entities from providing
certain physician prescribing data to pharmaceutical and biotechnology companies for use in sales and
marketing, and to prohibit certain other sales and marketing practices. All of our activities are potentially
subject to federal and state consumer protection and unfair competition laws.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the
current environment of healthcare reform, especially in light of the lack of applicable precedent and
regulations. Federal and state enforcement bodies have recently increased their scrutiny of interactions
between healthcare companies and healthcare providers, which has led to a number of investigations,
prosecutions, convictions and settlements in the healthcare industry. 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, damages, fines,
disgorgement, contractual damages, reputational harm, diminished profits and future earnings, imprisonment,
exclusion of drugs from government funded healthcare programs, such as Medicare and Medicaid, and
the curtailment or restructuring of our operations, as well as additional reporting obligations and oversight
if we become subject to a corporate integrity agreement or other agreement to resolve allegations of
non-compliance with these laws, any of which could adversely affect our ability to operate our business and
our financial results. If any of the physicians or other healthcare providers or entities with whom we expect
to do business is found to be not in compliance with applicable laws, they may be subject to significant
criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Ensuring business arrangements comply with applicable healthcare laws, as well as responding to possible
investigations by government authorities, can be time- and resource consuming and can divert a company’s
attention from the business.
European data collection
The collection and use of personal health data in or arising from the EU are governed by the provisions
of the Data Protection Directive, and the General Data Protection Regulation, or GDPR. This directive
imposes several requirements relating to the consent of the individuals to whom the personal data relates, the
information provided to the individuals, notification of data processing obligations to the competent national
data protection authorities and the security and confidentiality of the personal data. The Data Protection
Directive and GDPR also impose strict rules on the transfer of personal data out of the EU, to the United
States. Failure to comply with the requirements of the Data Protection Directive, the GDPR and the related
national data protection laws of the EU Member States may result in fines and other administrative penalties.
The GDPR introduces new data protection requirements in the EU and substantial fines for breaches of the
data protection rules. The GDPR regulations may impose additional responsibility and liability in relation
to personal data that we process, including in respect of clinical trials, and we may be required to put in place
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additional mechanisms ensuring compliance with the new data protection rules. This may be onerous and
adversely affect our business, financial condition, results of operations and prospects.
Current and future legislation
In the United States and other 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 product candidates, restrict or regulate post-approval activities and affect our ability to
profitably sell any product candidates for which we obtain marketing approval. We expect that current laws,
as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous
coverage criteria and additional downward pressure on the price that we, or any collaborators, may receive for
any approved products.
Payors, whether domestic or foreign, or governmental or private, are developing increasingly
sophisticated methods of controlling healthcare costs and those methods are not always specifically adapted
for new technologies such as gene therapy and therapies addressing rare diseases such as those we are
developing. In both the United States and certain foreign jurisdictions, there have been a number of legislative
and regulatory changes to the health care system that could impact our ability to sell our products profitably.
In particular, in 2010, the Patient Protection and Affordable Care Act, as amended by the Health Care
and Education Reconciliation Act of 2010, or collectively, the ACA, was enacted, which, among other things,
subjected biologic products to potential competition by lower-cost biosimilars implanted or injected;
increased the minimum Medicaid rebates owed by most manufacturers under the Medicaid Drug Rebate
Program; extended the Medicaid Drug Rebate program to utilization of prescriptions of individuals enrolled
in Medicaid managed care organizations; subjected manufacturers to annual fees and taxes for certain
branded prescription drugs; created a Medicare Part D coverage gap discount program, in which
manufacturers must 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 the manufacturer’s outpatient
drugs to be covered under Medicare Part D; and provided incentives to programs that increase the federal
government’s comparative effectiveness research.
Additionally, other federal health reform measures have been proposed and adopted in the United
States since the ACA was enacted:
• The Budget Control Act of 2011, among other things, included aggregate reductions of Medicare
payments to providers of 2% per fiscal year. These reductions went into effect on April 1, 2013 and,
due to subsequent legislative amendments to the statute, will remain in effect through 2031.
• The American Taxpayer Relief Act of 2012, 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.
• On April 13, 2017, CMS published a final rule that gives states greater flexibility in setting benchmarks
for insurers in the individual and small group marketplaces, which may have the effect of relaxing
the essential health benefits required under the ACA for plans sold through such marketplaces.
• On May 23, 2019, CMS published a final rule to allow Medicare Advantage Plans the option of
using step therapy for Part B drugs beginning January 1, 2020.
• On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law, which
eliminates the statutory Medicaid drug rebate cap, currently set at 100% of a drug’s average
manufacturer price, for single source and innovator multiple source drugs, beginning January 1,
2024. Due to the Statutory Pay-As-You-Go Act of 2010, estimated budget deficit increases resulting
from the American Rescue Plan Act of 2021, and subsequent legislation, Medicare payments to
providers will be further reduced starting in 2025 absent further legislation.
• On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or the Inflation
Act, into law, which, among other provisions, includes several measures intended to lower the cost of
prescription drugs and related healthcare reforms. These proposals, recommendations and
enactments include changes to the existing framework in respect of income taxes, as well as new
types of non-income taxes (such as taxes based on a percentage of revenue or taxes applicable to digital
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services). The IRA includes several provisions that may impact our business, depending on how
various aspects of the IRA are implemented. Provisions that may impact our business include a $2,000
out-of-pocket cap for Medicare Part D beneficiaries, the imposition of new manufacturer financial
liability on most drugs in Medicare Part D, permitting the U.S. government to negotiate Medicare
Part B and Part D pricing for certain high-cost drugs and biologics without generic or biosimilar
competition, requiring companies to pay rebates to Medicare for drug prices that increase faster than
inflation, and delay until January 1, 2032 the implementation of the HHS rebate rule that would
have limited the fees that pharmacy benefit managers can charge. Further, under the IRA, orphan
drugs are exempted from the Medicare drug price negotiation program, but only if they have one
orphan designation and for which the only approved indication is for that disease or condition. If a
product receives multiple orphan designations or has multiple approved indications, it may not
qualify for the orphan drug exemption. The implementation of the IRA is currently subject to ongoing
litigation challenging the constitutionality of the IRA’s Medicare drug price negotiation program.
The effects of the IRA on our business and the healthcare industry in general is not yet known.
Additionally, there has been increasing legislative and enforcement interest in the United States with
respect to drug pricing practices. Specifically, there has been heightened governmental scrutiny over the
manner in which manufacturers set prices for their marketed products, which has resulted in several U.S.
Congressional inquiries and proposed and enacted federal and state legislation designed to, among other
things, bring more transparency to drug pricing, reduce the cost of prescription drugs under Medicare, and
review the relationship between pricing and manufacturer patient programs. President Biden has issued
multiple executive orders that have sought to reduce prescription drug costs. In February 2023, HHS also
issued a proposal in response to an October 2022 executive order from President Biden that includes a
proposed prescription drug pricing model that will test whether targeted Medicare payment adjustments will
sufficiently incentivize manufacturers to complete confirmatory trials for drugs approved through FDA’s
accelerated approval pathway. Although a number of these and other proposed measures may require
authorization through additional legislation to become effective, and the Biden administration may reverse
or otherwise change these measures, both the Biden administration and Congress have indicated that they will
continue to seek new legislative measures to control drug costs.
We expect that additional U.S. federal healthcare reform measures will be adopted in the future, any of
which could limit the amounts that the U.S. Federal Government will pay for healthcare drugs and services,
which could result in reduced demand for our drug candidates or additional pricing pressures.
In addition, there have been several changes to the 340B drug pricing program, which imposes ceilings
on prices that drug manufacturers can charge for medications sold to certain health care facilities. On
November 3, 2023, the U.S. District Court of South Carolina issued an opinion in Genesis Healthcare Inc.
v. Becerra et al. that may lead to an expansion of the scope of patients eligible to access prescriptions at
340B pricing. The outcome of this judicial proceeding is uncertain. We continue to review developments
impacting the 340B program. Individual states in the United States have also increasingly passed legislation
and implemented regulations designed to control pharmaceutical product pricing, including price or
patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost
disclosure and transparency measures, and, in some cases, designed to encourage importation from other
countries and bulk purchasing. Legally mandated price controls on payment amounts by third-party payors
or other restrictions could harm our business, financial condition, results of operations and prospects. In
addition, regional healthcare authorities and individual hospitals are increasingly using bidding procedures
to determine what pharmaceutical products and which suppliers will be included in their prescription drug
and other healthcare programs. This could reduce the ultimate demand for our drugs or put pressure on
our drug pricing, which could negatively affect our business, financial condition, results of operations and
prospects.
Human Capital
As of December 31, 2023, we had 305 full-time employees, of whom, 142 focus on driving forward
research and development programs, 71 focus on commercial operations and 92 provide strategic business
development, finance and other technical expertise, as well as general and administrative services. None of our
employees are represented by a labor union or covered by a collective bargaining agreement. We expect
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headcount growth to continue for the foreseeable future, particularly as we continue to develop our
products and commercialization capabilities.
We believe our employees are among the most important assets to our company and are key to
achieving our goals and expectations. Accordingly, we focus significant attention on attracting and retaining
talented individuals. Our management teams and function leaders regularly review employee engagement
and satisfaction surveys and monitor employee turnover rates.
Compensation and Benefits
We offer competitive compensation to attract and retain the best people. Our total compensation
package includes market-competitive salary, bonuses, and equity. We offer full-time employees equity at the
time of hire and through discretionary annual equity grants because we want them to have an ownership
stake in the company and to be committed to our long-term success. We offer a wide range of benefits across
areas such as health, family, finance, community, and paid time off, including healthcare and wellness
benefits, a 401(k) plan, access to legal services, and parental leave.
Diversity and Inclusion
Diversity and inclusion are important parts of our culture. We are focused on understanding our
diversity and inclusion strengths and opportunities and executing on a strategy to support further progress.
We created a number of employee resource groups to foster dialogue and engagement around dimensions
of diversity, such as gender, ethnicity, sexual orientation, or other shared attributes, which we believe help
build community and enable opportunities for development. We continue to focus on building a pipeline for
talent to create more opportunities for workplace diversity and to support greater representation within
the company.
Corporate history and information
We were originally formed in Delaware in August 2017 and until March 29, 2019, we conducted our
business through SpringWorks Therapeutics, LLC, a Delaware limited liability company. Pursuant to the
terms of a corporate reorganization and merger that was completed on March 29, 2019, or the Reorganization,
all of the equity interests in SpringWorks Therapeutics, LLC were exchanged for the same number and
class of newly issued securities of SpringWorks Therapeutics, Inc. and, as a result, SpringWorks Therapeutics,
LLC became a wholly owned subsidiary of SpringWorks Therapeutics, Inc.
On September 17, 2019, we completed our initial public offering, or IPO, pursuant to which we issued
and sold 10,350,000 shares of our common stock, including the exercise in full by the underwriters of their
option to purchase 1,350,000 additional shares of our common stock, at the public offering price of $18.00
per share, resulting in net proceeds of $169.7 million, after deducting underwriting discounts and
commissions and other offering expenses. Upon the closing of the IPO, our outstanding convertible preferred
stock automatically converted into shares of common stock.
We own various U.S. federal trademark applications and unregistered trademarks, including our
company name and our logo. All other trademarks or trade names referred to in this Annual Report are the
property of their respective owners. Solely for convenience, the trademarks and trade names in this
prospectus supplement are referred to without the symbols ® and ™, but such references should not be
construed as any indicator that their respective owners will not assert, to the fullest extent under applicable
law, their rights thereto.
Our principal executive offices are located at 100 Washington Blvd, Stamford, CT 06902, and our
phone number is (203) 883-9490. Our website address is http://www.springworkstx.com. The information
contained in or accessible from our website is not incorporated into this Annual Report, and you should not
consider it part of this Annual Report.
Available Information
Our Internet address is www.springworkstx.com. Our Annual Reports on Form 10-K, Quarterly
Reports on Form 10-Q, Current Reports on Form 8-K, including exhibits, proxy and information statements
34
and amendments to those reports filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange
Act are available through the “Investors” portion of our website free of charge as soon as reasonably
practicable after we electronically file such material with, or furnish it to, the SEC. Information on our
website is not part of this Annual Report on Form 10-K or any of our other securities filings unless
specifically incorporated herein by reference. In addition, our filings with the SEC may be accessed through
the SEC’s Interactive Data Electronic Applications system at http://www.sec.gov. All statements made in
any of our securities filings, including all forward-looking statements or information, are made as of the date
of the document in which the statement is included, and we do not assume or undertake any obligation to
update any of those statements or documents unless we are required to do so by law.
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Item 1A. Risk Factors
Careful consideration should be given to the following risk factors, in addition to the other information set
forth in this Annual Report on Form 10-K and in other documents that we file with the Securities and Exchange
Commission, or the SEC, in evaluating the Company and our business. Investing in our common stock
involves a high degree of risk. If any of the following risks and uncertainties actually occurs, our business,
prospects, financial condition and results of operations could be materially and adversely affected. The risks
described below are not intended to be exhaustive and are not the only risks facing the company. New risk factors
can emerge from time to time, and it is not possible to predict the impact that any factor or combination of
factors may have on our business, prospects, financial condition and results of operations.
Summary of company-specific material risk factors
We have included a summary of the material risks that we believe are specific to SpringWorks. The
summary does not include all material risks associated with our business and is not a conclusive ranking or
prioritization of our risk factors. Further, placement of certain of these risks in the summary section as opposed
to others does not constitute guidance that the risk factors included in the summary are the only material risks
to consider when considering an investment in our securities. We believe that all risk factors presented in this
Annual Report on Form 10-K are important to an understanding of our company and should be given careful
consideration. In addition, the summary of company-specific material risks does not include the appropriate level
of detail necessary to fully understand these risks, and the corresponding risk factors that follow provide
essential detail and context necessary to fully understand and appreciate these company-specific risks associated
with our business.
Risks related to our research and development and commercialization
• Our business depends heavily on our ability to successfully commercialize OGSIVEO in the United
States and in other jurisdictions where we may obtain marketing approval, including Europe. There is no
assurance that our commercialization efforts with respect to OGSIVEO will be successful or that we
will be able to generate revenues at the levels or on the timing we expect, or at levels or on the timing
necessary to support our goals.
• We have limited experience as a commercial company and the sales, marketing, and distribution of
OGSIVEO or any future approved products may be unsuccessful or less successful than anticipated.
• Our business is highly dependent on the successful commercialization of OGSIVEO and development of
our current product candidates, including mirdametinib. If we are unable to successfully commercialize
OGSIVEO or successfully complete clinical development of, obtain regulatory approval for, or
commercialize, our product candidates, or if we experience delays in doing so, our business will be
materially harmed.
• We were not involved in the early development of our lead product candidates or in the development of
third-party agents being developed in combination with our product candidates; therefore, we are dependent
on third parties having accurately generated, collected, interpreted and reported data from certain
preclinical and clinical trials for our product candidates.
• If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials
conducted by us or third parties, we may be unable to successfully develop, obtain regulatory approval
for or commercialize our product candidates.
• Interim “topline” and preliminary data from our clinical trials that we announce or publish from time to
time may change as more data become available, are not necessarily predictive of the final results of
the completed study or the results of other ongoing or future studies and are subject to audit and
verification procedures that could result in material changes.
• Although we have successfully completed the DeFi trial and received approval for OGSIVEO for the
treatment of adult patients with progressing desmoid tumors who require systemic treatment, we have
limited experience completing registrational clinical trials, and we may be unable to do so for additional
product candidates we may develop.
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• We expect to develop nirogacestat and mirdametinib, and potentially future product candidates, in
combination with other therapies, and safety or supply issues with combination use products may delay
or prevent development and approval of such product candidates.
• If we encounter difficulties enrolling patients in any of our clinical trials, our clinical development
activities could be delayed or otherwise adversely affected.
• The target patient populations of OGSIVEO for the treatment of desmoid tumors and mirdametinib for
the treatment of NF1-PN are small and have not been definitively determined, and if our estimates of
the number of treatable patients is lower than expected, our potential revenues from sales of OGSIVEO
or of mirdametinib, if approved, and our ability to achieve profitability would be compromised.
• Even if our product candidates receive marketing approval, they may fail to achieve market acceptance
by physicians, patients, third-party payers, or others in the medical community necessary for commercial
success.
Risks related to our reliance on third parties
• We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials. If these
third parties do not successfully carry out their contractual duties, meet expected deadlines or comply with
regulatory requirements, we may not be able to obtain regulatory approval for, or commercialize, any
potential product candidates.
• Because we rely on third-party manufacturing and supply partners, our supply of preclinical and clinical
development materials and commercial product may become limited or interrupted or may not be of
satisfactory quantity or quality, which could delay, prevent or impair our development or commercialization
efforts.
• Despite entering into commercial manufacturing and supply agreements related to the supply of
nirogacestat’s active pharmaceutical ingredient and finished drug product, we have limited experience
manufacturing on a commercial scale, and we have not yet entered into commercial supply arrangements
with respect to our product candidates, and we rely on third parties to produce and process quantities
of our first FDA-approved product, OGSIVEO, and we expect to rely on third parties to produce and
process commercial quantities of OGSIVEO and our product candidates, if approved.
• We are dependent on a small number of suppliers for some of the materials used to manufacture our
product candidates, and on a limited number of qualified active ingredient manufacturers for the
commercial supply of OGSIVEO and each of our lead product candidates.
• Our existing and future collaborations are important to our business. If we are unable to maintain our
existing collaborations or enter into new collaborations, or if these collaborations are not successful, our
business could be adversely affected. In addition, our collaborators have broad discretion in many
aspects of their performance of collaboration activities and they may take actions with which we do not
agree.
Risks related to our intellectual property
• We depend on intellectual property licensed from third parties, including from Pfizer Inc., or Pfizer, for
our lead product candidates, and termination of any of these licenses could result in the loss of significant
rights, which would harm our business.
• If we fail to comply with our obligations under our patent licenses with third parties, we could lose
license rights that are important to our business.
Risks related to government regulation
• We have been granted Orphan Drug Designation for nirogacestat and mirdametinib and may seek
Orphan Drug Designation for other product candidates, but we may be unable to obtain or maintain
such designation, or the benefits associated with such designation, including the potential for market
exclusivity, which may negatively impact our financial performance.
• A portion of our manufacturing of our lead product candidates takes place in China, with additional
capacity sourced from India, through third-party manufacturers. A significant disruption in the operation
37
of those manufacturers, a trade war or political unrest could materially adversely affect our business,
financial condition and results of operations.
Risks related to managing our business and operations
• We will need to grow the size of our organization, and we may experience difficulties in managing this
growth.
• We are still developing the internal research capabilities required to independently discover new product
candidates, and we plan to execute our growth strategy, in part by identifying and in-licensing or
acquiring additional product candidates that have been discovered and initially developed by others. We
may not be successful in executing our growth strategy or such growth strategy may not deliver the
anticipated results.
• Our current operations are concentrated in two locations, and we or the third parties upon whom we
depend may be adversely affected by natural disasters, including those that may be related to climate
change, or other unforeseeable or uncontrollable events, and our business continuity and disaster recovery
plans may not adequately protect us from a serious disaster.
Risks related to our financial position and need for additional capital
• We have incurred significant net losses since our inception and anticipate that we will incur net losses in
the future.
• We have a limited operating history, which may make it difficult to evaluate our prospects and likelihood
of success.
• We may require additional capital to fund our operations and if we fail to obtain necessary capital, we
will not be able to complete the development and commercialization of our product candidates.
• Raising additional capital may cause dilution to our existing stockholders, restrict our operations or
require us to relinquish rights to our technologies or product candidates.
Risks related to our common stock
• We do not intend to pay dividends on our common stock so any returns will be limited to the value of
our stock.
• Our principal stockholders and management own a significant percentage of our stock and will be able
to exert significant control over matters subject to stockholder approval.
• Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a
change of control which could limit the market price of our common stock and may prevent or frustrate
attempts by our stockholders to replace or remove our current management.
• Our bylaws designate certain specified courts as the sole and exclusive forums for certain disputes
between us and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial
forum for disputes with us or our directors, officers or employees.
Company-specific material risk factors
Risks related to our research and development and commercialization
Our business depends heavily on our ability to successfully commercialize OGSIVEO in the United States and
in other jurisdictions where we may obtain marketing approval, including Europe. There is no assurance that
our commercialization efforts with respect to OGSIVEO will be successful or that we will be able to generate
revenues at the levels or on the timing we expect, or at levels or on the timing necessary to support our goals.
To date, we have not generated substantial revenue from the sale of products. In November 2023,
OGSIVEO (nirogacestat)was approved by the FDA for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment. Our business currently depends heavily on our ability to
successfully commercialize OGSIVEO in the United States and in other jurisdictions where we may obtain
marketing approval, including Europe. We may never be able to successfully commercialize our product or
38
meet our expectations with respect to revenues. We have never marketed, sold, or distributed for commercial
use any pharmaceutical product other than OGSIVEO, with respect to which we only recently began
commercial sales. There is no guarantee that the infrastructure, systems, processes, policies, relationships,
and materials we have built for the launch and commercialization of OGSIVEO in the United States, or that
we may build in Europe, will be sufficient for us to achieve success at the levels we expect.
We may encounter issues and challenges in commercializing OGSIVEO and generating substantial
revenues. We may also encounter challenges related to reimbursement of OGSIVEO, including potential
limitations in the scope, breadth, availability, or amount of reimbursement covering OGSIVEO. Similarly,
healthcare settings or patients may determine that the financial burdens of treatment are not acceptable. We
may face other limitations or issues related to the price of OGSIVEO. Our results may also be negatively
impacted if we have not adequately sized our field teams or our physician segmentation and targeting strategy
is inadequate or if we encounter deficiencies or inefficiencies in our infrastructure or processes. Other
factors that may hinder our ability to successfully commercialize OGSIVEO, or any of our future approved
drugs, and generate substantial revenues, include:
• the acceptance of OGSIVEO by patients and the medical community;
• the ability of our third-party manufacturer(s) to manufacture commercial supplies of OGSIVEO at
acceptable costs, to remain in good standing with regulatory agencies, and to maintain commercially
viable manufacturing processes that are, to the extent required, compliant with cGMP regulations;
• our ability to remain compliant with laws and regulations that apply to us and our commercial
activities;
• FDA-mandated package insert requirements and successful completion of any related FDA post-
marketing requirements;
• the actual market size for OGSIVEO, which may be different than expected;
• the length of time that patients who are prescribed our drug remain on treatment;
• our ability to obtain marketing approval for OGSIVEO in Europe;
• the sufficiency of our drug supply to meet commercial and clinical demands which could be negatively
impacted if our projections regarding the potential number of patients are inaccurate, we are
subject to unanticipated regulatory requirements, or our current drug supply is destroyed, or
negatively impacted at our manufacturing sites, storage sites, or in transit;
• our ability to effectively compete with other therapies that may emerge for desmoid tumors; and
• our ability to maintain, enforce, and defend third party challenges to our intellectual property rights
in and to OGSIVEO.
Any of these issues could impair our ability to successfully commercialize our product or to generate
substantial revenues or profits or to meet our expectations with respect to the amount or timing of revenues
or profits. Any issues or hurdles related to our commercialization efforts may materially adversely affect
our business, results of operations, financial condition, and prospects. There is no guarantee that we will be
successful in our launch or commercialization efforts with respect to OGSIVEO. We may also experience
significant fluctuations in sales of OGSIVEO from period to period and, ultimately, we may never generate
sufficient revenues from OGSIVEO to reach or maintain profitability or sustain our anticipated levels of
operations. Any inability on our part to successfully commercialize OGSIVEO in the United States, and any
other international markets where it may subsequently be approved, including Europe, or any significant
delay, could have a material adverse impact on our ability to execute upon our business strategy.
We have limited experience as a commercial company and the sales, marketing, and distribution of OGSIVEO
or any future approved products may be unsuccessful or less successful than anticipated.
We recently began commercializing our first product, OGSIVEO, in the United States. As a company,
we had no prior experience commercializing a product. The success of our commercialization efforts for
OGSIVEO and any future approved products is difficult to predict and subject to the effective execution of
our business plan, including, among other things, the continued development of our internal sales, marketing,
39
and distribution capabilities and our ability to navigate the significant expenses and risks involved with the
development and management of such capabilities.
For example, we have completed hiring in areas to support commercialization, including in sales
management, sales representatives, marketing, access and reimbursement, sales support, and distribution.
There are significant expenses and risks involved with establishing our own sales, marketing, and distribution
capabilities, including our ability to hire, retain, and appropriately incentivize qualified individuals, provide
adequate training to sales and marketing personnel, and effectively manage geographically dispersed sales and
marketing teams to generate sufficient demand. Any failure or delay in the development of these capabilities
could delay or negatively affect the success of our commercialization efforts and our business. For example,
the commercialization of OGSIVEO may not develop as planned or anticipated, which may require us to,
among others, adjust or amend our business plan and incur significant expenses.
Further, given our lack of experience commercializing products, we do not have a track record of
successfully executing on the commercialization of an approved product. If we are unsuccessful in
accomplishing our objectives and executing on our business plan, or if the commercialization of OGSIVEO
or any future approved products does not develop as planned, we may require significant additional
capital and financial resources, we may not become profitable, and we may not be able to compete against
more established companies in our industry.
Our business is highly dependent on the successful commercialization of OGSIVEO and development of our
current product candidates, including mirdametinib. If we are unable to successfully commercialize OGSIVEO
or successfully complete clinical development of, obtain regulatory approval for, or commercialize, our
product candidates, or if we experience delays in doing so, our business will be materially harmed.
Our future success and ability to generate revenue from our product candidates is dependent on our
ability to successfully develop, obtain regulatory approval for and commercialize one or more product
candidates. We currently have one product approved for commercial sale and a portfolio of product
candidates in various stages of development. Our product candidates that are in earlier stages of development
and will require substantial additional investment for preclinical development, clinical development,
regulatory review and approval in one or more jurisdictions.
In November 2023, the FDA approved OGSIVEO (nirogacestat) for the treatment of adult patients
with progressing desmoid tumors who require systemic treatment. We are exploring nirogacestat in additional
indications and in combination with other therapies and also advancing mirdametinib, an investigational
MEK inhibitor, in pediatric and adult patients with neurofibromatosis type 1-associated plexiform
neurofibromas (NF1-PN). In November 2023, we announced positive topline results from the pivotal
Phase 2b ReNeu trial evaluating mirdametinib for NF1-PN. If nirogacestat for additional indications,
mirdametinib or any of our other product candidates encounter safety or efficacy problems, development
delays or regulatory issues or other problems, our development plans and ability to obtain regulatory approval
for, or commercialize, additional indications or product candidates would be significantly harmed.
We may not have the financial resources to continue the development of, or to modify existing or enter
into new collaborations for, a product candidate if we experience any issues that delay or prevent regulatory
approval of, or our ability to commercialize, our product candidates, including:
• our inability to demonstrate to the satisfaction of the FDA, or comparable foreign regulatory
authorities that our product candidates are safe and effective;
• our ability to establish commercial manufacturing processes and product supply arrangements;
• insufficiency of our financial and other resources to complete the necessary preclinical studies and
clinical trials;
• negative or inconclusive results from our preclinical studies, clinical trials or the clinical trials of
others for product candidates similar to ours, leading to a decision or requirement to conduct
additional preclinical studies or clinical trials or abandon a program;
• product-related adverse events experienced by subjects in our clinical trials or by individuals using
drugs or therapeutic biologics similar to our product candidates;
40
• delays in submitting an IND or comparable foreign applications, or delays or failure in obtaining the
necessary approvals from regulators to commence a clinical trial or a suspension or termination of
a clinical trial once commenced;
• conditions imposed by the FDA, EMA, or comparable foreign regulatory authorities regarding the
scope or design of our clinical trials;
• poor effectiveness of our product candidates during clinical trials;
• better than expected performance of control arms, such as placebo groups, which could lead to
negative or inconclusive results from our clinical trials;
• delays in enrolling subjects in clinical trials;
• high drop-out rates of subjects from clinical trials;
• inadequate supply or quality of product candidates or other materials necessary for the conduct of
our clinical trials;
• greater than anticipated clinical trial or manufacturing costs;
• unfavorable FDA, EMA, or comparable regulatory authority inspection and review of a clinical trial
site;
• failure of our third-party contractors or investigators to comply with regulatory requirements or
otherwise meet their contractual obligations in a timely manner, or at all;
• delays and changes in regulatory requirements, policy and guidelines, including the imposition of
additional regulatory oversight around clinical testing generally or with respect to our therapies in
particular; or varying interpretations of data by the FDA, EMA, and comparable foreign regulatory
authorities.
We were not involved in the early development of our lead product candidates or in the development of
third-party agents being developed in combination with our product candidates; therefore, we are dependent on
third parties having accurately generated, collected, interpreted and reported data from certain preclinical
and clinical trials for our product candidates.
We had no involvement with or control over the initial preclinical and clinical development of any of
our lead product candidates or third-party agents being developed in combination with our product
candidates. We are dependent on third parties having conducted their research and development in accordance
with the applicable protocols and legal, regulatory and scientific standards; having accurately reported the
results of all preclinical studies and clinical trials conducted with respect to such product candidates; and
having correctly collected and interpreted the data from these trials. If these activities were not compliant,
accurate or correct, the clinical development, regulatory approval or commercialization of our product
candidates will be adversely affected.
If our clinical trials fail to replicate positive results from earlier preclinical studies or clinical trials conducted
by us or third parties, we may be unable to successfully develop, obtain regulatory approval for or commercialize
our product candidates.
Our preclinical studies or early clinical trials of our product candidates, whether conducted by us or
third parties, may not necessarily be predictive of the results of later clinical trials that we conduct. Similarly,
even if we are able to complete our planned clinical trials of our product candidates, positive results from
such clinical trials may not be replicated in our subsequent preclinical studies or clinical trials.
Many companies in the pharmaceutical and biotechnology industries have suffered significant setbacks
in late-stage clinical trials after achieving positive results in early-stage development, and we cannot be certain
that we will not face similar setbacks. These setbacks have been caused by, among other things, preclinical
findings made while clinical trials were underway or safety or efficacy observations made in preclinical studies
and clinical trials, including previously unreported adverse events. Moreover, preclinical and clinical data
are often susceptible to varying interpretations and analyses and many companies that believed their product
candidates performed satisfactorily in preclinical studies and clinical trials nonetheless failed to obtain
41
FDA, EMA or comparable foreign regulatory authority approval. Furthermore, the approval policies or
regulations of the FDA, EMA or comparable foreign regulatory authorities may significantly change in a
manner rendering our clinical data insufficient for approval, which may lead to the FDA, EMA or comparable
foreign regulatory authorities delaying, limiting or denying approval of our product candidates.
Interim “topline” and preliminary data from our clinical trials that we announce or publish from time to time
may change as more data become available, are not necessarily predictive of the final results of the completed
study or the results of other ongoing or future studies and are subject to audit and verification procedures that
could result in material changes.
From time to time, we may publicly disclose interim topline or preliminary data from our clinical trials,
such as the positive topline results from pediatric and adult patients in the ReNeu trial, our Phase 2b clinical
trial of mirdametinib announced in November 2023. Interim updates are based on a preliminary analysis
of then-available data, and the data and related findings and conclusions are subject to change following a
more comprehensive review of the data related to the particular study or trial. We also make assumptions,
estimations, calculations and conclusions as part of our analyses of data, and we may not have received or
had the opportunity to fully and carefully evaluate all data. As a result, any topline results that we report may
differ from future results of the same studies, or different conclusions or considerations may qualify such
results, once additional data have been received and fully evaluated. Interim topline or preliminary data also
remain subject to audit and verification procedures that may result in the final data being materially
different from the preliminary data we previously published. As a result, interim topline or preliminary data
should be viewed with caution until the final data are available. In addition, we may report interim analyses
of only certain endpoints rather than all endpoints. Interim data from clinical trials that we may complete are
subject to the risk that one or more of the clinical outcomes may materially change as patient enrollment
continues and more patient data become available. As a result, interim data may not be predictive of the final
results of the same study or the results of ongoing or future studies. Differences between preliminary or
interim data and final data could significantly harm our business prospects and may cause the trading price
of our common stock to fluctuate significantly.
Furthermore, others, including regulatory agencies, may not accept or agree with our assumptions,
estimates, calculations, conclusions or analyses or may interpret or weigh the importance of data differently,
which could impact the value of the particular program, the approvability or commercialization of the
particular product candidate or product and our company in general. In addition, the information we choose
to publicly disclose regarding a particular study or clinical trial is typically selected from a more extensive
amount of available information. You or others may not agree with what we determine is the material or
otherwise appropriate information to include in our disclosure, and any information we determine not to
disclose may ultimately be deemed significant with respect to future decisions, conclusions, views, activities
or otherwise regarding a particular product, product candidate or our business. If the interim topline or
preliminary data that we report differ from late, final or actual results, or if others, including regulatory
authorities, disagree with the conclusions reached, our ability to obtain approval for, and commercialize, the
product candidate being studied or any of our other product candidates may be harmed, which could
harm our business, financial condition, results of operations and prospects.
Although we have successfully completed the DeFi trial and received approval for OGSIVEO for the treatment
of adult patients with progressing desmoid tumors who require systemic treatment, we have limited experience
completing registrational clinical trials, and we may be unable to do so for additional product candidates we may
develop.
We will need to successfully complete registrational clinical trials in order to obtain the approval of the
FDA, EMA or comparable foreign regulatory authorities to market any product candidates. Carrying out
clinical trials, including later-stage registrational clinical trials, is a complicated process. Although we completed
the DeFi trial, which supported the approval of OGSIVEO for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment by the FDA in November 2023, as an organization, we
have limited experience completing registrational clinical trials. We will need to continue to build and expand
our clinical development and regulatory capabilities, and we may be unable to recruit and train qualified
personnel. We also expect to continue to rely on third parties to conduct our clinical trials. If these third parties
do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory
42
requirements, we may not be able to obtain regulatory approval of or commercialize any potential product
candidates. Consequently, we may be unable to successfully and efficiently execute and complete necessary
clinical trials in a way that leads to an NDA submission and approval of any other product candidates. We may
require more time and incur greater costs than our competitors and may not succeed in obtaining regulatory
approval of any product candidates that we develop. Failure to commence or complete, or delays in, our planned
clinical trials, could prevent us from or delay us in commercializing our product candidates.
We expect to develop nirogacestat and mirdametinib, and potentially future product candidates, in combination
with other therapies, and safety or supply issues with combination use products may delay or prevent
development and approval of such product candidates.
We intend to develop nirogacestat and mirdametinib, and likely other future product candidates, in
combination with one or more other approved or unapproved rational therapies to treat cancer or other
diseases. For example, we are currently evaluating mirdametinib in combination with lifirafenib, BeiGene
Ltd.’s, or BeiGene’s, RAF dimer inhibitor, and nirogacestat in combination with several BCMA-directed
therapies across modalities through our collaborations with industry leaders developing such therapies.
We will not be able to market and sell nirogacestat, mirdametinib or any product candidate we
develop in combination with an unapproved rational therapy to treat cancer for a combination indication if
that unapproved cancer therapy does not ultimately obtain marketing approval either alone or in
combination with our product. In addition, unapproved cancer therapies face the same risks described
herein elsewhere with respect to our product candidates currently in development and clinical trials, including
the potential for serious adverse effects, delay in the clinical trials and lack of FDA approval.
Even if any product candidate we develop were to receive marketing approval or be commercialized for
use in combination with other existing therapies, we would continue to be subject to the risks that the FDA,
EMA or comparable foreign regulatory authorities outside of the United States could revoke approval of
the therapy used in combination with our product or that safety, efficacy, manufacturing or supply issues
could arise with any of those existing therapies. If the therapies we use in combination with our product
candidates are replaced as the standard of care for the indications we choose for any of our product
candidates, the FDA, EMA or comparable foreign regulatory authorities may require us to conduct
additional clinical trials. The occurrence of any of these risks could result in our own products, if approved,
being removed from the market or being less successful commercially.
If the FDA, EMA or comparable foreign regulatory authorities do not approve these other drugs or
revoke their approval of, or if safety, efficacy, quality, manufacturing or supply issues arise with, the drugs
we choose to evaluate in combination with our product candidate we develop, we may be unable to obtain
approval of or market such combination therapy.
If we encounter difficulties enrolling patients in any of our clinical trials, our clinical development activities
could be delayed or otherwise adversely affected.
The timely completion of clinical trials in accordance with their protocols depends, among other
things, on our ability to enroll a sufficient number of patients who remain in the trial until its conclusion.
We may experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:
• the patient eligibility and exclusion criteria defined in the protocol;
• the size of the patient population required for analysis of the clinical trial’s primary endpoints;
• the proximity of patients to clinical trial sites;
• the design of the clinical trial;
• our ability to recruit clinical trial investigators with the appropriate competencies and experience,
and the ability of these investigators to identify and enroll suitable patients;
• perception of the safety profile of our product candidates;
• our ability to obtain and maintain patient consents; and
• the risk that patients enrolled in clinical trials will drop out of the trials before completion.
43
For example, we are developing mirdametinib for the treatment of NF1-PN, which is a rare disease
with a small patient population. As a result, although we have completed enrollment in our ReNeu trial, we
may encounter difficulties enrolling subjects in our other clinical trials for our product candidates due, in
part, to the small size of rare disease patient populations. In addition, our clinical trials will compete with
other clinical trials for product candidates that are in the same therapeutic areas as our product candidates,
and this competition will reduce the number and types of patients available to us, because some patients who
might have opted to enroll in our trials may instead opt to enroll in a clinical trial being conducted by one
of our competitors. Since the number of qualified clinical investigators is limited, we expect to conduct some
of our clinical trials at the same clinical trial sites that some of our competitors use, which will reduce the
number of patients who are available for our clinical trials in such clinical trial site. In addition, in the case of
mirdametinib, we may face difficulty with enrollment due to physician or patient perception of an adverse
tolerability profile.
Delays in patient enrollment may result in increased costs or may affect the timing or outcome of our
clinical trials, which could prevent completion of these trials and adversely affect our ability to advance the
development of our product candidates.
The target patient populations of OGSIVEO for the treatment of desmoid tumors and mirdametinib for the
treatment of NF1-PN are small and have not been definitively determined, and if our estimates of the number
of treatable patients is lower than expected, our potential revenues from sales of OGSIVEO or of mirdametinib,
if approved, and our ability to achieve profitability would be compromised.
Our estimates of both the number of patients who have the diseases we are targeting, as well as the
subset of patients with these diseases in a position to receive our product candidates, if approved, are based
on our beliefs and estimates, and these estimates may prove to be incorrect. These estimates have been
derived from a variety of sources, including scientific literature, input from physicians that treat patients
with the diseases we are targeting, patient foundations and secondary market research databases. Further,
new studies may change the estimated incidence or prevalence of these diseases, and any regulatory approvals
that we may receive for a product candidate may include limitations for use or contraindications that
decrease the addressable patient population. Accordingly, the target patient populations may turn out to be
lower than expected, in which case the potential revenues from sales of our product candidates, if approved,
would be lower than expected.
Even if our product candidates receive marketing approval, they may fail to achieve market acceptance by
physicians, patients, third-party payers, or others in the medical community necessary for commercial success.
Notwithstanding the marketing approval of OGSIVEO and any other product candidates, such
products may fail to gain sufficient market acceptance by physicians, patients, third-party payers, and
others in the medical community. If OGSIVEO or our other product candidates do not achieve an adequate
level of acceptance, we may not generate adequate product revenue or become profitable. The degree of
market acceptance will depend on a number of factors, including but not limited to:
• the safety, efficacy, risk-benefit profile, and potential advantages compared to alternative or existing
treatments, which physicians may perceive to be adequately effective for some or all patients;
• the prevalence and severity of any side effects and the difficulty of, or costs associated with, resolving
such side effects;
• the content of the approved product label, including any limitations or warnings contained in the
labeling approved by FDA or other applicable foreign regulatory authorities;
• any restrictions on the use of our products;
• the effectiveness of our sales and marketing efforts;
• the strength of our marketing and distribution support;
• our ability to offer our products for sale at competitive prices; and
• the convenience and ease of administration compared to alternative treatments.
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We cannot assure you that OGSIVEO or our current or future product candidates, if approved, will
achieve market acceptance among physicians, patients, third-party payers, or others in the medical
community necessary for commercial success. Any failure by OGSIVEO or such other product candidates
that obtain regulatory approval to achieve market acceptance or commercial success would harm our results
of operations.
Risks related to our reliance on third parties
We rely on third parties to conduct certain aspects of our preclinical studies and clinical trials. If these third
parties do not successfully carry out their contractual duties, meet expected deadlines or comply with regulatory
requirements, we may not be able to obtain regulatory approval for, or commercialize, any potential product
candidates.
We depend upon third parties to conduct certain aspects of our preclinical studies and depend on third
parties, including independent investigators, to conduct our clinical trials under agreements with universities,
medical institutions, contract research organizations, or CROs, strategic partners and others. We expect to
negotiate budgets and contracts with such third parties, which may result in delays to our development
timelines and increased costs.
We commenced operations in August 2017, and we continue to build our infrastructure and hire
personnel necessary to execute our operational plans. We rely especially heavily on third parties over the
course of our clinical trials, and, as a result, may have limited control over the clinical investigators and limited
visibility into their day-to-day activities, including with respect to their compliance with the approved
clinical protocol. Nevertheless, we are responsible for ensuring that each of our clinical trials is conducted in
accordance with the applicable protocol, legal and regulatory requirements and scientific standards, and
our reliance on third parties does not relieve us of our regulatory responsibilities. We and these third parties
are required to comply with good clinical practice, or GCP, requirements, which are regulations and
guidelines enforced by the FDA and comparable foreign regulatory authorities for product candidates in
clinical development. Regulatory authorities enforce these GCP requirements through periodic inspections
of clinical trial sponsors, clinical investigators and clinical trial sites. If we or any of these third parties fail to
comply with applicable GCP requirements, the clinical data generated in our clinical trials may be deemed
unreliable and the FDA or comparable foreign regulatory authorities may require us to suspend or terminate
these trials or perform additional preclinical studies or clinical trials before approving our marketing
applications. We cannot be certain that, upon inspection, such regulatory authorities will determine that
any of our clinical trials comply with GCP requirements. In addition, our clinical trials must be conducted
with product produced under current good manufacturing practice, or cGMP, requirements and may require
a large number of patients.
Our failure or any failure by these third parties to comply with these regulations may require us to
repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be
adversely affected if any of these third parties violates federal or state fraud and abuse or false claims laws
and regulations or healthcare privacy and security laws.
Any third parties conducting aspects of our preclinical studies or our clinical trials will not be our
employees and, except for remedies that may be available to us under our agreements with such third
parties, we cannot control whether or not they devote sufficient time and resources to our preclinical studies
and clinical programs. These third parties may also have relationships with other commercial entities,
including our competitors, for whom they may also be conducting clinical trials or other product development
activities, which could affect their performance on our behalf. If these third parties do not successfully
carry out their contractual duties or obligations or meet expected deadlines, if they need to be replaced or if
the quality or accuracy of the preclinical or clinical data they obtain is compromised due to the failure to
adhere to our protocols or regulatory requirements or for other reasons, our development timelines, including
clinical development timelines, may be extended, delayed or terminated and we may not be able to complete
development of, obtain regulatory approval of or successfully commercialize our product candidates. As
a result, our financial results and the commercial prospects for our product candidates would be harmed, our
costs could increase and our ability to generate revenue could be delayed or precluded entirely.
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If any of our relationships with these third-party contract research organizations, or CROs, or others
terminate, we may not be able to enter into arrangements with alternative CROs or other third parties or to
do so on commercially reasonable terms.
Switching or adding additional CROs involves additional cost and requires management’s time and
focus. In addition, there is a natural transition period when a new CRO begins work. As a result, delays may
occur, which can materially impact our ability to meet our desired development timelines. Though we
carefully manage our relationships with our CROs, investigators and other third parties, there can be no
assurance that we will not encounter challenges or delays in the future or that these delays or challenges will
not have a material adverse impact on our business, financial condition and prospects.
Because we rely on third-party manufacturing and supply partners, our supply of preclinical and clinical
development materials and commercial product may become limited or interrupted or may not be of satisfactory
quantity or quality, which could delay, prevent or impair our development or commercialization efforts.
We rely on third-party contract manufacturers to manufacture all of our preclinical and clinical trial
product supplies. We do not own manufacturing facilities for producing any product supplies. There can be
no assurance that our preclinical and clinical development product supplies will not be limited, interrupted, of
satisfactory quality or continue to be available at acceptable prices. In particular, any replacement of our
manufacturers could require significant effort and expertise because there may be a limited number of
qualified replacements.
The manufacturing process for a product candidate is subject to FDA, EMA and comparable foreign
regulatory authority review. Suppliers and manufacturers must meet applicable manufacturing requirements
and undergo rigorous facility and process validation tests required by regulatory authorities in order to
comply with regulatory standards, such as cGMPs. In the event that any of our 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 reasonable terms,
if at all. In either scenario, our clinical trials supply could be delayed significantly as we establish alternative
supply sources. In some cases, the technical skills or technology required to manufacture our product
candidates may be unique or proprietary to the original manufacturer and we may have difficulty, or there
may be contractual restrictions prohibiting us from, transferring such skills or technology to another third
party and a feasible alternative may not exist. These factors would increase our reliance on such
manufacturer or require us to obtain a license from such manufacturer in order to have another third-party
manufacture our product candidates. 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 product candidates in a timely manner or
within budget. Furthermore, a manufacturer may possess technology related to the manufacture of our
product candidate that such manufacturer owns independently. This would increase our reliance on such
manufacturer or require us to obtain a license from such manufacturer in order to have another manufacturer
manufacture our product candidates. In addition, changes in manufacturers often involve changes in
manufacturing procedures and processes, which could require that we conduct bridging studies between our
prior clinical supply and that of any new manufacturer. We may be unsuccessful in demonstrating the
comparability of clinical supplies, which could require the conduct of additional clinical trials.
Our or a third party’s failure to execute on our manufacturing requirements and comply with cGMP
could adversely affect our business in a number of ways, including:
• an inability to initiate or continue clinical trials of product candidates under development;
• delay in submitting regulatory applications, or receiving regulatory approvals, for product candidates;
• loss of the cooperation of an existing or future collaborator;
• subjecting third-party manufacturing facilities to additional inspections by regulatory authorities;
• requirements to cease distribution or to recall batches of our product candidates; and
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• in the event of approval to market and commercialize a product candidate, an inability to meet
commercial demands for our products.
In addition, we contract with packaging providers with the appropriate expertise, facilities and scale to
meet our needs. Failure to maintain cGMP can result in a contractor receiving FDA sanctions, which can
impact our ability to operate or lead to delays in clinical development programs. We believe that our current
packaging contractors operate in accordance with cGMP, but we can give no assurance that FDA, EMA
or comparable foreign regulatory authorities will not conclude that a lack of compliance exists. In addition,
any delay in contracting for packaging services, or failure of the contract manufacturer to perform the
services as needed, may delay clinical trials, registration and launches, which could negatively affect our
business. If our current third-party contract manufacturers cannot perform as agreed, we may be required
to replace such manufacturers and we may be unable to replace them on a timely basis or at all. Our current
and anticipated future dependence upon others for the manufacture of our product candidates or products
may adversely affect our future profit margins and our ability to commercialize any products that receive
marketing approval on a timely and competitive basis.
Our product candidates and any drugs that we may develop may compete with other product candidates
and drugs for access to manufacturing facilities. There is no assurance we would be able to enter into similar
commercial arrangements with other manufacturers that operate under cGMP regulations and that might
be capable of manufacturing for us. Any performance failure on the part of our existing or future
manufacturers could delay clinical development or marketing approval.
Despite entering into commercial manufacturing and supply agreements related to the supply of nirogacestat’s
active pharmaceutical ingredient and finished drug product, we have limited experience manufacturing on a
commercial scale, and we have not yet entered into commercial supply arrangements with respect to our product
candidates, and we rely on third parties to produce and process quantities of our first FDA-approved product,
OGSIVEO, and we expect to rely on third parties to produce and process commercial quantities of OGSIVEO
and our product candidates, if approved.
We expect to continue to rely on third-party manufacturers for our commercial requirements of
OGSIVEO and if we receive regulatory approval for other product candidates. We have only limited
manufacturing and supply agreements in place with respect to our product candidates. Although we have
agreements for the commercial supply of nirogacestat’s active pharmaceutical ingredient and finished products,
our supply arrangements for our other product candidates are limited to non-commercial, development-
stage manufacturing and supply. As a result, we do not yet have long-term supply arrangements with respect
to such other product candidates. To the extent that we enter into future manufacturing arrangements with
third parties for commercial supply of our product candidates, if approved, we will depend on these third
parties to perform their obligations in a timely manner consistent with contractual and regulatory
requirements, including those related to quality control and assurance.
Any performance failure on the part of our existing or future third-party manufacturers could delay
clinical development, marketing approval, or commercial supply, including with respect to nirogacestat. If
our current suppliers, or future third-party manufacturers, cannot perform as agreed, or if such contract
manufacturers choose to terminate their agreements with us, we will be required to replace such manufacturers.
We may incur added costs, delays, and difficulties in identifying and qualifying any such replacement
manufacturer or in reaching an agreement with any such alternative manufacturers. We will also need to
verify, such as through a manufacturing comparability study, that any new supplier will produce our product
candidate or product according to the specifications previously submitted to the FDA, EMA or another
comparable regulatory authority. In addition, changes in suppliers often involve changes in manufacturing
procedures and processes, which could require that we conduct bridging studies between our prior clinical
supply used in our clinical trials and that of any new supplier. The delays associated with the verification
of a new supplier or comparability of new manufacturing processes could negatively affect our ability to
develop product candidates or commercialize our product in a timely manner or within budget.
The facilities used by our contract manufacturers to manufacture our product candidates must also be
approved by the FDA, EMA or comparable foreign regulatory authorities following inspections that will be
conducted after we submit an application to the FDA, EMA or comparable foreign regulatory authorities.
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We do not directly control the manufacturing process of, and will be completely dependent on, our contract
manufacturing partners for compliance with cGMP requirements for the manufacture of our product
candidates. If our contract manufacturers cannot successfully manufacture material that conforms to our
specifications and the strict regulatory requirements of the FDA, EMA or comparable foreign regulatory
authorities, they will not be able to secure and/or maintain regulatory approval for their manufacturing
facilities. In addition, we have no direct control over the ability of our contract manufacturers to maintain
adequate quality control, quality assurance and qualified personnel. If the FDA, EMA or a comparable
foreign regulatory authority does not approve these facilities for the manufacture of our product candidates
or if it withdraws any approval in the future, we may need to find alternative manufacturing facilities, which
would significantly impact our ability to develop, obtain regulatory approval for or market our product
candidates, if approved.
We are dependent on a small number of suppliers for some of the materials used to manufacture our product
candidates, and on a limited number of qualified active ingredient manufacturers for the commercial supply of
OGSIVEO and each of our lead product candidates.
We currently depend on a small number of suppliers for some of the materials used in, and processes
required to develop, our product candidates. We cannot ensure that these suppliers or service providers will
remain in business or have sufficient capacity or supply to meet our needs, or that they will not be purchased
by one of our competitors or another company that is not interested in continuing to work with us. Our
use of a small number of suppliers exposes us to several risks, including disruptions in supply, price increases
or late deliveries. There are, in general, relatively few alternative sources of supply for substitute materials.
Our current vendors may be unable or unwilling to meet our future demands for our clinical trials or
commercial sale. Finding suitable replacement suppliers, materials and processes could take a substantial
amount of time and it may be difficult to establish replacement suppliers who meet regulatory requirements.
Any disruption or delay in supply could compromise our ability to pursue development and eventual
commercialization of our product candidates.
Our existing and future collaborations are important to our business. If we are unable to maintain our existing
collaborations or enter into new collaborations, or if these collaborations are not successful, our business could be
adversely affected. In addition, our collaborators have broad discretion in many aspects of their performance
of collaboration activities and they may take actions with which we do not agree.
An important part of our strategy is to evaluate and, as deemed appropriate, extend our current, or
enter into additional, partnerships in the future, including potentially with major biopharmaceutical
companies. We have limited capabilities for product development and are currently in the process of building
our preclinical research and development and commercial capabilities. Accordingly, we have entered into
collaborations with other companies to provide us with important technologies in order to more fully develop
our product candidates and we may enter into collaborations with other companies to provide us with
important technologies or funding for our programs.
Any current or future collaborations we may extend or enter into may pose a number of risks, including
the following:
• collaborators have significant discretion in determining the efforts and resources that they will apply;
• collaborators may not perform their obligations as expected;
• collaborators may not pursue development and commercialization of any product candidates that
achieve regulatory approval or may elect not to continue or renew development or commercialization
programs or license arrangements based on clinical trial results, changes in the collaborators’
strategic focus or available funding, or external factors, such as a strategic transaction that may
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 product candidate, repeat or conduct new clinical trials or require a new
formulation of a product candidate for clinical testing;
• collaborators could independently develop, or develop with third parties, products that compete
directly or indirectly with our products and product candidates if the collaborators believe that the
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competitive products are more likely to be successfully developed or can be commercialized under
terms that are more economically attractive than ours;
• for collaborations involving combination therapies that have not yet been tested together, treatment-
emergent adverse events may be unforeseen and may negatively impact the monotherapy
development of our product candidates;
• product candidates discovered in collaboration with us may be viewed by our collaborators as
competitive with their own product candidates or products, which may cause collaborators to cease
to devote resources to the commercialization of our product candidates;
• collaborators may fail to comply with applicable regulatory requirements regarding the development,
manufacture, distribution or marketing of a product candidate or product;
• collaborators with marketing and distribution rights to one or more of our product candidates that
achieve regulatory approval may not commit sufficient resources to the marketing and distribution of
such product or products;
• disagreements with collaborators, including disagreements over proprietary rights, contract
interpretation or the preferred course of development, might cause delays or terminations of the
research, development or commercialization of product candidates, might lead to additional
responsibilities for us with respect to product 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 intellectual property rights or may use our
proprietary information in such a way as to invite litigation that could jeopardize or invalidate our
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 by the collaborator, and, if terminated, we could lose license rights
to the applicable product candidates or could be required to raise additional capital to pursue
further development or commercialization of the applicable product candidates.
Additionally, under our various collaboration agreements with industry leading BCMA-directed
therapy developers, the combination of nirogacestat and the BCMA-directed therapy of each such developer
is being evaluated in relapsed or refractory MM patients. Under these existing collaboration arrangements,
upon completion of the relevant clinical trials, we and our collaboration partners will have the opportunity to
negotiate in good faith to provide for the expansion of the respective clinical collaboration and the potential
establishment of a commercial relationship. However, our partners have no obligation to continue
development of the combination products, regardless of the applicable clinical trial results. We also jointly
formed MapKure, LLC, or MapKure, with BeiGene for the development of brimarafenib, and although we
contribute to clinical development and other operational activities and have representation on MapKure’s
board of directors and joint steering committee, we do not control the development process. MapKure may
pursue a development plan that differs from our expectations, which may or may not be successful.
If our collaborations do not result in the successful discovery, development and commercialization of
product candidates, or if one of our collaborators elects not to enter into collaboration agreements to pursue
future development, we may not receive any future funding or milestone or royalty payments under such
collaborations. Risks relating to product development, regulatory approval and commercialization described
in this report may also apply to the activities of our collaborators.
Additionally, if one of our collaborators terminates its agreement with us, we may find it more difficult
to attract new collaborators and our perception in the business and financial communities could be adversely
affected.
Furthermore, we face significant competition in seeking appropriate partners for our product candidates
and the negotiation process is time-consuming and complex. In order for us to successfully partner our
product candidates, potential partners must view our product candidates as economically valuable in markets
they determine to be attractive in light of the terms that we are seeking and other available products for
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licensing by other companies. In addition, there have been a significant number of recent business
combinations among large biopharmaceutical companies that have resulted in a reduced number of potential
future collaborators. Our ability to reach a definitive agreement for a collaboration will depend, among
other things, upon our assessment of the collaborator’s resources and expertise, the terms and conditions of
the proposed collaboration and the proposed collaborator’s evaluation of a number of factors. 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 product candidate, reduce or delay its development program or one
or more of our other development programs, delay its potential commercialization or reduce the scope of
any sales or marketing activities or planning, or increase our expenditures and undertake development or
commercialization activities at our own expense. If we elect to increase our expenditures to fund development
or commercialization activities on our own, we may need to obtain additional expertise or capital, which
may not be available to us on acceptable terms, or at all. If we fail to enter into collaborations or do not have
sufficient funds or expertise to undertake the necessary development and commercialization activities, we
may not be able to further develop our product candidates, bring them to market and generate revenue from
sales of drugs or continue to develop our technology, and our business may be materially and adversely
affected. Even if we are successful in our efforts to establish new strategic partnerships, the terms that we
agree upon may not be favorable to us, and we may not be able to maintain such strategic partnerships if, for
example, development or approval of a product candidate is delayed or sales of an approved product are
disappointing. Any delay in entering into new strategic partnership agreements related to our product
candidates could delay the development and commercialization of our product candidates and reduce their
competitiveness even if they reach the market.
Risks related to our intellectual property
We depend on intellectual property licensed from third parties, including from Pfizer for our lead product
candidates, and termination of any of these licenses could result in the loss of significant rights, which would
harm our business.
We are dependent on patents, know-how and proprietary technology, both our own and licensed from
others. Any termination of a product license could result in the loss of significant rights and would cause
material adverse harm to our ability to commercialize our product candidates.
Disputes may also arise between us and our licensors regarding intellectual property subject to a license
agreement, including:
• the scope of rights granted under the license agreement and other interpretation-related issues;
• whether and the extent to which our technology and processes infringe on intellectual property of
the licensor that is not subject to the licensing agreement;
• our right to sublicense patent and other rights to third parties under collaborative development
relationships;
• our diligence obligations with respect to the use of licensed technology in relation to our development
and commercialization of our product candidates and what activities satisfy those diligence
obligations; and
• the ownership of inventions and know-how resulting from the joint creation or use of intellectual
property by our licensors and us and our partners.
If disputes over intellectual property that we have licensed prevent or impair our ability to maintain
our current licensing arrangements on acceptable terms, we may be unable to successfully develop and
commercialize the affected product candidates.
We are generally also subject to all of the same risks with respect to protection of intellectual property
that we own, as we are for intellectual property that we license, which are described below. If we or our
licensors fail to adequately protect this intellectual property, our ability to commercialize products could
materially suffer.
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If we fail to comply with our obligations under our patent licenses with third parties, we could lose license
rights that are important to our business.
We are a party to license agreements pursuant to which we in-license key patents for our product
candidates. At the time we began our operations in August 2017, we entered into four license agreements
with Pfizer, three of which remain in effect, including a license agreement for each of our lead product
candidates, nirogacestat and mirdametinib, both of which agreements were amended and restated in 2019. In
addition, in 2021, we entered into a license for our TEAD inhibitor program with Katholieke Universiteit
Leuven and the Flanders Institute for Biotechnology, as well as a license for a portfolio of epidermal growth
factor receptor small molecule inhibitors with the Dana-Farber Cancer Institute. Each of our existing
licenses imposes various diligence, milestone payment, royalty, insurance and other obligations on us. If we
fail to comply with these obligations, our licensors may have the right to terminate the license, in which event
we would not be able to develop or market the products covered by such licensed intellectual property.
While we assigned the Pfizer license agreement covering our FAAH inhibitor program in connection with
the sale of that program to Jazz Pharmaceuticals Ireland Limited, or Jazz, in October 2020, there can be no
assurance that Jazz will comply with the terms of such license, which could result in its termination and
our inability to recover that asset as a remedy for a potential material breach of Jazz’s obligations to us in
connection with such sale.
We may have limited control over the maintenance and prosecution of these in-licensed rights,
activities or any other intellectual property that may be related to our in-licensed intellectual property. For
example, we cannot be certain that such activities by these licensors have been or will be conducted in
compliance with applicable laws and regulations or will result in valid and enforceable patents and other
intellectual property rights. We have limited control over the manner in which our licensors initiate an
infringement proceeding against a third-party infringer of the intellectual property rights or defend certain
of the intellectual property that is licensed to us. It is possible that the licensors’ infringement proceeding or
defense activities may be less vigorous than they would have been had we conducted them ourselves.
Risks related to government regulation
We have been granted Orphan Drug Designation for nirogacestat and mirdametinib and may seek Orphan
Drug Designation for other product candidates, but we may be unable to obtain or maintain such designation,
or the benefits associated with such designation, including the potential for market exclusivity, which may
negatively impact our financial performance.
Regulatory authorities in some jurisdictions, including the United States and Europe, may designate
drugs and therapeutic biologics for relatively small patient populations as orphan drugs. Under the Orphan
Drug Act, the FDA may designate a drug or therapeutic biologic as an orphan drug if it is a drug or
therapeutic biologic 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, or a patient population greater
than 200,000 in the United States where there is no reasonable expectation that the cost of developing the drug
or therapeutic biologic will be recovered from sales in the United States. In the United States, Orphan
Drug Designation entitles a party to financial incentives such as opportunities for grant funding toward
clinical trial costs, tax advantages and user-fee waivers. Such a designation, however, may be revoked by the
FDA in certain circumstances, such as if the agency finds that the applicant’s request for designation
request omitted material information required under the Orphan Drug Act and its implementing regulations.
If a product that has Orphan Drug Designation subsequently receives the first FDA approval for the
disease for which it has such designation, the product is entitled to orphan drug exclusivity, which means
that the FDA may not approve any other applications, including a full NDA, or Biologics License Application,
or BLA, to market the same product for the same indication for seven years, except in limited circumstances,
such as a showing of clinical superiority to the product with orphan drug exclusivity or where the
manufacturer is unable to assure sufficient product quantity.
In January 2024, the FDA granted Orphan Exclusivity to nirogacestat for the treatment of desmoid
tumors and in September 2019, the European Commission granted nirogacestat Orphan Drug Designation
for the treatment of soft tissue sarcoma. In October 2018, the FDA granted Orphan Drug Designation to
mirdametinib for the treatment of NF1 and in July 2019 the European Commission granted mirdametinib
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Orphan Drug Designation for the treatment of NF1. We may seek Orphan Drug Designations for
nirogacestat and mirdametinib for other indications or for our other product candidates. There can be no
assurances that we will be able to obtain such designations.
Even if we obtain Orphan Drug Designation for any of our future product candidates in specific
indications, we may not be the first to obtain marketing approval of nirogacestat, mirdametinib or any
other such product candidates for the orphan-designated indication due to the uncertainties associated with
developing pharmaceutical products. In addition, exclusive marketing rights in the United States may be
limited if we seek approval for an indication broader than the orphan-designated indication or may be lost
if the FDA later determines that the request for designation was materially defective or if the manufacturer is
unable to assure sufficient quantities of the product to meet the needs of patients with the rare disease or
condition.
Further, even if we obtain orphan drug exclusivity in the United States for a product, that exclusivity
may not effectively protect the product from competition because different drugs or therapeutic biologics
with different active moieties can be approved for the same condition. Even after an orphan product is
approved, the FDA can subsequently approve the same drug or therapeutic biologic with the same active
moiety for the same condition if the FDA concludes that the later drug or therapeutic biologic is safer,
more effective or makes a major contribution to patient care. In Europe, we could be prevented from
marketing our products if a similar medicinal product is granted Orphan Drug Designation for the same
indications that we are pursuing. Once authorized, with a limited number of exceptions, neither the competent
authorities of the EU member states, the EMA or the European Commission are permitted to accept
applications or grant marketing authorization for other similar medicinal products with the same therapeutic
indication. Marketing authorization could also be granted to a similar medicinal product with the same
orphan indication if the latter product is safer, more effective or otherwise clinically superior to the original
orphan medicinal product.
U.S. patents covering nirogacestat as a composition of matter have a statutory expiration date in 2025,
U.S. patents that cover the drug substance, including polymorphic forms of nirogacestat expire in 2039, U.S.
patents that cover pharmaceutical compositions expire in 2042, and a U.S. patent that covers methods of
treating desmoid tumors expires in 2043, in each case, not including patent term adjustment or any regulatory
extensions, with foreign counterparts pending. U.S. patents that cover polymorphic forms of mirdametinib,
including the form that is currently in clinical development, expire in 2041, a U.S. patent that covers
pharmaceutical compositions expires in 2041, and U.S. patents directed to methods of treatment expire in
2041 and 2043, in each case not including any regulatory extensions, with foreign counterparts pending.
Notwithstanding expected patent life, if orphan drug exclusivity does not protect these products from
competition, our business and financial condition could be materially adversely affected. Orphan Drug
Designation neither shortens the development time or regulatory review time of a drug or therapeutic biologic
nor gives the drug or therapeutic biologic any advantage in the regulatory review or approval process. In
addition, while we may seek Orphan Drug Designation for our future product candidates, we may never
receive such designations.
A portion of our manufacturing of our lead product candidates takes place in China, with additional capacity
sourced from India, through third-party manufacturers. A significant disruption in the operation of those
manufacturers, a trade war or political unrest could materially adversely affect our business, financial condition
and results of operations.
We currently contract manufacturing operations to third parties, and commercial quantities of
OGSIVEO and clinical quantities of our product candidates are manufactured by these third parties
outside the United States, including in China, with additional capacity sourced from India. We expect to
continue to use such third-party manufacturers for such product candidates. Any disruption in production
or inability of our manufacturers in those countries to produce adequate quantities to meet our needs, whether
as a result of a natural disaster or other causes, could impair our ability to operate our business on a
day-to-day basis and to continue our development of our product candidates. Furthermore, since certain of
these manufacturers are located in China, we are exposed to the possibility of product supply disruption
and increased costs in the event of changes in the policies of the United States or Chinese governments,
political unrest or unstable economic conditions in China. For example, a trade war could lead to tariffs on
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the chemical intermediates we use that are manufactured in China. Any of these matters could materially
and adversely affect our business and results of operations. Legislative proposals have been introduced that,
if enacted, would limit government contracting or renewals, loans, or grants with certain biotechnology
service providers in China which, if extended more broadly to industry members, could create supply
interruptions and require identification of new suppliers. Any recall of the manufacturing lots or similar
action regarding our product candidates used in clinical trials could delay the trials or detract from the
integrity of the trial data and its potential use in future regulatory filings. In addition, manufacturing
interruptions or failure to comply with regulatory requirements by any of these manufacturers could
significantly delay clinical development of potential products and reduce third-party or clinical researcher
interest and support of proposed trials. These interruptions or failures could also impede commercialization
of our product candidates and impair our competitive position. Further, we may be exposed to fluctuations
in the value of the local currencies in China and India. Future appreciation of the local currencies could
increase our costs. In addition, our labor costs could continue to rise as wage rates increase due to increased
demand for skilled laborers and the availability of skilled labor declines in such countries.
Risks related to managing our business and operations
We will need to grow the size of our organization, and we may experience difficulties in managing this growth.
As of December 31, 2023, we had 305 full-time employees. As our clinical development and
commercialization plans and strategies develop, we expect we will need additional managerial, clinical,
manufacturing, medical, regulatory, sales, marketing, financial, legal and other personnel. Future growth
would impose significant added responsibilities on members of management, including:
• recruiting, integrating, retaining and motivating additional employees;
• managing our development efforts effectively, including the clinical, manufacturing and quality
review process for our product candidates, while complying with our contractual obligations to
contractors, collaboration partners and other third parties; and
• improving our operational, financial and management controls, reporting systems and procedures.
Our future financial performance and our ability to commercialize our product candidates, if approved,
will depend, in part, on our ability to effectively manage any future growth, and our management may also
have to divert a disproportionate amount of its attention away from day-to-day activities in order to devote a
substantial amount of time to managing these growth activities.
We currently rely, and for the foreseeable future will continue to rely, in substantial part on third
parties, including independent organizations, advisors and consultants, to provide certain services to
support and perform our operations. There can be no assurance that the services of these third parties will
continue to be available to us on a timely basis when needed, or that we can find qualified replacements. In
addition, if we are unable to effectively manage our outsourced activities or if the quality, accuracy or
quantity of the services provided is compromised for any reason, our clinical trials may be delayed or
terminated, and we may not be able to obtain, or may be substantially delayed in obtaining, regulatory
approval of our product candidates or otherwise advance our business. There can be no assurance that we
will be able to manage our existing consultants or find other suitable outside contractors and consultants on
economically reasonable terms, or at all.
If we are not able to effectively expand our organization by hiring new employees and expanding our
groups of consultants and contractors, we may not be able to successfully execute the tasks necessary to
further develop and commercialize our product candidates and, accordingly, may not achieve our development
and commercialization goals.
We are still developing the internal research capabilities required to independently discover new product
candidates, and we plan to execute our growth strategy, in part by identifying and in-licensing or acquiring
additional product candidates that have been discovered and initially developed by others. We may not be
successful in executing our growth strategy or such growth strategy may not deliver the anticipated results.
While we are currently building out internal discovery and preclinical research and development
capabilities, there can be no assurance that we will successfully achieve the capacity to independently
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discover and initially develop new product candidates. We also plan to source new product candidates,
including those that may be complementary to our existing product candidates, by in-licensing or acquiring
them from other companies, academic institutions or other asset originators. If we are unable to identify, in-
license or acquire and integrate product candidates, our ability to pursue our growth strategy would be limited.
Research programs and business development efforts to identify new product candidates require
substantial technical, financial and human resources, and we currently have limited internal drug discovery
and preclinical research and development capabilities. In-licensing and acquiring product candidates or
development programs often requires significant payments and expenses and may consume valuable resources.
We will need to devote a substantial amount of time and personnel to develop and commercialize any in-
licensed or acquired technology or product candidate, in addition to doing so for our existing product
candidates. Our business development efforts or acquisition or licensing attempts may fail to yield additional
complementary or successful product candidates for clinical development and commercialization for a
number of reasons, including the following:
• our identification or business development methodology or search criteria and process may be
unsuccessful in identifying potential product candidates with a high probability of success for
development progression;
• we may not be able or willing to assemble sufficient resources or expertise to identify and in-license
or acquire additional product candidates;
• for product candidates we seek to in-license or acquire, we may not be able to agree to acceptable
terms with the licensor or owner of those product candidates;
• any product candidates that we do in-license or acquire may not succeed in preclinical studies or
clinical trials;
• we may not succeed in formulation or process development of such in-licensed or acquired product
candidates;
• such in-licensed or acquired product candidates may be shown to have harmful side effects or may
have other characteristics that may make the products unlikely to receive regulatory approval or be
unmarketable if approved;
• competitors may develop alternatives that render such in-licensed product candidates obsolete or less
attractive;
• in-licensed or acquired product candidates may be covered by third parties’ patents or other
exclusive rights that we may not be able to access;
• in-licensed or acquired product candidates that we develop may not allow us to best make use of our
expertise and our development and commercial infrastructure as currently expected;
• the market for a product candidate that we in-license or acquire may change during the course of
our development of the product candidate so that such product candidate may become unreasonable
to continue to develop;
• a product candidate that we in-license or acquire may not be capable of being produced in commercial
quantities at an acceptable cost, or at all; and
• a product candidate that we in-license or acquire may not be accepted as safe and effective by
patients, the medical community or third-party payors.
If any of these events occur, we may not be successful in executing our growth strategy or our growth
strategy may not deliver the anticipated results.
Our current operations are concentrated in two locations, and we or the third parties upon whom we depend
may be adversely affected by natural disasters, including those that may be related to climate change, or other
unforeseeable or uncontrollable events, and our business continuity and disaster recovery plans may not adequately
protect us from a serious disaster.
Our current headquarters are located in Stamford, Connecticut. Our development operations are
currently located at two facilities in Durham and Research Triangle Park, North Carolina. We currently
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outsource our manufacturing operations to third parties, and clinical and commercial quantities of our
approved product and product candidates are manufactured by these third parties outside the United States,
including in Canada, China, France, Germany and India. Any unplanned event, such as flood, fire,
explosion, earthquake, extreme weather condition, medical epidemics, power shortage, telecommunication
failure or other natural or man-made accidents or incidents that result in us being unable to fully utilize our
facilities, or the manufacturing facilities of our third-party contract manufacturers, may have a material
and adverse effect on our ability to operate our business, particularly on a daily basis, and have significant
negative consequences on our financial and operating conditions.
Loss of access to these facilities may result in increased costs, delays in the development of our product
candidates or interruption of our business operations. Earthquakes or other natural disasters could further
disrupt our operations and have a material and adverse effect on our business, financial condition, results of
operations and prospects. If a natural disaster, power outage or other event occurred that prevented us
from using all or a significant portion of our headquarters or our development operations, that damaged
critical infrastructure, such as the manufacturing facilities of our third-party contract manufacturers, or that
otherwise disrupted operations, it may be difficult or, in certain cases, impossible, for us to continue our
business for a substantial period of time. Disaster recovery and business continuity plans may prove inadequate
in the event of a serious disaster or similar event. We may incur substantial expenses as a result of the
limited nature of our disaster recovery and business continuity plans, which could have a material adverse
effect on our business. As part of our risk management approach, we maintain insurance coverage at levels
that we believe are appropriate for our business. However, in the event of an accident or incident at these
facilities, we cannot assure you that the amounts of insurance will be sufficient to satisfy any damages and
losses. If our facilities, or the manufacturing facilities of our third-party contract manufacturers, are unable
to operate because of an accident or incident or for any other reason, even for a short period of time, any
or all of our research and development programs may be harmed. Any business interruption may have a
material and adverse effect on our business, financial condition, results of operations and prospects.
Risks related to our financial position and need for additional capital
We have incurred significant net losses since our inception and anticipate that we will incur net losses in the
future.
We have incurred significant net losses in each reporting period since our inception. To date, we have
financed our operations principally through equity financings. We have derived license and collaboration
revenue from the nonrefundable upfront payment we received under the Jazz asset purchase and license
agreement and limited deferred revenue from the non-exclusive license and collaboration agreement with
GlaxoSmithKline. In November 2023, the FDA approved OGSIVEO (nirogacestat) for the treatment of
adult patients with desmoid tumors. In December 2023, we began to generate revenue from sales of OGSIVEO
in the United States. We continue to incur significant research and development and selling, general and
administrative expenses related to our ongoing operations, including expenses incurred in connection with
the commercialization of OGSIVEO. As a result, we are not profitable and have incurred losses in each annual
period since our inception. Our net losses were $325.1 million, $277.4 million and $173.9 million for the
fiscal years ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively. As of
December 31, 2023 and December 31, 2022, we had an accumulated deficit of $895.0 million and
$569.9 million, respectively. We expect to continue to incur significant losses for the foreseeable future, and
we expect these losses to increase as we continue our research and development of, seek regulatory approvals
for, and prepare for commercialization of, our product candidates, including our lead product candidates,
nirogacestat and mirdametinib, and any future product candidates.
We anticipate that our expenses will increase substantially if, and as, we:
• launch, promote and support commercialization of OGSIVEO;
• advance the development of our other product candidates, including nirogacestat and mirdametinib,
through late-stage clinical trials, including registrational clinical trials and potentially for other
indications;
• advance our development programs for our other product candidates through clinical development
and into later-stage clinical development;
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• seek marketing approvals for any product candidates that successfully complete clinical trials;
• invest in or in-license other technologies or product candidates for further preclinical and clinical
development;
• hire additional personnel, including clinical, quality control, scientific, medical, business development
and finance personnel, and continue to build our infrastructure;
• expand our operational, financial and management systems and increase personnel, including
personnel to support our clinical development, manufacturing and commercialization efforts and our
operations as a public company;
• maintain, expand and protect our intellectual property portfolio; and
• establish a sales, marketing and distribution infrastructure to commercialize any products for which
we may obtain marketing approval and intend to commercialize on our own or jointly with third
parties.
To become and remain profitable, we or any potential future collaborators must develop and eventually
commercialize products with significant market potential. This will require us to be successful in a range of
challenging activities, including completing preclinical studies and clinical trials, obtaining marketing approval
for product candidates, manufacturing, obtaining reimbursement approval, marketing and selling products
for which we may obtain marketing approval and satisfying any post-marketing requirements. We may never
succeed in any or all of these activities and, even if we do, we may never generate revenue that is significant
or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase
profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease
the value of our company and could impair our ability to raise capital, maintain our research and development
efforts, expand our business or continue our operations. A decline in the value of our company also could
cause stockholders to lose all or part of their investment.
Even if we succeed in commercializing our product candidates, we will continue to incur substantial
research and development and other expenditures to develop, register and market additional product
candidates. We may encounter unforeseen expenses, difficulties, complications, delays and other unknown
factors that may adversely affect our business. The size of our future net losses will depend, in part, on the rate
of future growth of our expenses and our ability to generate revenue. Our prior losses and expected future
losses have had and will continue to have an adverse effect on our stockholders’ equity and working capital.
We have a limited operating history, which may make it difficult to evaluate our prospects and likelihood of
success.
We are a commercial-stage biopharmaceutical company with a limited operating history. We were
formed in August 2017 and our operations to date have been focused on preparing and executing our
clinical trials for our product candidates, building our infrastructure, raising capital and executing partnerships.
Consequently, we have limited operations upon which to evaluate our business, and predictions about our
future success or viability may not be as accurate as they could be if we had a longer operating history or a
history of successfully developing and commercializing drug products. Investment in biopharmaceutical
product development is highly speculative because it entails substantial upfront capital expenditures and
significant risk that any potential product candidate will fail to demonstrate adequate activity or an acceptable
safety profile, gain regulatory approval, secure market access and reimbursement and become commercially
viable.
Although we received FDA approval for OGSIVEO for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment, this is our first and only product approved for commercial
sale, and we have not yet generated significant revenue from product sales to date. In addition, as a business
with a limited operating history, we may encounter unforeseen expenses, difficulties, complications, delays and
other known and unknown factors and risks frequently experienced by early-stage biopharmaceutical
companies in rapidly evolving fields, or other known or unknown factors and risks that may be infrequent
or unique.
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In addition, we are transitioning from a company with a development focus to a company supporting
commercial activities and may not be successful in such a transition.
We may require additional capital to fund our operations and if we fail to obtain necessary capital, we will not
be able to complete the development and commercialization of our product candidates.
Our operations have consumed substantial amounts of cash since inception. We expect to continue to
spend substantial amounts of cash to launch, promote and support commercialization of OGSIVEO, to
conduct further research and development and clinical trials of our product candidates, to seek regulatory
approvals for our product candidates and to launch and commercialize any additional products for which we
receive regulatory approval. As of December 31, 2023, we had $662.6 million in cash, cash equivalents and
marketable securities. Based on our current operating plan, we believe that our cash, cash equivalents and
marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements
for at least the next 12 months from the date of issuance of this Annual Report. However, our future capital
requirements and the period for which our existing resources will support our operations may vary
significantly from what we expect, and we will in any event require additional capital in order to complete
clinical development and obtain regulatory approval of our product candidates. Our monthly spending levels
will vary based on new and ongoing development and corporate activities. Because the length of time and
activities associated with development of our product candidates is highly uncertain, we are unable to estimate
the actual funds we will require for development and any approved marketing and commercialization
activities.
Our future funding requirements will depend on many factors, including, but not limited to:
• costs to launch, promote and support commercialization of OGSIVEO, and the level of commercial
success achieved by OGSIVEO;
• the initiation, progress, timing, costs and results of clinical trials for our product candidates;
including any unforeseen costs we may incur as a result of clinical trial delays due to ongoing global
and regional conflicts, or other causes;
• the clinical and preclinical development and manufacturing plans we establish for these product
candidates;
• the number and characteristics of product candidates that we develop or in-license;
• the cost of identifying and evaluating potential product candidates for acquisition or license,
including the cost of preclinical activities or clinical activities;
• the terms of any collaboration or licensing agreements we may choose to enter into;
• the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA,
and other comparable foreign regulatory authorities;
• the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual
property rights;
• the cost of defending intellectual property disputes, including patent infringement actions brought
by third parties against us or our product candidates;
• the effect of competing technological and market developments;
• the cost and timing of completion of commercial-scale outsourced manufacturing activities;
• the establishment of sales, marketing and distribution capabilities for any product candidates for
which we may receive regulatory approval in regions where we choose to commercialize our products
on our own or jointly with third parties; and
• the degree of commercial success achieved following the successful completion of development and
regulatory approval activities for a product candidate.
If we are unable to raise additional capital in sufficient amounts or on terms acceptable to us, we may
have to significantly delay, scale back or discontinue the development or commercialization of one or more
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of our product candidates or one or more of our other research and development initiatives. Any of the
foregoing events could significantly harm our business, prospects, financial condition and results of operations
and cause the price of our common stock to decline.
Raising additional capital may cause dilution to our existing stockholders, restrict our operations or require us
to relinquish rights to our technologies or product candidates.
We do not have any committed external source of funds or other support for our development efforts,
and we cannot be certain that additional funding will be available on acceptable terms, or at all. Until we
can generate sufficient product or royalty revenue to finance our cash requirements, which we may never do,
we expect to finance our future cash needs through a combination of public or private equity offerings,
debt financings, collaborations, strategic alliances, licensing arrangements and other marketing or distribution
arrangements. If we raise additional funds through public or private equity offerings, the terms of these
securities may include liquidation or other preferences that adversely affect our stockholders’ rights. Further,
to the extent that we raise additional capital through the sale of common stock or securities convertible or
exchangeable into common stock, existing stockholder ownership interest may be diluted. In addition, any
debt financing may subject us to fixed payment obligations and 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 capital through marketing and distribution arrangements or other
collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish
certain valuable rights to our product candidates, technologies, future revenue streams or research programs
or grant licenses on terms that may not be favorable to us. We also could be required to seek commercial
or development partners for our lead products or any future product candidate at an earlier stage than
otherwise would be desirable or relinquish our rights to product candidates or technologies that we otherwise
would seek to develop or commercialize ourselves.
Risks related to our common stock
We do not intend to pay dividends on our common stock so any returns will be limited to the value of our stock.
We currently anticipate that we will retain future earnings for the development, operation and expansion
of our business and do not anticipate declaring or paying any cash dividends for the foreseeable future.
Furthermore, future debt or other financing arrangements may contain terms prohibiting or limiting the
amount of dividends that may be declared or paid on our common stock. Any return to stockholders will
therefore be limited to the appreciation of their stock.
Our principal stockholders and management own a significant percentage of our stock and will be able to exert
significant control over matters subject to stockholder approval.
Our executive officers, directors and their affiliates and holders of more than 5% of our common stock
beneficially hold, in the aggregate, as of December 31, 2023, approximately 36.8% of our outstanding voting
stock. Therefore, these stockholders will have the ability to influence us through this ownership position.
These stockholders may be able to determine all matters requiring stockholder approval. For example, these
stockholders may be able to control elections of directors, amendments of our organizational documents,
or approval of any merger, sale of assets, or other major corporate transaction. This may prevent or discourage
unsolicited acquisition proposals or offers for our common stock that stockholders may feel are in their
best interest as one of our stockholders.
Anti-takeover provisions under our charter documents and Delaware law could delay or prevent a change of
control which could limit the market price of our common stock and may prevent or frustrate attempts by our
stockholders to replace or remove our current management.
Our amended and restated certificate of incorporation, or the certificate of incorporation, and
amended and restated bylaws, as further amended, or the bylaws, contain provisions that could delay or
prevent a change of control of our company or changes in our board of directors that our stockholders might
consider favorable. Some of these provisions include:
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• a board of directors divided into three classes serving staggered three-year terms, such that not all
members of the board will be elected at one time;
• a prohibition on stockholder action through written consent, which requires that all stockholder
actions be taken at a meeting of our stockholders;
• a requirement that special meetings of stockholders be called only by the chairman of the board of
directors, the chief executive officer or by a majority of the total number of authorized directors;
• advance notice requirements for stockholder proposals and nominations for election to our board of
directors;
• a requirement that no member of our board of directors may be removed from office by our
stockholders except for cause and, in addition to any other vote required by law, upon the approval
of not less than two-thirds of all outstanding shares of our voting stock then entitled to vote in the
election of directors; and
• a requirement of approval of not less than two-thirds of all outstanding shares of our voting stock
to amend any bylaws by stockholder action or to amend specific provisions of our certificate of
incorporation; and the authority of the board of directors to issue convertible preferred stock on terms
determined by the board of directors without stockholder approval and which convertible preferred
stock may include rights superior to the rights of the holders of common stock.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203
of the Delaware General Corporation Law, which may prohibit certain business combinations with
stockholders owning 15% or more of our outstanding voting stock. These anti-takeover provisions and
other provisions in our certificate of incorporation and bylaws could make it more difficult for stockholders
or potential acquirers to obtain control of our board of directors or initiate actions that are opposed by
the then-current board of directors and could also delay or impede a merger, tender offer or proxy contest
involving our company. These provisions could also discourage proxy contests and make it more difficult for
stockholders to elect directors of their choosing or cause us to take other corporate actions they desire.
Any delay or prevention of a change of control transaction or changes in our board of directors could cause
the market price of our common stock to decline.
Our bylaws designate certain specified courts as the sole and exclusive forums for certain disputes between us
and our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes
with us or our directors, officers or employees.
Our bylaws provide that, unless we consent in writing to the selection of an alternative forum, the
Court of Chancery of the State of Delaware, or the Chancery Court, will be the sole and exclusive forum
for state law claims for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting
a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or
our stockholders, (iii) any action asserting a claim pursuant to any provision of the General Corporation
Law of the State of Delaware, our certificate of incorporation or our bylaws, (iv) any action to interpret,
apply, enforce or determine the validity of our certificate of incorporation or bylaws, or (v) any action asserting
a claim governed by the internal affairs doctrine, or the Delaware Forum Provision. The Delaware Forum
Provision does not apply to any causes of action arising under the Securities Act of 1933, as amended, or the
Securities Act, or the Securities Exchange Act of 1934, as amended, or the Exchange Act. Our bylaws
further provide that, unless we consent in writing to the selection of an alternative forum, the U.S. District
Court for the District of Connecticut will be the sole and exclusive forum for resolving any complaint asserting
a cause of action arising under the Securities Act or the Federal Forum Provision. Our bylaws provide that
any person or entity purchasing or otherwise acquiring any interest in shares of our capital stock is deemed to
have notice of and consented to the foregoing Delaware Forum Provision and the Federal Forum Provision;
provided, however, that stockholders cannot and will not be deemed to have waived our compliance with
the federal securities laws and the rules and regulations thereunder.
The Delaware Forum Provision and the Federal Forum Provision may impose additional litigation
costs on stockholders in pursuing the claims identified above, particularly if the stockholders do not reside
in or near the State of Delaware or the State of Connecticut. Additionally, the Delaware Forum Provision and
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the Federal Forum Provision may limit a stockholder’s ability to bring a claim in a judicial forum that it
finds favorable for disputes with us or our directors, officers or other employees, which may discourage such
lawsuits. In addition, while the Delaware Supreme Court ruled in March 2020 that federal forum selection
provisions purporting to require claims under the Securities Act be brought in federal court are “facially
valid” under Delaware law, there is uncertainty as to whether other courts will enforce our Federal Forum
Provision. If the Federal Forum Provision is found to be unenforceable in an action, we may incur additional
costs associated with resolving such an action. The Federal Forum Provision may also impose additional
litigation costs on stockholders who assert that the provision is not enforceable or invalid. The Chancery
Court or the U.S. District Court for the District of Connecticut may also reach different judgments or results
than would other courts, including courts where a stockholder considering an action may be located or
would otherwise choose to bring the action, and such judgments may be more, or less, favorable to us than
our stockholders.
General risk factors
Risks related to research and development and the biopharmaceutical industry
Clinical 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 product candidates.
To obtain the requisite regulatory approvals to commercialize any product candidate, we must
demonstrate through extensive preclinical studies and clinical trials that such product candidate is safe and
effective in humans. Clinical testing is expensive and can take many years to complete, and its outcome is
inherently uncertain. We may be unable to establish clinical endpoints that applicable regulatory authorities
would consider clinically meaningful, and a clinical trial can fail at any stage of testing.
Differences in trial design between early-stage clinical trials and later-stage clinical trials make it
difficult to extrapolate the results of earlier clinical trials to later clinical trials. Moreover, clinical data are
often susceptible to varying interpretations and analyses, and many companies that have believed their product
candidates performed satisfactorily in clinical trials have nonetheless failed to obtain marketing approval
of their products. Additionally, we are conducting and plan to conduct some open-label trials, where both
the patient and investigator know whether the patient is receiving the investigational product candidate or
either an existing approved drug or placebo. Most typically, open-label clinical trials test only the
investigational product candidate and sometimes may do so at different dose levels. Open-label clinical trials
are subject to various limitations that may exaggerate any therapeutic effect as patients in those trials are
aware when they are receiving treatment. Open-label clinical trials may be subject to a “patient bias” where
patients perceive their symptoms to have improved merely due to their awareness of receiving an experimental
treatment. In addition, open-label clinical trials may be subject to an “investigator bias” where those
assessing and reviewing the outcomes of the clinical trials are aware of which patients have received treatment
and may interpret the information of the treated group more favorably given this knowledge. Where a
randomized, placebo-controlled clinical trial is designed to allow enrolled subjects to cross-over to the
treatment arm, there may be a risk of inadvertent unblinding of subjects prior to cross-over, which may limit
the clinical meaningfulness of those data and may require the conduct of additional clinical trials. As such,
the results from an open-label trial may not be predictive of future clinical trial results with any of our product
candidates for which we include an open-label clinical trial when studied in a controlled environment with
a placebo or active control.
Successful completion of clinical trials is a prerequisite to submitting an NDA to the FDA, a Marketing
Authorisation Application, or MAA, to the EMA and similar marketing applications to comparable foreign
regulatory authorities for each product candidate and, consequently, the ultimate approval and commercial
marketing of any product candidates.
We do not know whether any of our ongoing or planned clinical trials, including trials for our
combination therapies using nirogacestat and mirdametinib, will be completed on schedule, if at all, or, in
some cases, whether such clinical trials will begin.
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We may experience delays in initiating or completing clinical trials and preparing for regulatory
submissions. We also may experience numerous unforeseen events during, or as a result of, any future
clinical trials that we could conduct that could delay or prevent our ability to receive marketing approval or
commercialize our current product candidates or any future product candidates, including:
• the potential impact that sanctions and other measures being imposed in response to the Russia-
Ukraine conflict, or the global business disruption caused by the conflict, may have on revenue and
supply chain;
• regulators, Institutional Review Boards, or IRBs, or ethics committees 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 terms with prospective
clinical trial sites and prospective CROs, the terms of which can be subject to extensive negotiation
and may vary significantly among different CROs and clinical trial sites;
• clinical trials of any product candidates may fail to show acceptable safety or efficacy, or produce
negative or inconclusive results and we may decide, or regulators may require us, to conduct additional
preclinical studies or clinical trials or we may decide to abandon product development programs;
• the number of subjects required for clinical trials of any product candidates may be larger than we
anticipate, enrollment in these clinical trials may be slower than we anticipate or subjects may drop out
of these clinical trials or fail to return for post-treatment follow-up 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, or may deviate from the clinical trial protocol or drop
out of the trial, which may require that we add new clinical trial sites or investigators;
• we may elect to, or regulators, IRBs or ethics committees may require, that we or our investigators
suspend or terminate clinical research or trials 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 any product candidates may be greater than we anticipate;
• the supply or quality of our product candidates or other materials necessary to conduct clinical trials
of our product candidates may be inadequate to initiate or complete a given clinical trial;
• our product candidates may have undesirable side effects or other unexpected characteristics, causing
us or our investigators, regulators, IRBs or ethics committees to suspend or terminate the clinical
trials;
• reports from clinical testing of other therapies may raise safety or efficacy concerns about our
product candidates; and
• the FDA, EMA or comparable regulatory authorities may require us to submit additional data, such
as long-term toxicology studies, or impose other requirements before permitting us to initiate a
clinical trial.
We could also encounter delays if a clinical trial is suspended or terminated by us, the IRBs of the
institutions in which such clinical trials are being conducted, or the FDA, EMA or comparable regulatory
authorities, or recommended for suspension or termination by the Data Safety Monitoring Board, or the
DSMB, for such clinical trial. A suspension or termination may be imposed due to a number of factors,
including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical
protocols, inspection of the clinical trial operations or clinical trial site by the FDA, EMA or comparable
foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse
side effects, failure to demonstrate a benefit from using a product or treatment, failure to establish or
achieve clinically meaningful trial endpoints, changes in governmental regulations or administrative actions
or lack of adequate funding to continue the clinical trial. Many of the factors that cause, or lead to, a
delay in the commencement or completion of clinical trials may also ultimately lead to the denial of regulatory
approval of our product candidates. Further, the FDA, EMA or comparable foreign regulatory authorities
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may disagree with our clinical trial design and our interpretation of data from clinical trials or may change
the requirements for approval even after they have reviewed and commented on the design for our clinical
trials.
Our costs will increase if we experience delays in clinical testing or marketing approvals. We do not
know whether any of our clinical trials will begin as planned, will need to be reassigned or will be completed
on schedule, or at all. Significant clinical trial delays also could shorten any periods during which we may
have the exclusive right to commercialize our product candidates and may allow our competitors to bring
products to market before we do, potentially impairing our ability to successfully commercialize our product
candidates and harming our business and results of operations. Any delays in our clinical development
programs may harm our business, financial condition and results of operations significantly. The clinical
trials sponsored by our partners with our product candidates in combination with our partners’ therapies pose
the same development risks.
The successful development of biopharmaceuticals is highly uncertain.
Successful development of biopharmaceuticals is highly uncertain and is dependent on numerous
factors, many of which are beyond our control. Product candidates that appear promising in the early
phases of development may fail to reach the market for several reasons including:
• clinical trial results may show the product candidates to be less effective than expected (for example,
a clinical trial could fail to meet its primary or key secondary endpoint(s)) or to have unacceptable side
effects or toxicities;
• failure to receive the necessary regulatory approvals or a delay in receiving such approvals. Among
other things, such delays may be caused by patients who fail the trial screening process, slow enrollment
in clinical trials, patients dropping out of trials, patients lost to follow-up;
• length of time to achieve trial endpoints, additional time requirements for data analysis or NDA
preparation, discussions with the FDA, an FDA request for additional preclinical or clinical data (such
as long-term toxicology studies) or unexpected safety or manufacturing issues;
• preclinical study results may show the product candidate to be less effective than desired or to have
harmful side effects;
• supply issues, manufacturing costs and formulation issues, including our inability to successfully
combine our product candidates with other therapies;
• post-marketing approval requirements; and
• the proprietary rights of others and their competing products and technologies that may prevent our
product candidates from being commercialized.
The length of time necessary to complete clinical trials and to submit an application for marketing
approval for a final decision by a regulatory authority varies significantly from one product candidate to the
next and from one country to the next and may be difficult to predict.
Even if we are successful in obtaining marketing approval, commercial success of any approved
products will also depend in large part on the availability of coverage and adequate reimbursement from
third-party payors, including government payors such as the Medicare and Medicaid programs, and managed
care organizations in the United States or country specific governmental organizations in foreign countries,
which may be affected by existing and future healthcare reform measures designed to reduce the cost of
healthcare. Third-party payors could require us to conduct additional studies, including post-marketing
studies related to the cost effectiveness of a product, to qualify for reimbursement, which could be costly and
divert our resources. If government and other healthcare payors were not to provide coverage and adequate
reimbursement for our products once approved, market acceptance and commercial success would be
reduced.
In addition, if any of our product candidates receive marketing approval, we will be subject to
significant regulatory obligations regarding the submission of safety and other post-marketing information
and reports and registration and will need to continue to comply (or ensure that our third-party providers
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comply) with cGMPs and GCPs for any clinical trials that we conduct post-approval. In addition, there is
always the risk that we, a regulatory authority or a third party might identify previously unknown problems
with a product post-approval, such as adverse events of unanticipated severity or frequency. Compliance
with these requirements is costly, and any failure to comply or other issues with our product candidates post-
approval could adversely affect our business, financial condition and results of operations.
Due to our limited resources and access to additional capital, we must prioritize development of certain
programs and product candidates; these decisions may prove to be wrong and may adversely affect our business.
We may fail to identify and acquire, through purchase or license, viable new product candidates for
clinical development for a number of reasons. If we fail to identify and acquire additional product candidates,
our business could be materially harmed.
Efforts to identify and pursue new product candidates and disease targets require substantial technical,
financial and human resources, regardless of whether they are ultimately successful. We currently rely on
third parties, including current and future collaborators, to perform all of our research and preclinical
activities. Programs may initially show promise in preclinical studies, yet fail to yield positive results during
clinical development for a number of reasons, including:
• the methodology used may not be successful in identifying potential indications and/or product
candidates; or
• product candidates may, after further study, be shown to have harmful adverse effects or other
characteristics that indicate they are unlikely to be effective products.
Because we have limited financial and human resources, we intend to initially focus on programs and
product candidates for a limited set of indications. As a result, we may forego or delay pursuit of opportunities
with other product candidates or for other indications with our existing product candidates that may later
prove to have greater commercial potential or a greater likelihood of success. We may focus our efforts and
resources on potential product candidates or other potential programs that ultimately prove to be unsuccessful.
Our future clinical trials or those of our future collaborators may reveal significant adverse events not seen in
prior preclinical studies or clinical trials and may result in a safety profile that could inhibit regulatory approval
or market acceptance of any of our product candidates.
If significant adverse events or other side effects are observed in any of our clinical trials, we may have
difficulty recruiting patients to our clinical trials, patients may drop out of our trials or we may be required
to abandon the trials or our development efforts of one or more product candidates altogether. For example,
a prior Phase 2 clinical trial of mirdametinib was terminated and enrollment in the Phase 2 portion of a
Phase 1/2 clinical trial was halted as a result of adverse events observed at doses of mirdametinib of 15 mg
twice daily, or BID, or above using both intermittent and continuous dosing schedules. These adverse events
included ocular disorders (visual disturbances, blurred vision and retinal vein occlusion), nervous system
disorders (confusion, slowed ideation, slurred speech and hallucinations), musculoskeletal and connective
tissue disorders (general weakness and neck muscle weakness associated with mild and moderate elevations
in creatine phosphokinase) and cardiac disorders (decreased left ventricular ejection fraction and congestive
heart failure). Although these doses were significantly higher than the maximum allowable dose of 4 mg
BID in our ongoing Phase 2b clinical trial of mirdametinib in NF1-PN, we plan to treat patients in this trial
for a period of up to 24 months, which would be longer than any subjects have been treated with
mirdametinib in prior trials. In our ongoing Phase 2b clinical trial, we may observe adverse events similar to
those that were seen at higher doses of mirdametinib in prior clinical trials owing to the potentially increased
duration of treatment, or other factors. In addition, this trial’s enrollment includes pediatric NF1-PN patients.
There is limited safety data of mirdametinib in children under the age of 16 and it is possible that there
may be unanticipated adverse events observed in this patient population.
If we elect or are required to delay, suspend or terminate any clinical trial of any product candidates
that we develop, the commercial prospects of such product candidates will be harmed and our ability to
generate product revenues from any of these product candidates will be delayed or eliminated. Serious adverse
events or other adverse events, as well as tolerability issues, observed in clinical trials could hinder or
prevent market acceptance of the product candidate at issue.
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We, the FDA, EMA or comparable foreign regulatory authorities or an IRB may suspend clinical trials
of a product candidate at any time for various reasons, including a belief that subjects in such trials are being
exposed to unacceptable health risks or adverse side effects. Some potential therapeutics developed in the
biotechnology industry that initially showed therapeutic promise in early-stage trials have later been found
to cause side effects that prevented their further development. Even if the side effects do not preclude the
product candidate from obtaining or maintaining marketing approval, restrictions could be imposed on
the approval or an approved product could be subject to a boxed warning, which is the FDA’s most prominent
warning regarding safety concerns, and undesirable side effects may inhibit market acceptance of the
approved product due to its tolerability versus other therapies.
Increasing demand for compassionate use of our product candidates could negatively affect our reputation and
harm our business.
We are developing product candidates for the treatment of indications for which there are currently
limited or no available therapeutic options. It is possible for individuals or groups to target companies with
disruptive social media campaigns related to a request for access to unapproved drugs for patients with
significant unmet medical need. If we experience a similar social media campaign regarding our decision
to provide or not provide access to any of our current or future product candidates under an expanded access
policy, our reputation may be negatively affected and our business may be harmed.
Recent media attention to individual patients’ expanded access requests has resulted in the introduction
and enactment of legislation at the local and national level referred to as “Right to Try” laws, such as the
federal Right to Try Act of 2017 signed into law on May 30, 2018, which are intended to allow patients access
to unapproved therapies earlier than traditional expanded access programs. A possible consequence of
both activism and legislation in this area may be the need for us to initiate an unanticipated expanded access
program or to make our product candidates more widely available sooner than anticipated.
In addition, some patients who receive access to drugs prior to their commercial approval through
compassionate use, expanded access programs or right to try access have life-threatening illnesses and have
exhausted all other available therapies. The risk for serious adverse events in this patient population is high,
which could have a negative impact on the safety profile of our product candidates if we were to provide
them to these patients, which could cause significant delays or an inability to successfully commercialize our
product candidates, which could materially harm our business. If we were to provide patients with any of
our product candidates under an expanded access program, we may in the future need to restructure or pause
any compassionate use and/or expanded access programs for a variety of reasons, which could prompt
adverse publicity or other disruptions related to current or potential participants in such programs.
We face significant competition from other biopharmaceutical companies, and our operating results will suffer
if we fail to compete effectively.
The biopharmaceutical industry is characterized by intense competition and rapid innovation. Our
competitors may be able to develop other compounds or drugs that are able to achieve similar or better
results. Our potential competitors include major multinational pharmaceutical companies, established
biotechnology companies, specialty pharmaceutical companies and universities and other research institutions.
Many of our competitors have substantially greater financial, technical and other resources, such as larger
research and development staff and experienced marketing and manufacturing organizations and well-
established sales forces. Smaller or early-stage companies may also prove to be significant competitors,
particularly as they develop novel approaches to treating disease indications that our product candidates are
also focused on treating. Established pharmaceutical companies may also invest heavily to accelerate
discovery and development of novel therapeutics or to in-license novel therapeutics that could make the
product candidates that we develop obsolete. Mergers and acquisitions in the biotechnology and
pharmaceutical industries may result in even more resources being concentrated in our competitors.
Competition may increase further as a result of advances in the commercial applicability of technologies
and greater availability of capital for investment in these industries. Our competitors, either alone or with
collaboration partners, may succeed in developing, acquiring or licensing on an exclusive basis drug or biologic
products that are more effective, safer, more easily commercialized or less costly than our product candidates
or may develop proprietary technologies or secure patent protection that we may need for the development
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of our technologies and products. We believe the key competitive factors that will affect the development
and commercial success of our product candidates are efficacy, safety, tolerability, reliability, convenience of
use, price and reimbursement.
Even if we obtain regulatory approval of our product candidates, the availability and price of our
competitors’ products could limit the demand and the price we are able to charge for our product candidates.
We may not be able to implement our business plan if the acceptance of our product candidates is inhibited
by price competition or the reluctance of physicians to switch from existing methods of treatment to our
product candidates, or if physicians switch to other new drug or biologic products or choose to reserve our
product candidates for use in limited circumstances.
Changes in methods of product candidate manufacturing or formulation may result in additional costs or delay.
As product candidates proceed through preclinical studies to late-stage clinical trials towards potential
approval and commercialization, it is common that various aspects of the development program, such as
manufacturing methods and formulation, are altered along the way in an effort to optimize processes and
results. Such changes carry the risk that they will not achieve these intended objectives. Any of these changes
could cause our product candidates to perform differently and affect the results of planned clinical trials or
other future clinical trials conducted with the materials manufactured using altered processes. Such changes
may also require additional testing, including bridging or comparability testing to demonstrate the validity
of clinical data obtained in clinical trials following manufacturing changes, FDA notification or FDA
approval.
Because all prior clinical trials of nirogacestat and mirdametinib were conducted by third parties, we
will need to perform analytical and other tests to demonstrate that any new drug product material is
comparable in all respects, including potency, to the product used in such earlier clinical trials. There is no
assurance that any such product will pass the required comparability testing, that any other future third-party
manufacturer that we engage will be successful in producing our product candidates or that any materials
produced by any third-party manufacturer that we engage will have the same effect in patients that we have
observed to date with respect to materials used in prior clinical trials.
All of the above could delay completion of clinical trials, require the conduct of bridging clinical trials
or the repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product
candidates and jeopardize our ability to commence sales and generate revenue.
Moreover, we have limited experience manufacturing or processing on a commercial scale and may not
be able to do so for any of our product candidates if approved. We may make changes as we work to optimize
our manufacturing processes, but we cannot be sure that even minor changes in our processes will result in
therapies that are safe, effective and approved for commercial sale.
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to
limit commercialization of our product candidates.
We face an inherent risk of product liability as a result of testing our product candidates in clinical
trials and face an even greater risk of product liability with the launch of our first approved product,
OGSIVEO. For example, we may be sued if OGSIVEO or any of our products or product candidates cause
or are perceived to cause injury or are found to be otherwise unsuitable during clinical trials, manufacturing,
marketing or sale. Any such product liability claim may include allegations of defects in manufacturing,
defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability or a
breach of warranties. Claims could also be asserted under state consumer protection acts. If we cannot
successfully defend ourselves against product liability claims, we may incur substantial liabilities or be
required to limit commercialization of OGSIVEO or our product candidates. Even a successful defense would
require significant financial and management resources. Regardless of the merits or eventual outcome,
liability claims may result in:
• inability to bring a product candidate to the market;
• decreased demand for our products;
• harm to our reputation;
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• withdrawal of clinical trial participants and inability to continue clinical trials;
• initiation of investigations by regulators;
• costs to defend the related litigation;
• diversion of management’s time and our resources;
• substantial monetary awards to clinical trial participants or patients who receive an approved
product;
• product recalls, withdrawals or labeling, marketing or promotional restrictions;
• loss of revenue;
• exhaustion of any available insurance and of our capital resources;
• inability to commercialize any product candidate, if approved; and
• a decline in our stock price.
Our inability to obtain sufficient product liability insurance at an acceptable cost to protect against
potential product liability claims could prevent or inhibit the commercialization of products we develop,
alone or with collaborators. Even if our agreements with any current or future corporate collaborators entitle
us to indemnification against losses, that indemnification may not be available or adequate should any
claim arise. Although we currently carry commercial product liability and clinical trial insurance, the amount
of insurance coverage we carry may not be adequate, and, in the future, we may be unable to maintain this
insurance coverage, or we may not be able to obtain additional or replacement insurance at a reasonable cost,
if at all. Our insurance policies also have various exclusions, and we may be subject to a product liability
claim for which we have no coverage. We may have to pay any amounts awarded by a court or negotiated in
a settlement that exceed our coverage limitations or that are not covered by our insurance, and we may
not have, or be able to obtain, sufficient capital to pay those amounts.
Adverse developments affecting the financial services industry, such as actual events or concerns involving
liquidity, defaults, or non-performance by financial institutions or transactional counterparties, could adversely
affect the Company’s current and projected business operations and its financial condition and results of
operations.
Actual events involving limited liquidity, defaults, non-performance or other adverse developments that
affect financial institutions, transactional counterparties or other companies in the financial services industry
or the financial services industry generally, or concerns or rumors about any events of these kinds or other
similar risks, have in the past and may in the future lead to market-wide liquidity problems. For example, in
2023, the closures of Silicon Valley Bank, or SVB, and Signature Bank were placed into receivership with
the Federal Deposit Insurance Corporation, or FDIC. Although a statement by the Department of the
Treasury, the Federal Reserve, and the FDIC indicated that all depositors at Silicon Valley Bank and Signature
Bank would have access to their funds, borrowers under credit agreements, letters of credit and certain
other financial instruments with SVB, Signature Bank or any other financial institution that is placed into
receivership by the FDIC may be unable to access undrawn amounts thereunder or obtain such access in a
timely manner. If any of our counterparties to any such instruments were to be placed into receivership,
we may be unable to access such funds. In addition, if any of our customers, suppliers or other parties with
whom we conduct business are unable to access funds pursuant to such instruments or lending arrangements
with such a financial institution, such parties’ ability to pay their obligations to us or to enter into new
commercial arrangements requiring additional payments to us could be adversely affected.
Inflation and rapid increases in interest rates have led to a decline in the trading value of previously
issued government securities with interest rates below current market interest rates. Although the U.S.
Department of Treasury, FDIC and Federal Reserve Board have announced a program to provide up to
$25 billion of loans to financial institutions secured by certain of such government securities held by financial
institutions to mitigate the risk of potential losses on the sale of such instruments, widespread demands for
customer withdrawals or other liquidity needs of financial institutions for immediately liquidity may exceed
the capacity of such program. Additionally, there is no guarantee that the U.S. Department of Treasury,
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FDIC and Federal Reserve Board will provide access to uninsured funds in the future in the event of the
closure of other banks or financial institutions, or that they would do so in a timely fashion.
Although we assess our banking and customer relationships as we believe necessary or appropriate, our
access to funding sources and other credit arrangements in amounts adequate to finance or capitalize our
current and projected future business operations could be significantly impaired by factors that affect the
Company, the financial institutions with which the Company may have credit agreements or arrangements
directly, or the financial services industry or economy in general. These factors could include, among
others, events such as liquidity constraints or failures, the ability to perform obligations under various types
of financial, credit or liquidity agreements or arrangements, disruptions or instability in the financial
services industry or financial markets, or concerns or negative expectations about the prospects for companies
in the financial services industry. These factors could involve financial institutions or financial services
industry companies with which the Company has financial or business relationships, but could also include
factors involving financial markets or the financial services industry generally.
The results of events or concerns that involve one or more of these factors could include a variety of
material and adverse impacts on our current and projected business operations and our financial condition
and results of operations. These could include, but may not be limited to, the following:
• Delayed access to deposits or other financial assets or the uninsured loss of deposits or other
financial assets; or
• Termination of cash management arrangements and/or delays in accessing or actual loss of funds
subject to cash management arrangements.
In addition, investor concerns regarding the U.S. or international financial systems could result in less
favorable commercial financing terms, including higher interest rates or costs and tighter financial and
operating covenants, or systemic limitations on access to credit and liquidity sources, thereby making it more
difficult for us to acquire financing on acceptable terms or at all. Any decline in available funding or access
to our cash and liquidity resources could, among other risks, adversely impact our ability to meet our operating
expenses, financial obligations or fulfill our other obligations, result in breaches of our financial and/or
contractual obligations or result in violations of federal or state wage and hour laws. Any of these impacts,
or any other impacts resulting from the factors described above or other related or similar factors not described
above, could have material adverse impacts on our liquidity and our current and/or projected business
operations and financial condition and results of operations.
In addition, any further deterioration in the macroeconomic economy or financial services industry
could lead to losses or defaults by our customers or suppliers, which in turn, could have a material adverse
effect on our current and/or projected business operations and results of operations and financial condition.
For example, a customer may fail to make payments when due, default under their agreements with us,
become insolvent or declare bankruptcy, or a supplier may determine that it will no longer deal with us as a
customer. In addition, a customer or supplier could be adversely affected by any of the liquidity or other
risks that are described above as factors that could result in material adverse impacts on the Company,
including but not limited to delayed access or loss of access to uninsured deposits or loss of the ability to draw
on existing credit facilities involving a troubled or failed financial institution. Any customer or supplier
bankruptcy or insolvency, or the failure of any customer to make payments when due, or any breach or
default by a customer or supplier, or the loss of any significant supplier relationships, could result in material
losses to the Company and may have a material adverse impact on our business.
Risks related to intellectual property
Our success depends in part on our ability to protect our intellectual property, and patent terms may be
inadequate to protect our competitive position. It is difficult and costly to protect our proprietary rights and
technology, and we may not be able to ensure their protection.
Our commercial success will depend in large part on obtaining and maintaining patent, trademark and
trade secret protection of our proprietary technologies and our product candidates, their respective
components, formulations, combination therapies, methods used to manufacture them and methods of
treatment, as well as successfully defending these patents against third-party challenges. Our ability to stop
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unauthorized third parties from making, using, selling, offering to sell or importing our product candidates
is affected by the extent to which we have rights under valid and enforceable patents that cover these
activities. If our patents expire, or we are unable to secure and maintain patent protection for any product
or technology we develop, or if the scope of the patent protection secured is not sufficiently broad, our
competitors could develop and commercialize products and technology similar or identical to ours, and our
ability to commercialize any product candidates we may develop may be adversely affected. Patents have a
limited lifespan. In the United States, if all maintenance fees are timely paid, the natural expiration of a patent
is generally 20 years from its earliest U.S. non-provisional filing date. Various extensions such as patent
term adjustments and/or extensions, may be available, but the life of a patent, and the protection it affords,
is limited. Our current composition of matter patents covering nirogacestat and mirdametinib, were licensed
from Pfizer in connection with the formation of our company. U.S. patents covering nirogacestat as a
composition of matter have a statutory expiration date in 2025, U.S. patents that cover the drug substance,
including polymorphic forms of nirogacestat expire in 2039, U.S. patents that cover pharmaceutical
compositions expire in 2042, and a U.S. patent that covers methods of treating desmoid tumors expires in
2043, in each case, not including patent term adjustment or any regulatory extensions, with foreign
counterparts pending. U.S. patents that cover polymorphic forms of mirdametinib, including the form that
is currently in clinical development expire in 2041, a U.S. patent that covers pharmaceutical compositions
expires in 2041, and U.S. patents directed to methods of treatment expire in 2041 and 2043, in each case
not including any regulatory extensions, with foreign counterparts pending. Our earliest patents may expire
before, or soon after, either product candidate achieves marketing approval in the United States or foreign
jurisdictions. We also intend to rely on orphan drug exclusivity to market our lead products. Once the patent
life has expired, we may be open to competition from competitive products, including generics. As a result,
our patent portfolio may not provide us with sufficient rights to exclude others from commercializing products
similar or identical to ours. The expiration of the patents covering our lead product candidates, and our
inability to secure additional patent protection, could also have a material adverse effect on our business,
results of operations, financial condition and prospects.
The patenting 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. In addition, we may
not pursue or obtain patent protection in all relevant markets. 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.
Moreover, in some circumstances, we may not have the right to control the preparation, filing and
prosecution of patent applications, or to maintain the patents, covering technology that we license from or
license to third parties and are reliant on our licensors or licensees.
The strength of patents in the biopharmaceutical field involves complex legal and scientific questions
and can be uncertain. The patent applications that we own or in-license now or in the future may fail to
result in issued patents with claims that cover our product candidates or uses thereof in the United States or
in other foreign countries. Even if the patents do successfully issue, third parties may challenge the validity,
enforceability or scope thereof, which may result in such patents being narrowed, invalidated or held
unenforceable. Furthermore, even if they are unchallenged, the patents and patent applications covering our
product candidates may not adequately protect our intellectual property or prevent others from designing
around our claims. If the breadth or strength of protection provided by the patents we hold with respect to
our product candidates is threatened, it could dissuade companies from collaborating with us to develop, and
threaten our ability to commercialize, our product candidates. Further, if we encounter delays in our
clinical trials, the period of time during which we could market our product candidates under patent
protection would be reduced.
Since patent applications in the United States and most other countries are confidential for a period of
time after filing, there is no certainty that any patent application related to a product candidate was the first
to be filed. Furthermore, for U.S. applications in which at least one claim is entitled to a priority date
before March 16, 2013, an interference proceeding can be provoked by a third party or instituted by the
U.S. Patent and Trademark Office, or USPTO, to determine who was the first to invent any of the subject
matter covered by the patent claims of an application.
We cannot be certain that we are the first to invent any inventions covered by a pending patent
application and, if we are not, we could be subject to priority disputes. We may be required to disclaim part
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or all of the term of certain patents or all of the term of certain patent applications. There may be prior art
of which we are not aware that may affect the validity or enforceability of a patent claim. There also may
be prior art of which we are aware, but which we do not believe affects the validity or enforceability of a claim,
which may, nonetheless, ultimately be found to affect the validity or enforceability of a claim. No assurance
can be given that if challenged, our patents would be declared by a court to be valid or enforceable or that
even if found valid and enforceable, a competitor’s technology or product would be found by a court to
infringe our patents. We may analyze patents or patent applications of our competitors that we believe are
relevant to our activities and consider that we are free to operate in relation to our product candidates, but
our competitors may achieve issued claims, including in patents we consider to be unrelated, which block our
efforts or may potentially result in our product candidates or our activities infringing such claims. The
possibility exists that others will develop products which have the same effect as our products on an
independent basis which do not infringe our patents or other intellectual property rights or will design around
the claims of patents that we have had issued that cover our products. In addition, some of our patent
applications and patents may cover inventions owned jointly by us and our collaborators. There can be no
assurance that we and our collaborators will agree upon matters related to patent filing and prosecution
strategy required to execute an effective patent strategy or that decisions made by our collaborators will
be consistent with our goals for protecting our solely owned intellectual property.
Recent or future 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. Under the
enacted Leahy-Smith America Invents Act, or America Invents Act, enacted in 2013, the United States moved
from a “first-to-invent” to a “first-to-file” system. Under a “first-to-file” system, assuming the other
requirements for patentability are met, the first inventor to file a patent application generally will be entitled
to a patent on the invention regardless of whether another inventor had made the invention earlier. The
America Invents Act includes a number of other significant changes to U.S. patent law, including provisions
that affect the way patent applications are prosecuted, redefine prior art and establish a new post-grant
review system. The effects of these changes are currently unclear as the USPTO only recently developed new
regulations and procedures in connection with the America Invents Act and many of the substantive
changes to patent law, including the “first-to-file” provisions, only became effective in March 2013. In
addition, the courts have yet to address many of these provisions and the applicability of the act and new
regulations on specific patents discussed herein have not been determined and would need to be reviewed.
However, the America Invents Act and its implementation could increase the uncertainties and costs
surrounding the prosecution of any patent applications and the enforcement or defense of our issued patents,
all of which could have a material adverse effect on our business and financial condition.
The degree of future protection for our proprietary rights is uncertain because legal means afford only
limited protection and may not adequately protect our rights or permit us to gain or keep our competitive
advantage. For example:
• others may be able to make or use compounds that are similar to the compositions of our product
candidates but that are not covered by the claims of our patents;
• the active ingredients in our current product candidates will eventually become commercially
available in generic drug products, and no patent protection may be available with regard to
formulation or method of use;
• a company or its licensor, as the case may be, may fail to meet its obligations to the U.S. government
in regard to any in-licensed patents and patent applications funded by U.S. government grants,
leading to the loss of patent rights;
• such company or its licensors, as the case may be, might not have been the first to file patent
applications for these inventions;
• others may independently develop similar or alternative technologies or duplicate any of our
technologies;
• it is possible that a pending patent applications will not result in issued patents;
• it is possible that there are prior public disclosures that could invalidate our or our licensors’ patents,
as the case may be, or parts of our or their patents;
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• it is possible that others may circumvent our owned or in-licensed patents;
• it is possible that there are unpublished applications or patent applications maintained in secrecy
that may later issue with claims covering our products or technology similar to ours;
• the laws of foreign countries may not protect our or our licensors’, as the case may be, proprietary
rights to the same extent as the laws of the United States;
• the claims of our owned or in-licensed issued patents or patent applications, if and when issued, may
not cover our product candidates;
• our owned or in-licensed issued patents may not provide us with any competitive advantages, may be
narrowed in scope, or be held invalid or unenforceable as a result of legal challenges by third
parties;
• the inventors of owned or in-licensed patents or patent applications may become involved with
competitors, develop products or processes which design around our patents, or become hostile to us
or the patents or patent applications on which they are named as inventors;
• it is possible that owned or in-licensed patents or patent applications omit individual(s) that should
be listed as inventor(s) or include individual(s) that should not be listed as inventor(s), which may cause
these patents or patents issuing from these patent applications to be held invalid or unenforceable;
• we have engaged in scientific collaborations in the past, and will continue to do so in the future. Such
collaborators may develop adjacent or competing products to ours that are outside the scope of
our patents;
• we may not develop additional proprietary technologies for which we can obtain patent protection;
• it is possible that product candidates we develop may be covered by third parties’ patents or other
exclusive rights; or
• the patents of others may have an adverse effect on our business.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would
be harmed.
In addition to patent protection, we rely heavily upon know-how and trade secret protection, as well as
non-disclosure agreements and invention assignment agreements with our employees, consultants and third
parties, to protect our confidential and proprietary information, especially where we do not believe patent
protection is appropriate or obtainable. In addition to contractual measures, we try to protect the confidential
nature of our proprietary information using physical and technological security measures. Such measures
may not, for example, in the case of misappropriation of a trade secret by an employee or third party with
authorized access, provide adequate protection for our proprietary information. Our security measures may
not prevent an employee or consultant from misappropriating our trade secrets and providing them to a
competitor, and recourse we take against such misconduct may not provide an adequate remedy to protect
our interests fully. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret can be
difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, trade secrets may
be independently developed by others in a manner that could prevent legal recourse by us. If any of our
confidential or proprietary information, such as our trade secrets, were to be disclosed or misappropriated, or
if any such information was independently developed by a competitor, our competitive position could be
harmed.
In addition, courts outside the United States are sometimes less willing to protect trade secrets. If we
choose to go to court to stop a third party from using any of our trade secrets, we may incur substantial
costs. These lawsuits may consume our time and other resources even if we are successful. Although we take
steps to protect our proprietary information and trade secrets, including through contractual means with
our employees and consultants, third parties may independently develop substantially equivalent proprietary
information and techniques or otherwise gain access to our trade secrets or disclose our technology.
Thus, we may not be able to meaningfully protect our trade secrets. It is our policy to require our
employees, consultants, outside scientific collaborators, sponsored researchers and other advisors to execute
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confidentiality agreements upon the commencement of employment or consulting relationships with us.
These agreements provide that all confidential information concerning our business or financial affairs
developed or made known to the individual or entity during the course of the party’s relationship with us is
to be kept confidential and not disclosed to third parties except in specific circumstances. In the case of
employees, the agreements provide that all inventions conceived by the individual, and which are related to
our current or planned business or research and development or made during normal working hours, on our
premises or using our equipment or proprietary information, are our exclusive property. In addition, we
take other appropriate precautions, such as physical and technological security measures, to guard against
misappropriation of our proprietary technology by third parties.
Third-party claims of intellectual property infringement may prevent or delay our product discovery and
development efforts.
Our commercial success depends in part on our ability to develop, manufacture, market and sell our
product candidates and use our proprietary technologies without infringing the proprietary rights of third
parties. There is a substantial amount of litigation involving patents and other intellectual property rights in
the biotechnology and pharmaceutical industries, as well as administrative proceedings for challenging
patents, including interference, derivation, inter partes review, post grant review, and reexamination
proceedings before the USPTO or oppositions and other comparable proceedings in foreign jurisdictions.
We may be exposed to, or threatened with, future litigation by third parties having patent or other intellectual
property rights alleging that our product candidates and/or proprietary technologies infringe their
intellectual property rights. Numerous U.S. and foreign issued patents and pending patent applications,
which are owned by third parties, exist in the fields in which we are developing our product candidates. As
the biotechnology and pharmaceutical industries expand and more patents are issued, the risk increases that
our product candidates may give rise to claims of infringement of the patent rights of others. Moreover, it
is not always clear to industry participants, including us, which patents cover various types of drugs, products
or their methods of use or manufacture. Thus, because of the large number of patents issued and patent
applications filed in our fields, there may be a risk that third parties may allege they have patent rights
encompassing our product candidates, technologies or methods.
If a third party claims that we infringe its intellectual property rights, we may face a number of issues,
including, but not limited to:
• infringement and other intellectual property claims which, regardless of merit, may be expensive and
time-consuming to litigate and may divert our management’s attention from our core business;
• substantial damages for infringement, which we may have to pay if a court decides that the product
candidate or technology at issue infringes on or violates the third party’s rights, and, if the court finds
that the infringement was willful, we could be ordered to pay treble damages and the patent owner’s
attorneys’ fees;
• a court prohibiting us from developing, manufacturing, marketing or selling our product candidates,
or from using our proprietary technologies, unless the third party licenses its product rights to us,
which it is not required to do;
• if a license is available from a third party, we may have to pay substantial royalties, upfront fees and
other amounts, and/or grant cross-licenses to intellectual property rights for our products; and
• redesigning our product candidates or processes so they do not infringe, which may not be possible
or may require substantial monetary expenditures and time.
Some of our competitors may be able to sustain the costs of complex patent litigation more effectively
than we can because they have substantially greater resources. In addition, any uncertainties resulting from
the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the
funds necessary to continue our operations or could otherwise have a material adverse effect on our
business, results of operations, financial condition and prospects.
Third parties may assert that we are employing their proprietary technology without authorization.
Generally, conducting clinical trials and other development activities in the United States is protected under
the Safe Harbor exemption as set forth in 35 U.S.C. §271. If any of our product candidates are approved
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by the FDA, third parties may then seek to enforce their patent by filing a patent infringement lawsuit
against us. While we do not believe that any claims of such patent that could otherwise materially adversely
affect commercialization of our product candidates, if approved, are valid and enforceable, we may be
incorrect in this belief, or we may not be able to prove it in a litigation. In this regard, patents issued in the
United States by law enjoy a presumption of validity that can be rebutted only with evidence that is “clear and
convincing,” a heightened standard of proof. There may be third-party patents of which we are currently
unaware with claims to materials, formulations, methods of manufacture or methods for treatment related
to the use or manufacture of our product candidates. Because patent applications can take many years to
issue, there may be currently pending patent applications which may later result in issued patents that our
product candidates may infringe. In addition, third parties may obtain patents in the future and claim that use
of our technologies infringes upon these patents. If any third-party patents were held by a court of
competent jurisdiction to cover the manufacturing process of our product candidates, constructs or molecules
used in or formed during the manufacturing process, or any final product itself, the holders of any such
patents may be able to block our ability to commercialize the product candidate unless we obtained a license
under the applicable patents, or until such patents expire or they are finally determined to be held invalid
or unenforceable. Similarly, if any third-party patent were held by a court of competent jurisdiction to cover
aspects of our formulations, processes for manufacture or methods of use, the holders of any such patent
may be able to block our ability to develop and commercialize the product candidate unless we obtained a
license or until such patent expires or is finally determined to be held invalid or unenforceable. In either case,
such a license may not be available on commercially reasonable terms or at all. If we are unable to obtain a
necessary license to a third-party patent on commercially reasonable terms, or at all, our ability to
commercialize our product candidates may be impaired or delayed, which could in turn significantly harm
our business. Even if we obtain a license, it may be non-exclusive, thereby giving our competitors access to the
same technologies licensed to us. In addition, if the breadth or strength of protection provided by our
patents and any patent applications is threatened, it could dissuade companies from collaborating with us
to license, develop or commercialize current or future product candidates.
Parties making claims against us may seek and obtain injunctive or other equitable relief, which could
effectively block our ability to further develop and commercialize our product candidates. Defense of these
claims, regardless of their merit, would involve substantial litigation expense and would be a substantial
diversion of employee resources from our business. In the event of a successful claim of infringement
against us, we or our licensors may have to pay substantial damages, including treble damages and attorneys’
fees for willful infringement, obtain one or more licenses from third parties, pay royalties or redesign our
infringing products, which may be impossible or require substantial time and monetary expenditure. We
cannot predict whether any such license would be available at all or whether it would be available on
commercially reasonable terms. Furthermore, even in the absence of litigation, we may need to obtain
licenses from third parties to advance our research or allow commercialization of our product candidates.
We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms, if at all. In that event,
we would be unable to further develop and commercialize our product candidates, which could harm our
business significantly.
Third parties may assert that our employees, consultants, collaborators or partners have wrongfully used or
disclosed confidential information or misappropriated trade secrets.
As is common in the biotechnology and pharmaceutical industries, we employ individuals who were
previously employed at universities or other biopharmaceutical or pharmaceutical companies, including our
competitors or potential competitors. Although no claims against us are currently pending, and although
we try to ensure that our employees and consultants do not use the proprietary information or know-how of
others in their work for us, we may be subject to claims that we or our employees, consultants or independent
contractors have inadvertently or otherwise used or disclosed intellectual property, including trade secrets
or other proprietary information, of a former employer or other third parties. Litigation may be necessary to
defend against these claims. If we fail in defending any such claims, in addition to paying monetary
damages, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending
against such claims, litigation 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
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be negative, it could have a substantial adverse effect on the price of our common stock. This type of
litigation or proceeding could substantially increase our operating losses and reduce our resources available
for development activities. We may not have sufficient financial or other resources to adequately conduct
such litigation or proceedings. Some of our competitors may be able to sustain the costs of such litigation or
proceedings more effectively than we can because of their substantially greater financial resources.
Uncertainties resulting from the initiation and continuation of patent litigation or other intellectual property
related proceedings could adversely affect our ability to compete in the marketplace.
We may not be successful in obtaining or maintaining necessary rights to develop any future product candidates
on acceptable terms.
Because our programs may involve additional product candidates that may require the use of proprietary
rights held by third parties, the growth of our business may depend in part on our ability to acquire, in-
license or use these proprietary rights.
Our product candidates may also require specific formulations to work effectively and these rights may
be held by others. We may develop products containing our compounds and pre-existing pharmaceutical
compounds. We may be unable to acquire or in-license any compositions, methods of use, processes or other
third-party intellectual property rights from third parties that we identify as necessary or important to our
business operations. We may fail to obtain any of these licenses at a reasonable cost or on reasonable terms,
if at all, which could harm our business. We may need to cease use of the compositions or methods
covered by such third-party intellectual property rights and may need to seek to develop alternative
approaches that do not infringe on such intellectual property rights which may entail additional costs and
development delays, even if we were able to develop such alternatives, which may not be feasible. Even if we
are able to obtain a license, it may be non-exclusive, thereby giving our competitors access to the same
technologies licensed to us. In that event, we may be required to expend significant time and resources to
develop or license replacement technology.
Additionally, we sometimes collaborate with academic institutions to accelerate our preclinical research
or development under written agreements with these institutions. In certain cases, these institutions may
provide us with an option to negotiate a license to any of the institution’s rights in technology resulting from
the collaboration. Regardless of such option, we may be unable to negotiate a license within the specified
timeframe or under terms that are acceptable to us. If we are unable to do so, the institution may offer the
intellectual property rights to others, potentially blocking our ability to pursue our program. If we are unable
to successfully obtain rights to required third-party intellectual property or to maintain the existing
intellectual property rights we have, we may have to abandon development of such program and our business
and financial condition could suffer.
The licensing and acquisition of third-party intellectual property rights is a competitive area, and
companies, which may be more established, or have greater resources than we do, may also be pursuing
strategies to license or acquire third-party intellectual property rights that we may consider necessary or
attractive in order to commercialize our product candidates. More established companies may have a
competitive advantage over us due to their size, cash resources and greater clinical development and
commercialization capabilities. There can be no assurance that we will be able to successfully complete such
negotiations and ultimately acquire the rights to the intellectual property surrounding the additional
product candidates that we may seek to acquire.
We may be involved in lawsuits to protect or enforce our patents or the patents of our licensors, which could be
expensive, time-consuming and unsuccessful.
Competitors may infringe our patents or the patents of our licensors. To counter infringement or
unauthorized use, we may be required to file infringement claims, which can be expensive and time-
consuming. In addition, in an infringement proceeding, a court may decide that one or more of our patents
is not valid or is unenforceable or may refuse to stop the other party from using the technology at issue on
the grounds that our patents do not cover the technology in question. An adverse result in any litigation or
defense proceedings could put one or more of our patents at risk of being invalidated, held unenforceable
or interpreted narrowly and could put any patent applications at risk of not issuing. Defense of these claims,
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regardless of their merit, would involve substantial litigation expense and would be a substantial diversion
of employee resources from our business.
We may choose to challenge the patentability of claims in a third party’s U.S. patent by requesting that
the USPTO review the patent claims in an ex-parte re-exam, inter partes review or post-grant review
proceedings. These proceedings are expensive and may consume our time or other resources. We may choose
to challenge a third party’s patent in patent opposition proceedings in the European Patent Office, or EPO,
or other foreign patent offices. The costs of these opposition proceedings could be substantial and may
consume our time or other resources. If we fail to obtain a favorable result at the USPTO, EPO or other
foreign patent offices, then we may be exposed to litigation by a third party alleging that the patent may be
infringed by our product candidates or proprietary technologies.
In addition, because some patent applications in the United States may be maintained in secrecy until
the patents are issued, patent applications in the United States and in many foreign jurisdictions are typically
not published until 18 months after filing, and publications in the scientific literature often lag behind
actual discoveries, we cannot be certain that others have not filed patent applications for technology covered
by issued patents or any pending applications, or that we or, if applicable, a licensor were the first to invent
the technology. Our competitors also may have filed, and may in the future file, patent applications covering
our products or technology similar to ours. Any such patent application may have priority over our
patents or any patent applications, which could require us to obtain rights to issued patents covering such
technologies. If another party has filed a U.S. patent application on inventions similar to those owned by or in-
licensed to us, we or, in the case of in-licensed technology, the licensor may have to participate in an
interference proceeding declared by the USPTO to determine priority of invention in the United States. If
we or one of our licensors is a party to an interference proceeding involving a U.S. patent application on
inventions owned by or in-licensed to us, we may incur substantial costs, divert management’s time and expend
other resources, even if we are successful.
Interference proceedings provoked by third parties or brought by the USPTO may be necessary to
determine the priority of inventions with respect to our patents or any patent applications or those of our
licensors. An unfavorable outcome could result in a loss of our current patent rights and could require us to
cease using the related technology or to attempt to license rights to it from the prevailing party. Our
business could be harmed if the prevailing party does not offer us a license on commercially reasonable
terms. Litigation or interference proceedings may result in a decision adverse to our interests and, even if we
are successful, may result in substantial costs and distract our management and other employees. We may
not be able to prevent, alone or with our licensors, misappropriation of our trade secrets or confidential
information, particularly in countries where the laws may not protect those rights as fully as in the United
States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual
property litigation, there is a risk that some of our confidential information could be compromised by
disclosure during such litigation. In addition, there could be public announcements of the results of hearings,
motions or other interim proceedings or developments. If securities analysts or investors perceive these
results to be negative, it could have a substantial adverse effect on the price of our common stock.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document
submission, fee payment and other requirements imposed by governmental patent agencies, and our patent
protection could be reduced or eliminated for non-compliance with these requirements.
Periodic maintenance fees on any issued patent are due to be paid to the USPTO and foreign patent
agencies in several stages over the lifetime of the patent. The USPTO and various foreign governmental
patent agencies require compliance with a number of procedural, documentary, fee payment and other
provisions during the patent application process and following the issuance of a patent. While an inadvertent
lapse can in many cases be cured by payment of a late fee or by other means in accordance with the
applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the
patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction.
Noncompliance events that could result in abandonment or lapse of a patent or patent application include,
but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees
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and failure to properly legalize and submit formal documents. In such an event, our competitors might be
able to enter the market, which would have a material adverse effect on our business.
Issued patents covering our product candidates could be found invalid or unenforceable if challenged in court or
the USPTO.
If we or one of our licensing partners initiate legal proceedings against a third party to enforce a patent
covering one of our product candidates, the defendant could counterclaim that the patent covering our
product candidate, as applicable, is invalid and/or unenforceable. In patent litigation in the United States,
defendant counterclaims alleging invalidity and/or unenforceability are commonplace, and there are numerous
grounds upon which a third party can assert invalidity or unenforceability of a patent. Third parties may
also raise similar claims before administrative bodies in the United States or abroad, even outside the context
of litigation. Such mechanisms include re-examination, post grant review, and equivalent proceedings in
foreign jurisdictions (e.g., opposition proceedings). Such proceedings could result in revocation or amendment
to our patents in such a way that they no longer cover our product candidates. The outcome following
legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we
cannot be certain that there is no invalidating prior art, of which we, our patent counsel and the patent
examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity
and/or unenforceability, or if we are otherwise unable to adequately protect our rights, we would lose at least
part, and perhaps all, of the patent protection on our product candidates. Such a loss of patent protection
could have a material adverse impact on our business and our ability to commercialize or license our
technology and product candidates.
Changes in patent law in the United States and in ex-U.S. jurisdictions could diminish the value of patents in
general, thereby impairing our ability to protect our products.
As is the case with other biopharmaceutical companies, our success is heavily dependent on intellectual
property, particularly patents. Obtaining and enforcing patents in the biopharmaceutical industry involve
both technological and legal complexity, and is therefore costly, time-consuming and inherently uncertain. In
addition, the United States has recently enacted, and is currently implementing, wide-ranging patent
reform legislation. Recent U.S. Supreme Court rulings have narrowed the scope of patent protection available
in certain circumstances and weakened the rights of patent owners in certain situations. In addition to
increasing uncertainty with regard to our ability to obtain patents in the future, this combination of events
has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the
U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could
change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing
patents and patents that we might obtain in the future. We cannot predict how these decisions or any
future decisions by the courts, the U.S. Congress or the USPTO may impact the value of our patents.
Similarly, any adverse changes in the patent laws of other jurisdictions could have a material adverse effect
on our business and financial condition.
We may not be able to protect our intellectual property rights throughout the world.
Filing, prosecuting and defending patents on product candidates in all countries throughout the world
is expensive. While certain of our licensed patents, including patents covering our lead product candidates,
have been issued in major markets and other countries, our intellectual property rights in some countries
outside the United States can be less extensive than those in the United States. In addition, the laws of
some foreign countries do not protect intellectual property rights to the same extent as federal and state
laws in the United States. Consequently, we may not be able to prevent third parties from practicing our
inventions in all countries outside the United States, or from selling or importing products made using our
inventions in and into the United States or other jurisdictions. Competitors may use our technologies in
jurisdictions where we have not obtained patent protection to develop their own products and, further,
may export otherwise infringing products to territories where we have patent protection but where enforcement
is not as strong as that in the United States. These products may compete with our products in jurisdictions
where we do not have any issued patents and our patent claims or other intellectual property rights may
not be effective or sufficient to prevent them from competing.
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Many companies have encountered significant problems in protecting and defending intellectual
property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing
countries, do not favor the enforcement of patents, trade secrets and other intellectual property protection,
particularly those relating to biopharmaceutical products, which could make it difficult for us or our licensors
to stop the infringement of our patents or marketing of competing products against third parties in
violation of our proprietary rights generally. The initiation of proceedings by third parties to challenge the
scope or validity of our patent rights in foreign jurisdictions could result in substantial cost and divert our
efforts and attention from other aspects of our business, could put our patents at risk of being invalidated
or interpreted narrowly and any patent applications at risk of not issuing and could provoke third parties to
assert claims against us or our licensors. We may not prevail in any lawsuits that we initiate and the
damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts
to enforce our intellectual property rights around the world may be inadequate to obtain a significant
commercial advantage from the intellectual property that we develop or license.
If we do not obtain patent term extension and data exclusivity for any product candidates we may develop, our
business may be materially harmed.
Depending upon the timing, duration and specifics of any FDA marketing approval of any product
candidates we may develop, one or more of our U.S. patents may be eligible for limited patent term extension
under the Drug Price Competition and Patent Term Restoration Action of 1984, or Hatch-Waxman
Amendments. The Hatch-Waxman Amendments permit a patent extension term of up to five years as
compensation for patent term lost during the FDA regulatory review process. A patent term extension cannot
extend the remaining term of a patent beyond a total of 14 years from the date of product approval, only
one patent may be extended and only those claims covering the approved drug, a method for using it or a
method for manufacturing it may be extended. However, we may not be granted an extension because of, for
example, failing to exercise due diligence during the testing phase or regulatory review process, failing to
apply within applicable deadlines, failing to apply prior to expiration of relevant patents or otherwise failing
to satisfy applicable requirements. Moreover, the applicable time period or the scope of patent protection
afforded could be less than we request. If we are unable to obtain patent term extension or term of any such
extension is less than we request, our competitors may obtain approval of competing products following
our patent expiration, and our business, financial condition, results of operations and prospects could be
materially harmed.
If our trademarks and trade names are not adequately protected, then we may not be able to build name
recognition in our markets of interest and our business may be adversely affected.
Our trademarks or trade names may be challenged, infringed, circumvented or declared generic or
determined to be infringing on other marks. We may not be able to protect our rights to these trademarks
and trade names or may be forced to stop using these names, which we need for name recognition by potential
partners or customers in our markets of interest. If we are unable to establish name recognition based on
our trademarks and trade names, we may not be able to compete effectively and our business may be adversely
affected.
Risks related to government regulation
The regulatory approval process for our product candidates in the United States, the European Union, and
other jurisdictions is currently uncertain and will be lengthy, time-consuming and inherently unpredictable and
we may experience significant delays in the clinical development and regulatory approval, if any, of our product
candidates.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and
distribution of drug products are subject to extensive regulation by the FDA in the United States, the EMA
in the European Union, or EU, and comparable foreign regulatory authorities. We are not permitted to
market any product in any jurisdiction until we receive marketing approval from the appropriate regulatory
authority. We have only submitted one NDA to the FDA, which was submitted in December 2022 for
nirogacestat for the treatment of adults with progressing desmoid tumors requiring systemic treatment, and
was granted regulatory approval on November 27, 2023. In addition, aside from the MAA we submitted
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to the EMA in February 2024 for nirogacestat for the treatment of adults with desmoid tumors, we have
not otherwise submitted an MAA to the EMA or similar marketing application to comparable foreign
regulatory authorities. In the United States, an NDA must include extensive preclinical and clinical data and
supporting information to establish that the product candidate is safe, pure and potent for each desired
indication. An NDA must also include significant information regarding the chemistry, manufacturing and
controls for the product, and the manufacturing facilities must complete a successful pre-approval inspection.
The FDA may also require a panel of experts, referred to as an Advisory Committee, to deliberate on
the adequacy of the safety and efficacy data to support approval. The opinion of the Advisory Committee,
although not binding, may have a significant impact on our ability to obtain approval of any product
candidates that we develop based on the completed clinical trials.
In addition, clinical trials can be delayed or terminated for a variety of reasons, including delays or
failures related to:
• obtaining regulatory authorization to begin a clinical trial, if applicable;
• the availability of financial resources to begin and complete the planned trials;
• reaching agreement on acceptable terms with prospective CROs and clinical trial sites, the terms of
which can be subject to extensive negotiation and may vary significantly among different CROs and
clinical trial sites;
• obtaining approval at each clinical trial site by an independent IRB or ethics committee;
• recruiting suitable patients to participate in a clinical trial in a timely manner;
• having patients complete a clinical trial or return for post-treatment follow-up;
• clinical trial sites deviating from clinical trial protocol, not complying with GCP requirements or
dropping out of a trial;
• the availability of materials or manufacturing slots for the products needed for our clinical trials, as a
result of the ongoing global and regional conflicts and resulting heightened economic sanctions
from the United States, which could lead to delays in these trials; We could face higher costs or reduced
availability of supplies, materials, components, or services for product candidates in the United
States, the European Union, and other jurisdictions;
• addressing any patient safety concerns that arise during the course of a clinical trial;
• addressing any conflicts with new or existing laws or regulations;
• adding new clinical trial sites; or
• manufacturing qualified materials under cGMP regulations for use in clinical trials.
Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors.
Further, a clinical trial may be suspended or terminated by us, the IRBs for the institutions in which such
clinical trials are being conducted, or the FDA, EMA or comparable foreign regulatory authorities, or
recommended for suspension or termination by the DSMB for such clinical trial, due to a number of factors,
including failure to conduct the clinical trial in accordance with regulatory requirements or our clinical
protocols, inspection of the clinical trial operations or clinical trial sites by the FDA, EMA or comparable
foreign regulatory authorities resulting in the imposition of a clinical hold, unforeseen safety issues or adverse
side effects, failure to demonstrate a benefit from using a product candidate, changes in governmental
regulations or administrative actions or lack of adequate funding to continue the clinical trial. If we
experience termination of, or delays in the completion of, any clinical trial of our product candidates, the
commercial prospects for our product candidates will be harmed, and our ability to generate product revenue
will be delayed. In addition, any delays in completing any clinical trials will increase our costs, slow down
our product development and approval process and jeopardize our ability to commence product sales and
generate revenue.
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The FDA, EMA or comparable foreign regulatory authorities may disagree with our regulatory plan for our
product candidates.
The general approach for FDA approval of a new drug is dispositive data from one or more well-
controlled Phase 3 clinical trials of the product candidate in the relevant patient population. Phase 3 clinical
trials typically involve a large number of patients, have significant costs and take years to complete.
Our clinical trial results may not support approval of our product candidates. In addition, our product
candidates could fail to receive regulatory approval, or regulatory approval could be delayed, for many
reasons, including the following:
• the FDA, EMA or comparable foreign regulatory authorities may disagree with the dosing regimen,
design or implementation of our clinical trials;
• we may be unable to demonstrate to the satisfaction of the FDA, EMA or comparable foreign
regulatory authorities that our product candidates are safe and effective for any of their proposed
indications;
• the results of clinical trials may not meet the level of statistical significance required by the FDA,
EMA or comparable foreign regulatory authorities for approval;
• we may be unable to demonstrate that our product candidates’ clinical and other benefits outweigh
their safety risks;
• the FDA, EMA or comparable foreign regulatory authorities may disagree with our interpretation of
data from preclinical studies or clinical trials;
• the data collected from clinical trials of our product candidates may not be sufficient to the satisfaction
of the FDA, EMA or comparable foreign regulatory authorities to support the submission of an
NDA or other comparable submission in foreign jurisdictions or to obtain regulatory approval in the
United States or elsewhere;
• the FDA, EMA or comparable foreign regulatory authorities may fail to approve the manufacturing
processes or facilities of third-party manufacturers with which we contract for clinical and
commercial supplies; and
• the approval policies or regulations of the FDA, EMA or comparable foreign regulatory authorities
may significantly change in a manner rendering our clinical data insufficient for approval.
We may seek regulatory approval of our product candidates based on an interim analysis conducted of
a registrational trial, particularly if the interim analysis is statistically significant for the primary endpoint
and the safety data demonstrate an acceptable safety and tolerability profile. The results of any such interim
analysis would be discussed with the FDA at a pre-NDA meeting to assess the adequacy of the data to
support the submission of an NDA; however, if the FDA does not agree that the interim analysis provides a
sufficient basis for regulatory approval, we would not submit an NDA until the conclusion of such
registrational trial.
Breakthrough Therapy Designation or Fast Track Designation from the FDA may not actually lead to a faster
development or regulatory review or approval process.
The FDA has granted Fast Track Designation and Breakthrough Therapy Designation for nirogacestat
for the treatment of adult patients with progressive, unresectable, recurrent or refractory desmoid tumors or
deep fibromatosis, and has granted Fast Track Designation for mirdametinib for the treatment of patients
at least two years of age with NF1-associated inoperable PN that are progressing or causing significant
morbidity. We may seek Breakthrough Therapy Designation or Fast Track Designation for our other
product candidates.
If a product is intended for the treatment of a serious or life-threatening condition and the product
demonstrates the potential to address unmet medical needs for this condition, the product sponsor may
apply for Fast Track Designation. The FDA has broad discretion whether or not to grant this designation,
so even if we believe one of our product candidates is eligible for this designation, we cannot assure you that
the FDA would decide to grant it. Even if we do receive Fast Track Designation, we may not experience a
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faster development process, review or approval compared to conventional FDA procedures. The FDA may
withdraw Fast Track Designation if it believes that the designation is no longer supported by data from our
clinical development program.
A breakthrough therapy is defined as a product that is intended, alone or in combination with one or
more other products, to treat a serious or life-threatening disease or condition, and preliminary clinical
evidence indicates that the product may demonstrate substantial improvement over existing therapies on
one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical
development. For products that have been designated as breakthrough therapies, interaction and
communication between the FDA and the sponsor of the trial can help to identify the most efficient path
for clinical development while minimizing the number of patients placed in ineffective control regimens.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we
believe one of our product candidates meets the criteria for designation as a breakthrough therapy, the
FDA may disagree and instead determine not to make such designation. In any event, the receipt of a
Breakthrough Therapy Designation may not result in a faster development process, review or approval
compared to products considered for approval under conventional FDA procedures and does not assure
ultimate approval by the FDA. In addition, even if a product candidate qualifies as a breakthrough therapy,
the FDA may later decide that the product no longer meets the conditions for qualification and rescind
the Breakthrough Therapy Designation.
The results of clinical trials conducted at clinical trial sites outside the United States might not be accepted by
the FDA, and data developed outside of a foreign jurisdiction similarly might not be accepted by such foreign
regulatory authority.
Some of the prior clinical trials for our product candidates were conducted outside the United States,
and we intend to conduct additional clinical trials outside the United States. Although the FDA, EMA or
comparable foreign regulatory authorities may accept data from clinical trials conducted outside the relevant
jurisdiction, acceptance of these data is subject to certain conditions. For example, the FDA requires that
the clinical trial must be well designed and conducted and performed by qualified investigators in accordance
with ethical principles such as IRB or ethics committee approval and informed consent, the trial population
must adequately represent the U.S. population, and the data must be applicable to the U.S. population
and U.S. medical practice in ways that the FDA deems clinically meaningful. In addition, while these clinical
trials are subject to the applicable local laws, acceptance of the data by the FDA will be dependent upon its
determination that the trials were conducted consistent with all applicable U.S. laws and regulations. There
can be no assurance that the FDA will accept data from trials conducted outside of the United States as
adequate support of a marketing application. Similarly, we must also ensure that any data submitted to
foreign regulatory authorities adheres to their standards and requirements for clinical trials and there can be
no assurance a comparable foreign regulatory authority would accept data from trials conducted outside
of its jurisdiction.
Our relationships with healthcare providers and physicians and third-party payors will be subject to applicable
anti-kickback, fraud and abuse and other healthcare laws and regulations, which could expose us to criminal
sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payors in the United States and elsewhere play a
primary role in the recommendation and prescription of pharmaceutical products. Arrangements with
third-party payors and customers can expose pharmaceutical manufacturers to broadly applicable fraud
and abuse and other healthcare laws and regulations, including, without limitation, the federal Anti-
Kickback Statute, or AKS, and the federal False Claims Act, or FCA, which may constrain the business or
financial arrangements and relationships through which such companies sell, market and distribute
pharmaceutical products. In particular, the research of our product candidates, as well as the promotion,
sales and marketing of healthcare items and services, as well as certain business arrangements in the healthcare
industry, are subject to extensive laws designed 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, structuring and commission(s), certain customer incentive programs and other business
arrangements generally. Activities subject to these laws also involve the improper use of information obtained
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in the course of patient recruitment for clinical trials. For more information, see the section titled
“Business — Other healthcare laws” in this Form 10-K.
The distribution of pharmaceutical products is subject to additional requirements and regulations,
including extensive record-keeping, licensing, storage and security requirements intended to prevent the
unauthorized sale of pharmaceutical products. Pharmaceutical companies may also be subject to federal
consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities
that potentially harm consumers.
The scope and enforcement of each of these laws is uncertain and subject to rapid change in the
current environment of healthcare reform, especially in light of the lack of applicable precedent and
regulations. Federal and state enforcement bodies continue to closely scrutinize interactions between
healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions,
convictions and settlements in the healthcare industry. Ensuring business arrangements comply with applicable
healthcare laws, as well as responding to possible investigations by government authorities, can be time
and resource-consuming and can divert a company’s attention from the business.
It is possible that governmental and enforcement authorities will conclude that our business practices
may not comply with current or future statutes, regulations or case law interpreting applicable fraud and
abuse or other healthcare laws and regulations. If any such actions are instituted against us, and we are not
successful in defending ourselves or asserting our rights, those actions could have a significant impact on our
business, including the imposition of civil, criminal and administrative penalties, damages, fines,
disgorgement, imprisonment, exclusion from participation in federal and state funded healthcare programs,
contractual damages and the curtailment or restricting of our operations, as well as additional reporting
obligations and oversight if we become subject to a corporate integrity agreement or other agreement to
resolve allegations of non-compliance with these laws. Further, if any of the physicians or other healthcare
providers or entities with whom we expect to do business is found to be not in compliance with applicable laws,
they may be subject to significant criminal, civil or administrative sanctions, including exclusions from
government funded healthcare programs. Any action for violation of these laws, even if successfully defended,
could cause a biopharmaceutical manufacturer to incur significant legal expenses and divert management’s
attention from the operation of the business. Prohibitions or restrictions on sales or withdrawal of future
marketed products could materially affect business in an adverse way.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does not mean
that we will be successful in obtaining regulatory approval of our product candidates in other jurisdictions.
Obtaining and maintaining regulatory approval of our product candidates in one jurisdiction does
not guarantee that we will be able to obtain or maintain regulatory approval in any other jurisdiction, while
a failure or delay in obtaining regulatory approval in one jurisdiction may have a negative effect on the
regulatory approval process in others. For example, even though the FDA granted marketing approval of to
OGSIVEO for the treatment of adults with progressing desmoid tumors requiring systemic therapy, the
EMA or comparable foreign regulatory authorities must also approve the manufacturing, marketing and
promotion of the product candidate in those countries, and we may be unable to obtain such additional
approvals. Approval procedures vary among jurisdictions and can involve requirements and administrative
review periods different from, and greater than, those in the United States, including additional preclinical
studies or clinical trials, as clinical trials conducted in one jurisdiction may not be accepted by regulatory
authorities in other jurisdictions. In many jurisdictions outside the United States, a product candidate
must be approved for reimbursement before it can be approved for sale in that jurisdiction. In some cases,
the price that we intend to charge for our products is also subject to approval.
Obtaining foreign regulatory approvals and compliance with foreign regulatory requirements could
result in significant delays, difficulties and costs for us and could delay or prevent the introduction of our
products in certain countries. If we fail to comply with the regulatory requirements in international markets
and/or receive applicable marketing approvals, our target market will be reduced and our ability to realize
the full market potential of our product candidates will be harmed.
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Even if we receive regulatory approval of any product candidates, we will be subject to ongoing regulatory
obligations and continued regulatory review, which may result in significant additional expense and we may be
subject to penalties if we fail to comply with regulatory requirements or experience unanticipated problems with
our product candidates.
Our approved product and any product candidates which receive approval in the future are and will be
subject to ongoing regulatory requirements for manufacturing, labeling, packaging, storage, advertising,
promotion, sampling, record-keeping, conduct of post-marketing studies and submission of safety, efficacy
and other post-marketing information, including both federal and state requirements in the United States
and requirements of comparable foreign regulatory authorities. In addition, we will be subject to continued
compliance with cGMP and GCP requirements for any clinical trials that we conduct post-approval.
Manufacturers and manufacturers’ facilities are required to comply with extensive FDA, EMA and
comparable foreign regulatory authority requirements, including ensuring that quality control and
manufacturing procedures conform to cGMP regulations and applicable product tracking and tracing
requirements. As such, we and our contract manufacturers will be subject to continual review and inspections
to assess compliance with cGMP and adherence to commitments made in any NDA, BLA, or other
marketing application and previous responses to inspection observations. Accordingly, we and others with
whom we work must continue to expend time, money and effort in all areas of regulatory compliance, including
manufacturing, production and quality control.
Any regulatory approvals that we receive for our product candidates may be subject to limitations on
the approved indicated uses for which the product may be marketed or to the conditions of approval, or
contain requirements for potentially costly post-marketing testing, including Phase 4 clinical trials and
surveillance to monitor the safety and efficacy of the product candidate. Additionally, under FDORA,
sponsors of approved drugs and biologics must provide 6 months’ notice to the FDA of any changes in
marketing status, such as the withdrawal of a drug, and failure to do so could result in the FDA placing
the product on a list of discontinued products, which would revoke the product’s ability to be marketed. The
FDA may also require a risk evaluation and mitigation strategies, or REMS, program as a condition of
approval of our product candidates, which could entail requirements for long-term patient follow-up, a
medication guide, physician communication plans or additional elements to ensure safe use, such as restricted
distribution methods, patient registries and other risk minimization tools. In addition, if the FDA, EMA
or a comparable foreign regulatory authority approves our product candidates, we will have to comply with
requirements including submissions of safety and other post-marketing information and reports and
registration.
The FDA may impose consent decrees or withdraw 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 our product candidates, including adverse events of unanticipated
severity or frequency, or with our third-party manufacturers or manufacturing processes, or failure to comply
with regulatory requirements, may result in revisions to the approved labeling to add new safety information,
imposition of post-marketing studies or clinical trials to assess new safety risks or imposition of
distribution restrictions or other restrictions under a REMS program. Other potential consequences
include, among other things:
• restrictions on the marketing or manufacturing of our products, withdrawal of the product from the
market or voluntary or mandatory product recalls;
• fines, warning letters or holds on clinical trials;
• refusal by the FDA to approve pending applications or supplements to approved applications filed
by us or suspension or revocation of license approvals;
• product seizure or detention or refusal to permit the import or export of our product candidates;
and
• 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. Products may be promoted only for the approved indications and in accordance with the
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provisions of the approved label. Certain endpoint data we hope to include in any approved product
labeling also may not make it into such labeling, including exploratory or secondary endpoint data such as
patient-reported outcome measures, which could impact our ability to promote products for which we obtain
approval. The policies of the FDA, EMA and comparable foreign regulatory authorities may change and
additional government regulations may be enacted that could prevent, limit or delay regulatory approval of
our product candidates. We cannot predict the likelihood, nature or extent of government regulation that may
arise from future legislation or administrative action, either in the United States or abroad. If we are slow
or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if
we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have
obtained and we may not achieve or sustain profitability.
Coverage and reimbursement may be limited or unavailable in certain market segments for our product
candidates, if approved, which could make it difficult for us to sell any product candidates profitably.
The success of our approved product and product candidates, if approved, depends on the availability
of coverage and adequate reimbursement from third-party payors. We cannot be sure that coverage and
reimbursement will be available for, or accurately estimate the potential revenue from, our product candidates
or assure that coverage and reimbursement will be available for any product that we may develop. For
more information, see the section titled “Business — Coverage, pricing and reimbursement” in this Form 10-K.
Patients who are provided medical treatment for their conditions generally rely on third-party payors to
reimburse all or part of the costs associated with their treatment. Coverage and adequate reimbursement
from governmental healthcare programs, such as Medicare and Medicaid, and commercial payors is critical
to new product acceptance.
Government authorities and other third-party payors, such as private health insurers and health
maintenance organizations, decide which drugs and treatments they will cover and the amount of
reimbursement.
In the United States, no uniform policy of coverage and reimbursement for products exists among
third-party payors. As a result, obtaining coverage and reimbursement approval of a product from a
government or other third-party payor is a time-consuming and costly process that could require us to
provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our products
on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.
Even if we obtain coverage for a given product, the resulting reimbursement payment rates might not be
adequate for us to achieve or sustain profitability or may require co-payments that patients find unacceptably
high. Additionally, third-party payors may not cover, or provide adequate reimbursement for, long-term
follow-up evaluations required following the use of product candidates, once approved. Patients are unlikely
to use our product candidates, once approved, unless coverage is provided and reimbursement is adequate
to cover a significant portion of their cost. There is significant uncertainty related to insurance coverage and
reimbursement of newly approved products. It is difficult to predict at this time what third-party payors
will decide with respect to the coverage and reimbursement for our product candidates.
Net prices for drugs may be reduced by mandatory discounts or rebates required by government
healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of
drugs from countries where they may be sold at lower prices than in the United States. Increasingly,
third-party payors are requiring that drug companies provide them with predetermined discounts from list
prices and are challenging the prices charged for medical products. We cannot be sure that reimbursement will
be available for any product candidate that we commercialize and, if reimbursement is available, the level
of reimbursement. In addition, many pharmaceutical manufacturers must calculate and report certain price
reporting metrics to the government, such as average manufacturer price, average sales price and best
price. Penalties may apply in some cases when such metrics are not submitted accurately and timely. Further,
these prices for drugs may be reduced by mandatory discounts or rebates required by government healthcare
programs. Payment methodologies may be subject to changes in healthcare legislation and regulatory
initiatives.
Moreover, increasing efforts by governmental and other third-party payors in the United States and
abroad to cap or reduce healthcare costs may cause such organizations to limit both coverage and the level
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of reimbursement for newly approved products and, as a result, they may not cover or provide adequate
payment for our product candidates. There has been increasing legislative and enforcement interest in the
United States with respect to specialty drug pricing practices.
Ongoing healthcare legislative and regulatory reform measures may have a material adverse effect on our
business and results of operations.
Changes in regulations, statutes or the interpretation of existing regulations could impact our business
in the future by requiring, for example: (i) changes to our manufacturing arrangements; (ii) additions or
modifications to product labeling; (iii) the recall or discontinuation of our products; or (iv) additional record-
keeping requirements. If any such changes were to be imposed, they could adversely affect the operation of
our business. For more information, see the section titled “Business — Current and future legislation” in this
Form 10-K.
We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the
government, insurance companies, managed care organizations and other payors of healthcare services to
contain or reduce costs of healthcare and/or impose price controls may adversely affect:
• the demand for our product candidates, if we obtain regulatory approval;
• our ability to set a price that we believe is fair for our approved products;
• our ability to generate revenue and achieve or maintain profitability;
• the level of taxes that we are required to pay; and
• the availability of capital.
Any reduction in reimbursement from Medicare or other government programs may result in a similar
reduction in payments from private payors, which may adversely affect our future profitability.
Individual states in the United States have also increasingly passed legislation and implemented
regulations designed to control pharmaceutical product pricing, including price or patient reimbursement
constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency
measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
See “— Coverage and reimbursement may be limited or unavailable in certain market segments for our
approved product and product candidates, if approved, which could make it difficult for us to sell any product
candidates profitably.”
These laws, and future state and federal healthcare reform measures may be adopted in the future, any
of which may result in additional reductions in Medicare and other healthcare funding and otherwise affect
the prices we may obtain for any of our product candidates for which we may obtain regulatory approval
or the frequency with which any such product candidate is prescribed or used.
If we fail to comply with our reporting and payment obligations under the Medicaid Drug Rebate program or
other governmental pricing programs, we could be subject to additional reimbursement requirements, penalties,
sanctions and fines, which could have a material adverse effect on our business, financial condition, results of
operations and growth prospects.
We participate in the Medicaid Drug Rebate program, the 340B drug pricing program, and the VA’s
FSS pricing program. Under the Medicaid Drug Rebate program, we are required to pay a rebate to each
state Medicaid program for our covered outpatient drugs that are dispensed to Medicaid beneficiaries and
paid for by a state Medicaid program as a condition of having federal funds being made available to the states
for our drugs under Medicaid and Medicare Part B. Those rebates are based on pricing data reported by
us on a monthly and quarterly basis to CMS, the federal agency that administers the Medicaid Drug Rebate
program. These data include the average manufacturer price and, in the case of innovator products, the
best price for each drug which, in general, represents the lowest price available from the manufacturer to any
entity in the U.S. in any pricing structure, calculated to include all sales and associated rebates, discounts
and other price concessions. Our failure to comply with these price reporting and rebate payment obligations
could negatively impact our financial results.
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The ACA made significant changes to the Medicaid Drug Rebate program. CMS issued a final
regulation, which became effective on April 1, 2016, to implement the changes to the Medicaid Drug
Rebate program under the ACA. The issuance of the final regulation has increased and will continue to
increase our costs and the complexity of compliance, has been and will continue to be time-consuming to
implement, and could have a material adverse effect on our results of operations, particularly if CMS
challenges the approach we take in our implementation of the final regulation.
Federal law requires that any company that participates in the Medicaid Drug Rebate program also
participate in the Public Health Service’s 340B drug pricing program in order for federal funds to be available
for the manufacturer’s drugs under Medicaid and Medicare Part B. The 340B program requires participating
manufacturers to agree to charge statutorily defined covered entities no more than the 340B “ceiling
price” for the manufacturer’s covered outpatient drugs. These 340B covered entities include a variety of
community health clinics and other entities that receive health services grants from the Public Health Service,
as well as hospitals that serve a disproportionate share of low-income patients. The 340B ceiling price is
calculated using a statutory formula based on the average manufacturer price and Medicaid rebate amount
for the covered outpatient drug as calculated under the Medicaid Drug Rebate program, and in general,
products subject to Medicaid price reporting and rebate liability are also subject to the 340B ceiling price
calculation and discount requirement. Any additional future changes to the definition of average manufacturer
price and the Medicaid rebate amount under the ACA, other legislation, or in regulation could affect our
340B ceiling price calculations and negatively impact our results of operations.
The Health Resources and Services Administration, or HRSA, which administers the 340B program,
issued a final regulation regarding the calculation of the 340B ceiling price and the imposition of civil
monetary penalties on manufacturers that knowingly and intentionally overcharge covered entities, which
became effective on January 1, 2019. We also are required to report our 340B ceiling prices to HRSA on a
quarterly basis. Implementation of the civil monetary penalties regulation and the issuance of any other final
regulations and guidance could affect our obligations under the 340B program in ways we cannot anticipate.
In addition, legislation may be introduced that, if passed, would further expand the 340B program to
additional covered entities or would require participating manufacturers to agree to provide 340B discounted
pricing on drugs used in the inpatient setting.
Pricing and rebate calculations vary across products and programs, are complex, and are often subject
to interpretation by us, governmental or regulatory agencies and the courts. In the case of our Medicaid
pricing data, if we become aware that our reporting for a prior quarter was incorrect, or has changed as a
result of recalculation of the pricing data, we are obligated to resubmit the corrected data for up to three years
after those data originally were due. Such restatements and recalculations increase our costs for complying
with the laws and regulations governing the Medicaid Drug Rebate program and could result in an overage or
underage in our rebate liability for past quarters. Price recalculations also may affect the ceiling price at
which we are required to offer our products under the 340B program or could require us to issue refunds to
340B covered entities.
Significant civil monetary penalties can be applied if we are found to have knowingly submitted any
false pricing information to CMS, or if we fail to submit the required price data on a timely basis. Such
conduct also could be grounds for CMS to terminate our Medicaid drug rebate agreement, in which case
federal payments may not be available under Medicaid or Medicare Part B for our covered outpatient drugs.
Significant civil monetary penalties also can be applied if we are found to have knowingly and intentionally
charged 340B covered entities more than the statutorily mandated ceiling price. We cannot assure you that our
submissions will not be found by CMS or HRSA to be incomplete or incorrect.
In order to be eligible to have our products paid for with federal funds under the Medicaid and
Medicare Part B programs and purchased by certain federal agencies and grantees, as noted above, we
participate in the VA’s FSS pricing program. As part of this program, we are obligated to make our products
available for procurement on an FSS contract under which we must comply with standard government
terms and conditions and charge a price that is no higher than the statutory Federal Ceiling Price, or FCP,
to four federal agencies (the VA, U.S. Department of Defense, or DOD, Public Health Service, and the U.S.
Coast Guard). The FCP is based on the Non-Federal Average Manufacturer Price, or Non-FAMP, which
we calculate and report to the VA on a quarterly and annual basis. Pursuant to applicable law, knowing
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provision of false information in connection with a Non-FAMP filing can subject a manufacturer to
significant penalties for each item of false information. These obligations also contain extensive disclosure
and certification requirements.
We also participate in the Tricare Retail Pharmacy program, under which we pay quarterly rebates on
utilization of innovator products that are dispensed through the Tricare Retail Pharmacy network to Tricare
beneficiaries. The rebates are calculated as the difference between the annual Non-FAMP and FCP. We are
required to list our covered products on a Tricare Agreement in order for these products to be eligible for
DOD formulary inclusion. If we overcharge the government in connection with our FSS contract or Tricare
Agreement, whether due to a misstated FCP or otherwise, we are required to refund the difference to the
government. Failure to make necessary disclosures and/or to identify contract overcharges can result in
allegations against us under the FCA and other laws and regulations. Unexpected refunds to the government,
and responding to a government investigation or enforcement action, would be expensive and time-
consuming, and could have a material adverse effect on our business, financial condition, results of operations
and growth prospects.
Off-label use or misuse of our products may harm our reputation in the marketplace or result in injuries that
lead to costly product liability suits.
We have received regulatory approval to market OGSIVEO for the treatment of adults with progressing
desmoid tumors in adults requiring systemic therapy and we are developing mirdametinib for the treatment
of NF1-PN. We may only promote or market OSGIVEO and our other product candidates, if approved
by the FDA, for their specifically approved indications and in a manner consistent with the approved labeling.
We will train our marketing and sales force against promoting our product candidates for uses outside of
the approved indications for use, known as “off-label uses.” We cannot, however, prevent a physician from
using our products off-label, when in the physician’s independent professional medical judgment, he or she
deems it appropriate. Furthermore, the use of our products for indications other than those approved by the
FDA may not effectively treat such conditions. Any such off-label use of our product candidates could
harm our reputation in the marketplace among physicians and patients. There may also be increased risk of
injury to patients if physicians attempt to use our products for any off-label uses, which could lead to
product liability suits that that might require significant financial and management resources and that could
harm our reputation. Additionally, the FDA imposes stringent restrictions on manufacturers’ communications
regarding off-label uses and if we, or our collaborators, do not promote our products, if approved, in a
manner consistent with the approved labeling, we, or they, may be subject to warnings or enforcement action
for off-label marketing. Violation of the Federal Food, Drug, and Cosmetic Act and other statutes,
including the FCA, relating to the promotion and advertising of prescription drugs may lead to investigations
or allegations of violations of federal and state healthcare fraud and abuse laws and state consumer
protection laws.
Disruptions at the FDA, the SEC and other government agencies caused by funding shortages or global health
concerns could hinder their ability to hire and retain key leadership and other personnel, or otherwise prevent new
or modified products from being developed, approved or commercialized in a timely manner or at all, or
otherwise prevent those agencies from performing normal business functions on which the operation of our
business may rely, which could negatively impact our business.
The ability of the FDA to review and approve new products can be affected by a variety of factors,
including government budget and funding levels, ability to hire and retain key personnel and accept the
payment of user fees, and statutory, regulatory, and policy changes, and other events that may otherwise affect
the FDA’s ability to perform routine functions. Average review times at the agency have fluctuated in
recent years as a result. In addition, government funding of the SEC and other government agencies on
which our operations may rely, including those that fund research and development activities, is subject to
the political process, which is inherently fluid and unpredictable.
Disruptions at the FDA and other agencies may also slow the time necessary for new drugs to be
reviewed and/or approved by necessary government agencies, which would adversely affect our business. For
example, in recent years, including in 2018 and 2019, the U.S. government shut down several times and
certain regulatory agencies, such as the FDA and the SEC, had to furlough critical employees and stop critical
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activities. During the COVID-19 public health emergency, a number of companies announced receipt of
complete response letters due to the FDA’s inability to complete required inspections for their applications.
If a prolonged government shutdown occurs, or if global health concerns prevent the FDA or other regulatory
authorities from conducting their regular inspections, reviews, or other regulatory activities, it could
significantly impact the ability of the FDA to timely review and process our regulatory submissions, which
could have a material adverse effect on our business. Further, in our operations as a public company, future
government shutdowns or delays could impact our ability to access the public markets and obtain necessary
capital in order to properly capitalize and continue our operations.
EU drug marketing and reimbursement regulations may materially affect our ability to market and receive
coverage for our products in the European member states.
We intend to seek approval to market our product candidates in both the United States and in selected
foreign jurisdictions. If we obtain approval in one or more foreign jurisdictions for our product candidates,
we will be subject to rules and regulations in those jurisdictions. In some foreign countries, particularly those
in the EU, the pricing of drugs is subject to governmental control and other market regulations which
could put pressure on the pricing and usage of our product candidates. In these countries, pricing negotiations
with governmental authorities can take considerable time after obtaining marketing approval of a product
candidate. In addition, market acceptance and sales of our product candidates will depend significantly on the
availability of adequate coverage and reimbursement from third-party payors for our product candidates
and may be affected by existing and future healthcare reform measures.
Much like the AKS prohibition in the United States, the provision of benefits or advantages to
physicians to induce or encourage the prescription, recommendation, endorsement, purchase, supply, order
or use of medicinal products is also prohibited in the EU. The provision of benefits or advantages to
physicians is governed by the national anti-bribery and other laws of EU Member States, and operations in
the United Kingdom would be subject to relevant United Kingdom laws, including the United Kingdom
Bribery Act 2010. Infringement of these laws could result in substantial fines and imprisonment.
Payments made to physicians in certain EU Member States must be publicly disclosed. Moreover,
agreements with physicians often must be the subject of prior notification and approval by the physician’s
employer, his or her competent professional organization and/or the regulatory authorities of the individual
EU Member States. These requirements are provided in the national laws, industry codes or professional
codes of conduct, applicable in the EU Member States. Failure to comply with these requirements could result
in reputational risk, public reprimands, administrative penalties, fines or imprisonment.
In addition, in most foreign countries, including the European Economic Area, or EEA, the proposed
pricing for a drug must be approved before it may be lawfully marketed. The requirements governing drug
pricing and reimbursement vary widely from country to country. For example, the EU provides options for its
member states to restrict the range of medicinal products for which their national health insurance systems
provide reimbursement and to control the prices of medicinal products for human use. Reference pricing used
by various EU member states and parallel distribution, or arbitrage between low-priced and high-priced
member states, can further reduce prices. A member state may approve a specific price for the medicinal
product or it may instead adopt a system of direct or indirect controls on the profitability of the company
placing the medicinal product on the market. In some countries, we may be required to conduct a clinical
study or other studies that compare the cost-effectiveness of any of our product candidates to other
available therapies in order to obtain or maintain reimbursement or pricing approval. There can be no
assurance that any country that has price controls or reimbursement limitations for biopharmaceutical
products will allow favorable reimbursement and pricing arrangements for any of our products. Historically,
products launched in the EU do not follow price structures of the United States and generally prices tend
to be significantly lower. Publication of discounts by third-party payors or authorities may lead to further
pressure on the prices or reimbursement levels within the country of publication and other countries. If pricing
is set at unsatisfactory levels or if reimbursement of our products is unavailable or limited in scope or
amount, our revenues from sales and the potential profitability of any of our product candidates in those
countries would be negatively affected. Moreover, if the current conflict between Russia and Ukraine expands
into the region, there is the potential for us to face higher costs or reduced availability of materials or
manufacturing slots for product candidates in the EU and other jurisdictions.
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We may incur substantial costs in our efforts to comply with evolving global data protection laws and regulations,
and any failure or perceived failure by us to comply with such laws and regulations may harm our business and
operations.
We collect, store, process and transmit sensitive data, including legally protected health information, or
PHI, personally identifiable information, intellectual property and proprietary business information. As we
seek to expand our business, we are, and will increasingly become, subject to numerous state, federal and
foreign laws, regulations and standards, as well as contractual obligations, relating to the collection, use,
retention, security, disclosure, transfer and other processing of sensitive and personal information in the
jurisdictions in which we operate. In many cases, these laws, regulations and standards apply not only to
third-party transactions, but also to transfers of information between or among us, our subsidiaries and other
parties with which we have commercial relationships. These laws, regulations and standards may be
interpreted and applied differently over time and from jurisdiction to jurisdiction, and it is possible that
they will be interpreted and applied in ways that will materially and adversely affect our business, financial
condition and results of operations. The regulatory framework for data privacy, data security and data
transfers worldwide is rapidly evolving, and there has been an increasing focus on privacy and data
protection issues with the potential to affect our business, and as a result, interpretation and implementation
standards and enforcement practices are likely to remain uncertain for the foreseeable future. Failure to
comply with any of these laws and regulations could result in enforcement actions against us, including fines,
imprisonment of company officials and public censure, claims for damages by affected individuals, damage
to our reputation and loss of goodwill, any of which could have a material adverse effect on our business.
In addition, many states in which we operate have laws that protect the privacy and security of
sensitive and personal information. Certain state laws may be more stringent or broader in scope, or offer
greater individual rights, with respect to sensitive and personal information than federal, international or
other state laws, and such laws may differ from each other, which may complicate compliance efforts. Where
state laws are more protective than HIPAA, we must comply with the state laws we are subject to, in
addition to HIPAA. In certain cases, it may be necessary to modify our planned operations and procedures
to comply with these more stringent state laws. Further, in some cases where we process sensitive and
personal information of individuals from numerous states, we may find it necessary to comply with the
most stringent state laws applicable to any of the information. California recently enacted the California
Consumer Privacy Act, or CCPA, which creates new individual privacy rights for California consumers (as
defined in the law) and places increased privacy and security obligations on entities handling personal data of
consumers or households. The CCPA will require covered companies to provide certain disclosures to
consumers about its data collection, use and sharing practices, and to provide affected California residents
with ways to opt-out of certain sales or transfers of personal information. The CCPA went into effect on
January 1, 2020, and the California State Attorney General submitted final regulations for review on
June 2, 2020, which were finalized and are now effective. The California State Attorney General has
commenced enforcement actions against violators as of July 1, 2020. Further, a new California privacy law,
the California Privacy Rights Act, or CPRA, was passed by California voters on November 3, 2020. The
CPRA, which became effective on January 1, 2023, creates additional obligations with respect to processing
and storing personal information. We will continue to monitor developments related to the CPRA and
anticipate additional costs and expenses associated with CPRA compliance. Four other states have passed
comprehensive privacy laws and other U.S. states also are considering omnibus privacy legislation. While the
CCPA and CPRA contain an exception for certain activities involving PHI under HIPAA, we cannot yet
determine the impact the CCPA, CPRA or other such future laws, regulations and standards may have on our
business.
In addition to our operations in the United States, which may be subject to healthcare and other laws
relating to the privacy and security of health information and other personal information, we may seek to
conduct clinical trials in EEA/UK and may become subject to additional European data privacy laws,
regulations and guidelines. Where we conduct clinical trials and enroll subjects in our ongoing or future
clinical trials in the European Economic Area, or EEA or in the United Kingdom, or UK, we may be subject
to European data protection regulations which include additional privacy restrictions. The collection, use,
storage, disclosure, transfer, or other processing of personal data regarding individuals in the EEA and UK,
including personal health data, is subject to the EU General Data Protection Regulation, or EU GDPR,
with respect to the EEA and the UK General Data Protection Regulation and UK Data Protection Act 2018
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with respect to the UK, or UK GDPR, and collectively with the EU GDPR referred to as the “GDPR” in
this document unless specified otherwise. The GDPR is wide-ranging in scope and imposes numerous
requirements on companies that process personal data, including requirements relating to processing health
and other sensitive data, obtaining consent of the individuals to whom the personal data relates, providing
information to individuals regarding data processing activities, conducting privacy impact assessments for
“high risk” processing, implementing safeguards to protect the security and confidentiality of personal
data, implementing limitations on the retention of personal data, providing mandatory notification of data
breaches, and taking certain measures when engaging third-party processors. The GDPR also imposes
strict rules on the transfer of personal data to countries outside the EEA and UK to non-adequate territories,
including the United States in certain circumstances unless derogation exists or a valid GDPR transfer
mechanism (for example, the European Commission approved Standard Contractual Clauses, or SCCs, and
the UK International Data Transfer Agreement/Addendum, or UK IDTA) have been put in place. Where
relying on the SCCs /UK IDTA for data transfers, we may also be required to carry out transfer impact
assessments to assess whether the recipient is subject to local laws which allow public authority access to
personal data. Failure to comply with the GDPR, and any supplemental EEA Member State or UK
national data protection laws which may apply by virtue of the location of the individuals whose personal
data we collect, may result in substantial penalties, including potential fines of up to €20 million (£17.5 million
for the UK GDPR) or 4% of annual global revenues for the preceding financial year, whichever is greater.
The GDPR also confers a private right of action on data subjects and consumer associations to lodge
complaints with supervisory authorities, seek judicial remedies, and obtain compensation for damages
resulting from violations of the GDPR. The GDPR increases our responsibility and liability in relation to
personal data that we process where such processing is subject to the GDPR, and requires us to put in place
additional mechanisms to ensure compliance with the GDPR, including as implemented by individual
countries. Compliance with the GDPR will be a rigorous and time-intensive process that may increase our
cost of doing business or require us to change our business practices, and despite those efforts, there is a risk
that we may be subject to fines and penalties, litigation, and reputational harm in connection with our
European activities.
Although the EU GDPR and the UK GDPR currently impose substantially similar obligations, it is
possible that over time the UK GDPR could become less aligned with the EU GDPR, particularly with the
introduction of the new Data Reform Bill into the UK legislative process. In addition, EEA Member
States have adopted national laws which may partially deviate from the EU GDPR, and the competent
authorities in the EEA Member States may interpret EU GDPR obligations slightly differently from country
to country, such that we do not expect to operate in a uniform legal landscape in the EEA. Also, as it
relates to processing and transfer of genetic data, the GDPR specifically allows national laws to impose
additional and more specific requirements or restrictions, and European laws have historically differed quite
substantially in this field, leading to additional uncertainty. The potential of the respective provisions and
enforcement of the EU GDPR and UK GDPR further diverging in the future creates additional regulatory
challenges and uncertainties for us. The lack of clarity on future UK laws and regulations and their
interaction with EU laws and regulations could add legal risk, uncertainty, complexity and compliance cost
to the handling of European personal data and our privacy and data security compliance, and could
require us to amend our processes and procedures to implement different compliance measures for the UK
and the EEA.
We expect that we will continue to face uncertainty as to whether our efforts to comply with any
obligations under European privacy laws will be sufficient. If we are investigated by a European data
protection authority, we may face fines and other penalties. Any such investigation or charges by European
data protection authorities could have a negative effect on our existing business and on our ability to attract
and retain new clients or biopharmaceutical partners. We may also experience hesitancy, reluctance or
refusal by European or multi-national clients or biopharmaceutical partners to continue to use our products
and solutions due to the potential risk exposure as a result of the current (and, in particular, future) data
protection obligations imposed on them by certain data protection authorities in interpretation of current
law, including the GDPR. Such clients or biopharmaceutical partners may also view any alternative approaches
to compliance as being too costly, too burdensome, too legally uncertain or otherwise objectionable and
therefore decide not to do business with us. Any of the forgoing could materially harm our business, prospects,
financial condition and results of operations.
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Additional laws and regulations governing international operations could negatively impact or restrict our
operations.
As we further expand our operations outside of the United States, we must dedicate additional
resources to comply with numerous laws and regulations in each jurisdiction in which we plan to operate.
The U.S. Foreign Corrupt Practices Act, or FCPA, prohibits any U.S. individual or business from paying,
offering, authorizing payment or offering anything of value, directly or indirectly, to any foreign official,
political party or candidate for the purpose of influencing any act or decision of any foreign entity in
order to assist the individual or business in obtaining or retaining business. The FCPA also obligates
companies whose securities are listed in the United States to comply with certain accounting provisions
requiring us to maintain books and records that accurately and fairly reflect all transactions of the company,
including international subsidiaries, and to devise and maintain an adequate system of internal accounting
controls for international operations.
Compliance with the FCPA is expensive and difficult, particularly in countries in which corruption is a
recognized problem. In addition, the FCPA presents particular challenges in the pharmaceutical industry,
because in many countries hospitals are operated by the government, and doctors and other hospital employees
are considered foreign officials. Certain payments to hospitals in connection with clinical trials and other
work have been deemed to be improper payments to government officials and have led to FCPA enforcement
actions.
Various laws, regulations and executive orders also restrict the use and dissemination outside of the
United States, or the sharing with certain non-U.S. nationals, of information classified for national security
purposes, as well as certain products and technical data relating to those products. If we expand our
presence outside of the United States, it will require us to dedicate additional resources to comply with
these laws, and these laws may preclude us from developing, manufacturing or selling certain products and
product candidates outside of the United States, which could limit our growth potential and increase our
development costs.
The failure to comply with laws governing international business practices may result in substantial
civil and criminal penalties and suspension or debarment from government contracting. The SEC also may
suspend or bar issuers from trading securities on U.S. exchanges for violations of the FCPA’s accounting
provisions.
We are subject to certain U.S. and foreign anti-corruption, anti-money laundering, export control, sanctions
and other trade laws and regulations. We can face serious consequences for violations of any such laws and
regulations.
Among other matters, U.S. and foreign anti-corruption, anti-money laundering, export control,
sanctions and other trade laws and regulations, which are collectively referred to as Trade Laws, prohibit
companies and their employees, agents, clinical research organizations, legal counsel, accountants, consultants,
contractors and other partners from authorizing, promising, offering, providing, soliciting or receiving,
directly or indirectly, corrupt or improper payments or anything else of value to or from recipients in the
public or private sector. Violations of Trade Laws can result in substantial criminal fines and civil penalties,
imprisonment, the loss of trade privileges, debarment, tax reassessments, breach of contract and fraud
litigation, reputational harm and other consequences. We have direct or indirect interactions with officials
and employees of government agencies or government-affiliated hospitals, universities and other
organizations. We also expect our non-U.S. activities to increase in time. We plan to engage third parties for
clinical trials and/or to obtain necessary permits, licenses, patent registrations and other regulatory
approvals, and we can be held liable for the corrupt or other illegal activities of our personnel, agents or
partners, even if we do not explicitly authorize or have prior knowledge of such activities.
Risks related to managing business and operations
Public health outbreaks, epidemics and pandemics, such as the COVID-19 pandemic, could adversely impact
our business, including our preclinical studies and clinical trials.
Public health outbreaks, epidemics and pandemics could adversely impact our business. For example,
the novel strain of coronavirus, severe acute respiratory syndrome coronavirus 2, or SARS-CoV-2, identified
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in Wuhan, China in December 2019, and the resulting disease from SARS-CoV-2, or COVID-19, became a
global pandemic. While we did not experience any material disruptions to the execution of the research
and development activities that we currently have underway as a result of the pandemic, however with respect
to any future epidemics, all of which remain uncertain and difficult to predict, we may continue to experience
disruptions that could severely impact research and development, and commercialization timelines and
outcomes, including, but not limited to:
• delays or difficulties in enrolling patients in our clinical trials;
• delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site
investigators and clinical site staff;
• diversion of healthcare resources away from the conduct of clinical trials, including the diversion of
hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical
trials;
• interruption of key clinical trial activities, such as clinical trial site data monitoring, due to limitations
on travel imposed or recommended by federal, state or foreign governments, employers and others
or interruption of clinical trial subject visits and study procedures (such as procedures that are deemed
non-essential under law, regulation or institutional policies), which may impact the integrity of
subject data and clinical study endpoints and the inability of patients to travel to trial sites or complete
scheduled study visits;
• interruption or delays in the operations of the FDA or other regulatory authorities, which may
impact review and approval timelines;
• interruption of, or delays in receiving, supplies of our product candidates from our contract
manufacturing organizations due to staffing shortages, production slowdowns or stoppages and
disruptions in delivery systems;
• interruptions in preclinical studies due to restricted or limited operations at our contracted research
facilities;
• deterioration of worldwide credit and financial markets that could limit our ability to obtain external
financing to fund our operations and capital expenditures;
• investment-related risks, including difficulties in liquidating investments due to current market
conditions and adverse investment performance;
• limitations on employee resources that would otherwise be focused on the conduct of our research
and development activities, including because of sickness of employees or their families or the desire
of employees to avoid contact with large groups of people; and
• interruptions or limitations of the types described affecting our service providers and collaboration
partners, including contract research organizations running clinical trials and collaboration partners
sponsoring clinical trials in which we are supplying our product candidates or otherwise participating.
If we lose key management personnel, or if we fail to recruit additional highly skilled personnel, our ability to
pursue our business strategy will be impaired, could result in loss of markets or market share and could make us
less competitive.
Our ability to compete in the highly competitive biopharmaceutical industries depends upon our
ability to attract and retain highly qualified managerial, scientific and medical personnel. We are highly
dependent on our management, scientific and medical personnel, including Saqib Islam, our Chief Executive
Officer, Frank Perier, our Chief Financial Officer, Bhavesh Ashar, our Chief Commercial Officer, Badreddin
Edris, our Chief Operating Officer, James Cassidy, our Chief Medical Officer, Kristin Patterson, our
Chief Technical Officer, and Tai-An Lin, our Chief Scientific Officer. The loss of the services of any of our
executive officers, other key employees, and other scientific and medical advisors, and our inability to find
suitable replacements for these individuals, could harm our business.
Competition for skilled personnel in our industry is intense and may limit our ability to hire and retain
highly qualified personnel on acceptable terms, in a timely manner or at all. To induce valuable employees
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to remain at our company, in addition to salary and cash incentives, we have provided equity incentive
awards that vest over time, and from time to time we will consider additional forms of incentives given then-
prevailing company circumstances and market conditions. The value to employees of restricted stock units
and awards and stock options that vest over time may be significantly affected by movements in our stock
price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers
from other companies. Despite our efforts to retain valuable employees, members of our management,
scientific and development teams are at-will employees and may terminate their employment with us on short
notice. We do not maintain “key man” insurance policies on the lives of these individuals or the lives of
any of our other employees. Given the stage of our programs and our plans to expand operations, our success
also depends on our ability to continue to attract, retain and motivate highly skilled junior, mid-level and
senior personnel across our organization.
Our business could be negatively affected by cyber security threats.
A cyberattack or similar incident could occur and result in information theft, data corruption,
operational disruption, damage to our reputation, or financial loss. We are increasingly dependent on
information technology systems and infrastructure, including mobile technologies, to operate our business.
Our technologies, systems, networks, or other proprietary information, and those of our vendors, suppliers
and other business partners, may become the target of cyberattacks or information security breaches that
could result in the unauthorized release, gathering, monitoring, misuse, loss, or destruction of proprietary and
other information, or could otherwise lead to the disruption of our business operations. Cyberattacks are
becoming more sophisticated and certain cyber incidents, such as surveillance, may remain undetected for an
extended period and could lead to disruptions in critical systems or the unauthorized release of confidential
or otherwise protected information. These events could lead to financial loss due to remedial actions, loss
of business, disruption of operations, damage to our reputation, or potential liability. Our systems and
insurance coverage for protecting against cybersecurity risks may not be sufficient. Furthermore, as
cyberattacks continue to evolve, we may be required to expend significant additional resources to continue
to modify or enhance our protective measures or to investigate and remediate any vulnerability to cyberattacks.
We are increasingly dependent on critical, complex, and interdependent information technology (IT) systems
and data to operate our business. Any failure, inadequacy, interruption, or security lapse of that technology,
including security attacks, incidents, and/or breaches, could harm our ability to operate our business effectively.
We have outsourced significant parts of our IT and business infrastructure to third-party providers,
and we currently use these providers to perform critical IT and business services for us. We are therefore
vulnerable to cybersecurity attacks and incidents on the associated networks and systems, whether they are
managed by us directly or by the third parties with whom we contract, and we have experienced and may in the
future experience such cybersecurity threats and attacks. The way we work continues to have and will likely
continue to contain a significant remote component in most aspects of the business and we will continue to
factor this into our cybersecurity risk management strategy. In addition, due to our reliance on third-party
providers, we have experienced and may in the future experience interruptions, delays, or outages related to
IT service availability due to a variety of factors outside of our control, including technical failures, natural
disasters, fraud, or security attacks experienced by or caused by these third-party providers. Interruptions in
the service provided by these third-party providers could affect our ability to perform critical tasks.
As a global pharmaceutical company, our systems are subject to frequent cyber-attacks. Due to the
nature of some of these attacks, there is a risk that they may remain undetected for a period of time. While
we have invested in the protection of data and information technology, our efforts may not prevent service
interruptions or security breaches (e.g., ransomware attacks). Any such interruption or breach of our
systems could adversely affect our business operations and/or result in the loss of critical or sensitive
confidential information or intellectual property, and could result in financial, legal, business, and reputational
harm to us. We maintain cyber liability insurance; however, this insurance may not be sufficient to cover
the financial, legal, business, or reputational losses that may result from an interruption or breach of our
systems.
Despite the implementation of security technical and organizational measures, our internal computer
systems, and those of third parties with which we contract, are vulnerable to damage from security incidents,
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breaches, and/or attacks (e.g., ransomware, computer viruses, worms, and other destructive or disruptive
software), unauthorized access, natural disasters, terrorism, war, and telecommunication and electrical failures.
System failures, accidents, or security attacks and/or breaches of our systems could result in operational
interruptions and/or a material disruption of our clinical and commercialization activities and business
operations, in addition to possibly requiring substantial expenditures of resources to remedy. The loss or
compromised integrity of clinical trial data could result in delays in our regulatory approval efforts and
significantly increase our costs to recover or reproduce the data. To the extent that any systems disruptions,
security incidents, or security breaches were to result in a loss of, damage to, or compromised integrity of our
data or applications, or inappropriate disclosure of confidential or proprietary information, we could
incur liability and our product research, development, and commercialization efforts could be disrupted or
delayed. In addition, we may not have adequate insurance coverage to provide compensation for any losses
associated with such events.
We could be subject to risks caused by misappropriation, misuse, leakage, falsification, or intentional
or accidental disclosure or loss of information maintained in the information systems and networks of our
company, including personal information of our personnel. In addition, outside parties may attempt to
penetrate our systems or those of our vendors or fraudulently induce our personnel or personnel of our
vendors to disclose sensitive information to gain access to our data. Like other companies, we have on
occasion, and will continue to experience, threats to our data and systems, including malicious codes and
viruses, and other security incidents, breaches, and attacks. The number and complexity of these threats
continue to increase over time. Although we have experienced some of the events described above, to date,
they have not had a material impact on our operations. Still, the occurrence of any of the events described
above in the future could disrupt our business operations and result in enforcement actions or liability,
including potential fines and penalties, claims for damages, and shareholder litigation.
Security incidents could also include supply chain attacks which, if successful, could cause a delay in
the manufacturing of our product or drug candidates. Our key business partners face similar risks, and any
security breach of their systems could adversely affect our security posture. In addition, our increased use
of cloud technologies could heighten these and other operational risks, and any failure by cloud technology
service providers to adequately safeguard their systems and prevent cyber-attacks, could disrupt our
operations and result in misappropriation, corruption, or loss of confidential or proprietary information.
Finally, as we increase our commercial activities and our brand becomes more widely known and
recognized, we may become a more attractive target for malicious third parties. If a material breach of our
security or that of our third-party providers occurs, the market perception of the effectiveness of our security
measures could be harmed, we could lose business and our reputation and credibility could be damaged.
We could be required to expend significant amounts of money and other resources to repair or replace
information assets and/or information systems. We could also be required to change third-party providers
and/or products at significant cost. Although we develop and maintain systems and controls designed to
prevent these events from occurring, and we have a process to identify and mitigate threats, the development
and maintenance of these systems, controls and processes are costly and require ongoing monitoring and
updating as technologies change and efforts to overcome security measures become more sophisticated.
Moreover, despite our efforts, the possibility of these events occurring cannot be eliminated entirely. Any
breach of our security measures by third-party actions, employee negligence and/or error, malfeasance,
defects, or compromise of the confidentiality, integrity or availability of our data could result in:
• severe harm to our reputation or brand, or a material and adverse effect on the overall market
perception of our technical and organizational measures to protect the confidentiality, integrity, and
availability of our information;
• individual and/or class action lawsuits, which could result in financial judgments against us potentially
causing us to incur legal fees and costs;
• legal or regulatory enforcement action, which could result in fines and/or penalties and which would
cause us to incur legal fees and costs; and/or
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• additional costs associated with responding to business interruption or security incidents and/or
breaches, such as investigative and remediation costs, the costs of providing individuals and/or data
owners with notice of the breach, legal fees, the costs of any additional fraud or cyber detection
activities, or the costs of prolonged system disruptions or shutdowns.
Any of these events could materially adversely impact our business and results of operations.
Our employees, independent contractors, consultants, academic collaborators, partners and vendors may engage
in misconduct or other improper activities, including noncompliance with regulatory standards and requirements.
We are exposed to the risk of employee fraud or other illegal activity by our employees, independent
contractors, consultants, academic collaborators, partners and vendors. Misconduct by these parties could
include intentional, reckless and/or negligent conduct that fails to comply with the laws of the FDA, EMA
and comparable foreign regulatory authorities, provide true, complete and accurate information to the
FDA, EMA and comparable foreign regulatory authorities, comply with manufacturing standards we have
established, comply with healthcare fraud and abuse laws in the United States and similar foreign fraudulent
misconduct laws, or report financial information or data accurately or to disclose unauthorized activities
to us. If we obtain FDA approval of any of our product candidates and begin commercializing those products
in the United States, our potential exposure under such laws will increase significantly, and our costs
associated with compliance with such laws are also likely to increase. These laws may impact, among other
things, our current activities with principal investigators and research patients, as well as proposed and future
sales, marketing and education programs. We have adopted a code of business conduct and ethics, but it is
not always possible to identify and deter misconduct by our employees, independent contractors, consultants,
academic collaborators, partners and vendors, and the precautions we take to detect and prevent such
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 comply with these
laws or regulations. If any actions are instituted against us and we are not successful in defending ourselves
or asserting our rights, those actions could result in the imposition of civil, criminal and administrative
penalties, damages, monetary fines, imprisonment, disgorgement, possible exclusion from participation in
government healthcare programs, additional reporting obligations and oversight if we become subject to a
corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws,
contractual damages, reputational harm, diminished profits and future earnings and the curtailment of
our operations.
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 the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our
development activities involve the use of biological and hazardous materials and can produce hazardous
waste products. We cannot eliminate the risk of contamination or injury from these materials, which could
cause an interruption of our commercialization efforts, research and development efforts and business
operations, environmental damage resulting in costly clean-up and liabilities under applicable laws and
regulations governing the use, storage, handling and disposal of these materials and specified waste products.
Although we believe that the safety procedures utilized by our third-party manufacturers for handling and
disposing of these materials generally comply with the standards prescribed by these laws and regulations, we
cannot guarantee that this is the case or eliminate the risk of accidental contamination or injury from
these materials. In such an event, we may be held liable for any resulting damages and such liability could
exceed our resources and state or federal or other applicable authorities may curtail our use of certain
materials and/or interrupt our business operations.
Furthermore, environmental laws and regulations are complex, change frequently and have tended to
become more stringent. We cannot predict the impact of such changes and cannot be certain of our future
compliance. 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. Failure to comply with these laws and regulations
also may result in substantial fines, penalties or other sanctions.
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Although we maintain workers’ compensation insurance to cover us for costs and expenses we may
incur due to injuries resulting from the use of hazardous materials or other work-related injuries, this
insurance may not provide adequate coverage against potential liabilities. We do not carry specific biological
waste or hazardous waste insurance coverage, workers compensation or property and casualty and general
liability insurance policies that include coverage for damages and fines arising from biological or hazardous
waste exposure or contamination.
Changes in tax law could adversely affect our business and financial condition.
The rules dealing with U.S. federal, state, and local income taxation are constantly under review by
persons involved in the legislative process and by the Internal Revenue Service and the U.S. Treasury
Department. Changes to tax laws (which changes may have retroactive application) could adversely affect
us or holders of our common stock. In recent years, many such changes have been made and changes are likely
to continue to occur in the future. Future changes in tax laws could have a material adverse effect on our
business, cash flow, financial condition or results of operations. Shareholders should consult with their legal
and tax advisers regarding the implications of potential changes in tax laws on an investment in our
common stock.
Our ability to use our net operating loss carryforwards and certain tax credit carryforwards may be subject to
limitation.
As of December 31, 2023, we had federal, state and city net operating loss carryforwards of
$472.1 million, $365.5 million and $3.7 million, respectively, which are available to reduce future taxable
income. Federal net operating loss carryforwards generated 2018 through 2023 of $467.8 million will be
limited to offset 80% of taxable income for an indefinite period of time, until fully utilized. Federal net
operating loss carryforwards of $4.3 million reported in 2017, and the state and city net operating loss
carryforwards expire at various dates through 2037. We also have federal tax credits of $33.5 million,
which may be used to offset future tax liabilities. These tax credit carryforwards will expire at various dates
beginning in 2038.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, or the Code, as amended, changes
in our ownership may limit the amount of our net operating loss carryforwards and tax credit carryforwards
that could be utilized annually to offset our future taxable income, if any. This limitation would generally
apply in the event of a cumulative change in ownership of our company of more than 50% within a three-
year period. Any such limitation may significantly reduce our ability to utilize our net operating loss
carryforwards and tax credit carryforwards before they expire. Private placements and other transactions
that have occurred since our inception, as well as our initial public offering, may trigger such an ownership
change pursuant to Sections 382 and 383 of the Code. Any such limitation, whether as the result of the initial
public offering, prior private placements, sales of our common stock by our existing stockholders or
additional sales of our common stock by us, could have a material adverse effect on our results of operations
in future years. Generally, under current law, federal net operating losses generated after December 31,
2017 are not subject to expiration and may not be carried back to prior taxable years. However, the
Coronavirus Aid, Relief, and Economic Security Act, or CARES Act, suspended the 80% taxable income
limitation for net operating losses generated in 2018, 2019, and 2020 to the extent these losses are exhausted
during the special five-year carryback period or during the 2018, 2019 or 2020 tax years. Additionally, as
noted above, for taxable years beginning after December 31, 2020, the CARES Act provisions no longer apply
and the deductibility of such federal net operating losses is limited to 80% of our taxable income in any
future taxable year.
Unfavorable global economic conditions could adversely affect our business, financial condition or results of
operations.
Our results of operations could be adversely affected by general conditions in the global economy and
in the global financial markets. Portions of our future clinical trials may be conducted outside of the United
States and unfavorable economic conditions resulting in the weakening of the U.S. dollar would make
those clinical trials more costly to operate. In addition, regarding the current Russia-Ukraine and Israel-
Hamas conflicts, while we do not have any clinical trial sites or operations in the currently affected regions,
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if the current conflict expands further into the region or continues, resulting heightened economic sanctions
from the United States and the international community, in addition to environmental regulations, could
limit our ability to procure or use certain materials or manufacturing slots for the products needed for our
clinical trials, which could lead to delays in these trials. Furthermore, the most recent global financial crisis
caused extreme volatility and disruptions in the capital and credit markets, and we have observed increased
economic uncertainty in the United States and abroad.
A severe or prolonged economic downturn (including inflation or uncertainty caused by political
violence and chaos) could result in a variety of risks to our business, including a reduced ability to raise
additional capital when needed on acceptable terms, if at all. A weak or declining economy or international
trade disputes could also strain our suppliers, some of which are located outside of the United States, possibly
resulting in supply disruption, including lack of renewals. Any of the foregoing could harm our business
and we cannot anticipate all of the ways in which the current economic climate and financial market conditions
could adversely impact our business.
Increasing scrutiny and changing expectations from governments with respect to Environmental, Social and
Governance, or ESG, policies and practices may cause us to incur additional costs or expose us to additional risks.
There has been increasing public focus and scrutiny from investors and governmental and
nongovernmental organizations on corporate ESG practices. Our ESG practices may not meet the standards
of all of our stockholders and advocacy groups may campaign for further changes. A failure, or perceived
failure, to respond to related expectations could cause harm to our business and reputation and have a
negative impact on the market price of our securities. New governmental regulations could result in new
regulations and new or more stringent forms of ESG oversight and disclosures which may lead to increased
expenditures for sustainability initiatives.
Risks related to a company’s financial position and need for additional capital
The amount of our future losses is uncertain and our quarterly and annual operating results may fluctuate
significantly or may fall below the expectations of investors or securities analysts, each of which may cause our
stock price to fluctuate or decline.
Our quarterly and annual operating results may fluctuate significantly in the future due to a variety of
factors, many of which are outside of our control and may be difficult to predict, including the following:
• the timing and success or failure of clinical trials for our product candidates or competing product
candidates, or any other change in the competitive landscape of our industry, including consolidation
among our competitors or partners;
• our ability to successfully recruit and retain subjects for clinical trials, and any delays caused by
difficulties in such efforts;
• our ability to obtain marketing approval for our product candidates, and the timing and scope of
any such approvals we may receive;
• the timing and cost of, and level of investment in, research and development activities relating to our
product candidates, which may change from time to time;
• the cost of manufacturing our product candidates, which may vary depending on the quantity of
production and the terms of our agreements with manufacturers;
• our ability to attract, hire and retain qualified personnel;
• expenditures that we will or may incur to develop additional product candidates;
• the level of demand for our product candidates should they receive approval, which may vary
significantly;
• the timing and level of investment in commercialization efforts to support product candidates, both
before and after regulatory approval is obtained;
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• the risk/benefit profile, cost and reimbursement policies with respect to our product candidates if
approved, and existing and potential future therapeutics that compete with our product candidates;
and
• future accounting pronouncements or changes in our accounting policies.
The cumulative effects of these factors could result in large fluctuations and unpredictability in our
quarterly and annual operating results. As a result, comparing our operating results on a period-to-period
basis may not be meaningful. This variability and unpredictability could also result in our failing to meet the
expectations of industry or financial analysts or investors for any period. If our revenue or operating
results fall below the expectations of analysts or investors or below any forecasts we may provide to the
market, or if the forecasts we provide to the market are below the expectations of analysts or investors, the
price of our common stock could decline substantially. Such a stock price decline could occur even when we
have met any previously publicly stated guidance we may provide.
Risks related to common stock
An active trading market for our common stock may not be sustained.
Our shares of common stock began trading on The Nasdaq Global Select Market on September 13,
2019. Given the limited trading history of our common stock, there is a risk that an active trading market
for our shares will not be sustained, which could put downward pressure on the market price of our common
stock and thereby affect the ability of our stockholders to sell their shares. Further, an inactive market may
also impair our ability to raise capital by selling shares of our common stock and may impair our ability to
enter into strategic partnerships or acquire companies or products by using our shares of common stock
as consideration.
The price of our stock is and may continue to be volatile, and stockholders could lose all or part of their
investment.
The trading price of our common stock has been and is likely to continue to be highly volatile and
could be subject to wide fluctuations in response to various factors, some of which are beyond our control
and often unrelated or disproportionate to our financial performance, including limited trading volume. In
addition to the factors discussed in this “Risk factors” section and elsewhere in this report, these factors
include:
• the results of our potentially registrational clinical trial for mirdametinib;
• any delay in our regulatory filings for our product candidates and any adverse development or
perceived adverse development with respect to the applicable regulatory authority’s review of such
filings, including without limitation the FDA’s issuance of a “refusal to file” letter or a request for
additional information;
• adverse results from or delays in future clinical trials;
• our decision to initiate a clinical trial, not to initiate a clinical trial or to terminate an existing clinical
trial;
• adverse regulatory decisions, including failure to receive regulatory approval of our product
candidates or any future product candidate;
• changes in laws or regulations applicable to our product candidates or any future product candidate,
including but not limited to clinical trial requirements for approvals;
• changes in the structure of healthcare payment systems;
• adverse developments concerning our manufacturers;
• our inability to obtain adequate product supply for any approved product or inability to do so at
acceptable prices;
• our inability to establish collaborations or partnerships, if needed;
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• our failure to commercialize our product candidates, if approved;
• additions or departures of key medical, scientific or management personnel;
• unanticipated serious safety concerns related to the use of our product candidates;
• introduction of new products or services offered by us or our competitors;
• clinical trial results for other product candidates that could compete with our product candidates;
• announcements of significant acquisitions, strategic partnerships, joint ventures or capital
commitments by us or our competitors;
• our ability to effectively manage our growth;
• actual or anticipated variations in quarterly operating results;
• our cash position;
• our failure to meet the estimates and projections of the investment community or that we may
otherwise provide to the public;
• publication of research reports about us or our industry, or product candidates in particular, or
positive or negative recommendations or withdrawal of research coverage by securities analysts;
• changes in the market valuations of similar companies;
• overall performance of the equity markets;
• sales of our common stock by us or our stockholders in the future;
• trading volume of our common stock;
• changes in accounting practices;
• ineffectiveness of our internal controls;
• disputes or other developments relating to proprietary rights, including patents, litigation matters
and our ability to obtain patent protection for our technologies;
• significant lawsuits, including patent or stockholder litigation;
• general political and economic conditions; and
• other events or factors, many of which are beyond our control.
In addition, the stock market in general, and the market for biopharmaceutical companies in particular,
have experienced extreme price and volume fluctuations resulting from the COVID-19 pandemic and other
macroeconomic factors (including global conflicts and political instability) and have often been unrelated or
disproportionate to the operating performance of these companies. Broad market and industry factors
may negatively affect the market price of our common stock, regardless of our actual operating performance.
If the market price of our common stock does not exceed a stockholder’s purchase price, such stockholder
may not realize any return on their investment in us and may lose some or all of their investment. In the past,
securities class action litigation has often been instituted against companies following periods of volatility
in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial
costs and a diversion of management’s attention and resources, which would harm our business, operating
results or financial condition.
We incur significant costs as a result of operating as a public company, and our management is required to
devote substantial time to new and existing compliance initiatives.
As a public company, we incur significant legal, accounting and other expenses. We are subject to the
reporting requirements of the Exchange Act which require, among other things, that we file, with the SEC,
annual, quarterly and current reports with respect to our business and financial condition. In addition, the
Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC and Nasdaq to implement provisions
of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring
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establishment and maintenance of effective disclosure and financial controls and changes in corporate
governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection
Act, or the Dodd-Frank Act, was enacted. There are significant corporate governance and executive
compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and
regulations in these areas such as “say on pay” and proxy access.
Stockholder activism, the current political environment and the current high level of government
intervention and regulatory reform may lead to substantial new regulations and disclosure obligations,
which may lead to additional compliance costs and impact the manner in which we operate our business in
ways we cannot currently anticipate.
Sales of a substantial number of shares of our common stock by our existing stockholders in the public market
could cause our stock price to fall.
If our existing stockholders sell, or indicate an intention to sell, substantial amounts of our common
stock in the public market, the trading price of our common stock could decline. As of December 31, 2023,
we had 73,486,699 shares of common stock outstanding, of which 106,834 shares are restricted shares
subject to future vesting.
As of December 31, 2023, approximately 36.8% of our shares of common stock are beneficially held
by directors, executive officers and holders of more than 5% of our common stock and will be subject to
certain limitations of Rule 144 under the Securities Act.
In addition, shares of common stock that are either subject to outstanding options or reserved for
future issuance under our existing equity compensation plans will become eligible for sale in the public
market to the extent permitted by the provisions of various vesting schedules and Rule 144 and Rule 701
under the Securities Act. If these additional shares of common stock 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. Additionally, the
number of shares of our common stock reserved for issuance under the 2019 Stock Option and Equity
Incentive Plan will automatically increase on January 1 of each year, with January 1, 2020 having been the
first of such increases and continuing through and including January 1, 2030, by 5% of the total number of
shares of our capital stock outstanding on December 31 of the preceding calendar year, or a lesser number
of shares as determined by our board of directors. Unless our board of directors elects not to increase the
number of shares available for future grant each year, our stockholders may experience additional dilution.
If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our
business, our stock price and trading volume could decline.
The trading market for our common stock depends in part on the research and reports that securities
or industry analysts publish about us or our business. If one or more of the analysts who covers us
downgrades our stock or publishes inaccurate or unfavorable research about our business, our stock price
may decline. If one or more of these analysts ceases coverage of our company or fails to publish reports on
us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to
decline.
If we fail to maintain an effective system of internal control over financial reporting, we may not be able to
accurately report our financial results or prevent fraud. As a result, stockholders could lose confidence in our
financial and other public reporting, which would harm our business and the trading price of our common stock.
Effective internal controls over financial reporting are necessary for us to provide reliable financial
reports and, together with adequate disclosure controls and procedures, are designed to prevent fraud. Any
failure to implement required new or improved controls, or difficulties encountered in their implementation
could cause us to fail to meet our reporting obligations. In addition, any testing by us conducted in connection
with Section 404 of the Sarbanes-Oxley Act, or Section 404, and the related rules and regulations of the
SEC and the Public Company Accounting Oversight Board (United States) or any subsequent testing by our
independent registered public accounting firm, may reveal deficiencies in our internal controls over
financial reporting that are deemed to be material weaknesses or that may require prospective or retroactive
changes to our financial statements or identify other areas for further attention or improvement. Inferior
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internal controls could also cause investors to lose confidence in our reported financial information, which
could have a negative effect on the trading price of our stock.
We will be required to disclose changes made in our internal controls and procedures on a quarterly
basis and our management will be required to assess the effectiveness of these controls annually.
Our independent registered public accounting firm is required to attest to the effectiveness of our
internal controls over financial reporting pursuant to Section 404. An independent assessment of the
effectiveness of our internal controls over financial reporting could detect problems that our management’s
assessment did not, and could lead to additional findings, potentially including material weaknesses. Material
weaknesses in our internal controls over financial reporting could lead to restatements of our financial
statements and require us to incur the expense of remediation.
Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.
We are subject to certain reporting requirements of the Exchange Act. Our disclosure controls and
procedures are designed to reasonably assure that information required to be disclosed by us in reports we
file or submit under the Exchange Act is accumulated and communicated to management, recorded,
processed, summarized and reported within the time periods specified in the rules and forms of the SEC.
We believe that any disclosure controls and procedures or internal controls and procedures, no matter how
well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the
control system are met. These inherent limitations include the realities that judgments in decision-making
can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can
be circumvented by the individual acts of some persons, by collusion of two or more people or by an
unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system,
misstatements or insufficient disclosures due to error or fraud may occur and not be detected.
Item 1B. Unresolved Staff Comments
None.
Item 1C. Cybersecurity
In a highly competitive, regulated industry, where we are responsible for managing and securing
confidential information, such as clinical trial results, clinical subject data, patient support program
information, collaboration data, trade secrets and other confidential, non-public information, such as
company plans and strategies, we recognize the importance of information security practices designed to
protect the confidentiality, integrity, and availability of such information. Accordingly, the foundation of our
cybersecurity program consists of appropriate governance and controls designed to assess, identify, and
manage cyber risks, and is considered to be an important part of the Company’s broader enterprise risk
management program.
Cybersecurity Governance
Responsibility for cybersecurity risk management is driven by Company leadership who are responsible
for communicating the requirements for vigilance and compliance throughout the organization. The
cybersecurity program is led by our Vice President of Information Technology (“VP of IT”), who reports to
the Chief Financial Officer and has over 25 years of experience building, implementing and managing
information systems, including the development and deployment of risk mitigation strategies for such
systems. The VP of IT is a member of and works in conjunction with other leaders of the Company’s Cyber
Governance Committee, which is responsible for oversight of the Company’s cybersecurity program. The
Cyber Governance Committee comprises cross-functional members of management, and in addition to the
VP of IT, includes the Company’s Chief Compliance Officer, Chief of Staff, and Chief Accounting
Officer. Together, these individuals meet periodically to align cybersecurity and privacy strategy with business
needs and risk appetite, monitor the execution of key cybersecurity initiatives, and serve as an escalation
point for any related issues.
Members of the Cyber Governance Committee provide quarterly updates to the Audit Committee of
our Board of Directors, annual updates to the Board of Directors, and regular reports to the Company’s
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executive leadership team about the cyber program, including information about the status of ongoing
efforts to enhance cybersecurity effectiveness. The Board of Directors also receives cybersecurity awareness
training.
Cybersecurity Risk Management and Strategy
Our cybersecurity risk management program is informed by industry standards, intended to address
the fundamental principles of information security. Our program leverages the expertise of third-party
information technology providers and solutions, and includes periodic simulated attacks, penetration testing,
third-party risk evaluations, and threat monitoring to identify, assess, and mitigate cybersecurity risks a
formalized incident response and notification plan that establishes an organizational framework and guidelines
to assist us in identifying, responding to, and recovering from cybersecurity incidents.
The Company performs assessments of certain third-party vendors prior to establishing a business
relationship as part of our efforts to evaluate whether such vendors demonstrate appropriate commitments
related to data security, availability, and confidentiality. This process is designed to be calibrated to the
identified risk level associated with each vendor.
We also educate with our employees to raise awareness of cybersecurity threats and best practices. As
part of our onboarding process, we train all new employees on cybersecurity and maintain an annual
retraining for all employees on cybersecurity standards and best practices, such as how to recognize and
respond to phishing and social engineering schemes, which is supported by periodic phishing testing and
training. We also have additional specific and regular training for our IT professionals.
Item 2. Properties
Our headquarters are located in Stamford, Connecticut, where we have leased approximately 24,000
square feet of office space under a lease that expires in April 2028, with two five-year renewal options or
one ten-year renewal option. Various corporate functions including clinical development operations are based
in Durham, North Carolina, where we have leased approximately 10,350 square feet of office space under
a lease that expires in 2026, with two five-year renewal options. Our discovery lab and translational operations
are based in Research Triangle Park in Durham, North Carolina, where we have leased approximately
16,010 square feet of office space under a lease that expires in 2028, with two five-year renewal options. We
believe that our current and planned facilities are adequate to meet our needs for the foreseeable future, and
that, should it be needed, suitable additional space will be available to accommodate any such expansion
of our operations.
Item 3. Legal Proceedings
We are not currently a party to any material legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
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Recent Sales of Unregistered Securities
None.
Purchase of Equity Securities
None.
Item 6. Reserved
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations
You should read the following discussion and analysis of our financial condition and results of operations
together with the consolidated financial statements and related notes included elsewhere in this Annual Report
on Form 10-K, or Annual Report. Unless the context otherwise requires, all references to “we,” “us,” “our,”
“SpringWorks,” or the “Company” refer to SpringWorks Therapeutics, Inc., together with its subsidiaries.
This discussion and analysis contains forward-looking statements based upon current expectations that involve
risks and uncertainties. We caution you that forward-looking statements are not guarantees of future performance,
and that our actual results of operations, financial condition and liquidity, and the developments in our
business and the industry in which we operate, may differ materially from the results discussed or projected in
the forward-looking statements contained in this Annual Report. We discuss risks and other factors that we
believe could cause or contribute to these potential differences elsewhere in this Annual Report, including under
Item 1A. “Risk Factors” and under “Special Note Regarding Forward-Looking Statements”. In addition,
even if our results of operations, financial condition and liquidity, and the developments in our business and the
industry in which we operate are consistent with the forward-looking statements contained in this Annual
Report, they may not be predictive of results or developments in future periods. We caution readers not to place
undue reliance on any forward-looking statements made by us, which speak only as of the date they are made.
We disclaim any obligation, except as specifically required by law and the rules of the Securities and Exchange
Commission, or SEC, to publicly update or revise any such statements to reflect any change in our expectations
or in events, conditions or circumstances on which any such statements may be based, or that may affect the
likelihood that actual results will differ from those set forth in the forward-looking statements.
Overview
We are a commercial-stage biopharmaceutical company applying a precision medicine approach to
developing and commercializing life-changing medicines for underserved patient populations suffering from
devastating rare diseases and cancer. We have a differentiated portfolio of small molecule targeted oncology
assets, including one approved product and several clinical candidates, and are advancing programs in both
rare tumor types as well as highly prevalent, genetically defined cancers. OGSIVEO™ (nirogacestat) is our
first commercial product. OGSIVEO was approved by the in the United States Food and Drug
Administration, or FDA, on November 27, 2023. OGSIVEO is a novel, oral, selective gamma secretase
inhibitor that is the first and only FDA-approved therapy for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment. Our strategic approach and operational excellence across
research, translational science, and clinical development have enabled us to successfully launch our first
product, rapidly advance additional product candidates into late-stage clinical trials, and enter into multiple
shared-value partnerships with industry leaders to expand our portfolio. From this foundation, we are
continuing to build a differentiated, fully-integrated, commercial biopharmaceutical company intensely
focused on understanding patients and their diseases in order to develop transformative targeted medicines.
As described in Part I, Item 1. “Business,” we currently have several product candidates in clinical
development. Refer to Part I, Item 1. “Business” for a summary of our clinical programs.
On November 27, 2023, the FDA approved OGSIVEO for the treatment of adult patients with
desmoid tumors who require systemic treatment. For the year ended December 31, 2023, the Company
generated $5.4 million in OGSIVEO net sales.
On November 16, 2023, the Company announced positive topline results from the Phase 2b ReNeu
trial of mirdametinib in NF1-PN. The ReNeu trial enrolled 114 patients in two cohorts (pediatric and
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adult) across 50 sites in the United States. The primary endpoint was confirmed objective response rate
(ORR), defined as ≥ 20% reduction in target tumor volume as measured by MRI and assessed by Blinded
Independent Central Review (BICR). As of the data cutoff date of September 20, 2023, 52% (29/56) of
pediatric patients and 41% (24/58) of adult patients had BICR confirmed objective responses within the
24-cycle treatment period (cycle length: 28 days). An additional pediatric patient and two additional adult
patients achieved confirmed objective responses after Cycle 24 in the long-term follow up phase of the trial,
where patients continue to receive mirdametinib treatment. Median best percent change from baseline in
target tumor volume was -42% and -41% in the pediatric and adult cohort, respectively. As of the data cut-off,
the median duration of treatment was 22 months in both the pediatric and adult cohorts. Median duration
of response was not reached in either cohort. Pediatric and adult patients in the ReNeu trial also experienced
statistically significant improvements from baseline in pain, quality of life, and physical function, as
assessed across multiple patient-reported outcome tools. Mirdametinib was generally well tolerated in the
ReNeu trial, with the majority of adverse events (AEs) being Grade 1 or Grade 2. The most frequently
reported AEs were rash, diarrhea, and vomiting in the pediatric cohort and rash, diarrhea, and nausea in the
adult cohort. 25% of pediatric patients and 16% of adult patients experienced a Grade 3 or higher treatment-
related AE. We believe the results from the ReNeu trial demonstrate a compelling clinical profile and
potentially transformative benefit across measures of both safety and efficacy. With these data, we believe
mirdametinib has the potential to be the best-in-class therapy for children and the first approved treatment for
adults with NF1-PN. We plan to submit a New Drug Application, or NDA, for mirdametinib to the FDA
in the first half of 2024. Additional data are expected to be presented at an upcoming medical conference in
the first half of 2024 and to be submitted for publication in a peer-reviewed journal.
On December 8, 2023, the Company completed the sale of 10,905,171 shares of common stock in an
underwritten public offering, including 1,422,413 shares of common stock sold pursuant to the underwriter’s
full exercise of their option to purchase additional shares, at an offering price of $29.00 per share, resulting
in net proceeds to the Company of $299.3 million.
On September 7, 2022, we and certain accredited investors, or the Investors, entered into a securities
purchase agreement pursuant to which we agreed to sell and issue to the Investors in a private placement
transaction, or the Private Placement, an aggregate of 8,650,520 shares of our common stock, par value
$0.0001 per share, at a purchase price of $26.01 per share. Upon closing of the Private Placement, we received
gross proceeds of approximately $225 million, and after deducting commissions and offering costs, net
proceeds were approximately $216.8 million. In connection with the Private Placement, we and the Investors
also entered into a registration rights agreement providing for the registration for resale of the shares of
our common stock. The shares were registered for resale pursuant to our registration statement on Form S-3,
or the Registration Statement, filed with the SEC on October 6, 2020, and the prospectus supplement
relating to the shares, filed with the SEC on September 26, 2022.
On September 6, 2022, we entered into an expanded global, non-exclusive license and collaboration
agreement with GSK, or the GSK License Agreement, for nirogacestat in combination with either
belantamab mafodotin (belamaf), or with any other cytotoxic antibody-drug conjugate targeting B-cell
maturation antigen, or BCMA, derived from belantamab that is controlled by GSK, either alone as a
combination therapy, or together with other pharmaceutical agents. Concurrent with the execution of the
GSK License Agreement, we entered into a stock purchase agreement, or the Stock Purchase Agreement,
with an affiliate of GSK, Glaxo Group Limited, or GGL, under which GGL purchased 2,050,819 shares of
our common stock, par value $0.0001 per share, in a private placement transaction for an aggregate
purchase price of approximately $75.0 million, or $36.57 per share. The shares were sold at a 25% premium
to the volume-weighted average share price of Common Stock for a specified 30-day period prior to
entering into the Stock Purchase Agreement. We are also eligible to receive up to $550.0 million in additional
payments based on reaching certain development and commercial milestones. We retain full commercial
rights to nirogacestat. Additionally, we will continue to supply nirogacestat for future belamaf clinical trials
and will seek to make nirogacestat commercially available in markets where approval has been sought by
GSK for combination with belamaf. GSK will continue to fund all development costs, except for those related
to the supply of nirogacestat and certain expenses related to intellectual property rights.
On February 25, 2021, we entered into a sales agreement, or the Sales Agreement, with Cowen and
Company, LLC, or Cowen, pursuant to which we were able to issue and sell shares of our common stock
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having aggregate offering proceeds of up to $200.0 million, or the Shares, from time to time through Cowen
as our sales agent. In August 2022, we sold 2,247,500 shares of Common Stock under this at-the-market
offering program, or ATM Program, for gross proceeds of $69.7 million, less commissions of $1.9 million
for net proceeds of $67.8 million.
Since our inception in August 2017, we have devoted substantially all of our resources to conducting
research and development activities for our product candidates, executing our business development strategy,
building our intellectual property portfolio, organizing and staffing our company, building commercialization
capabilities, business planning, raising capital and providing selling, general and administrative support
for these activities.
We had cash, cash equivalents and available-for-sale marketable securities of $662.6 million and
$597.0 million as of December 31, 2023 and December 31, 2022, respectively. Since inception, we have
funded our operations primarily with proceeds from the sale of our securities including net proceeds of
$269.5 million from our follow-on financing in October 2020, net proceeds of $67.8 million from the ATM
Program in August 2022, gross proceeds of approximately $75.0 million from the Stock Purchase Agreement
entered into concurrently with the GSK License Agreement in September 2022, net proceeds of
$216.8 million from the Private Placement in September 2022 and net proceeds of $299.3 million from
follow-on financing in December 2023. We believe that our cash, cash equivalents and available-for-sale
marketable securities will be sufficient to fund our operating expenses and capital expenditure requirements
for at least the next 12 months from the date of issuance of this Annual Report.
Since inception, we have incurred significant operating losses. Our net losses were $325.1 million,
$277.4 million, and $173.9 million for the years ended December 31, 2023, December 31, 2022, and
December 31, 2021, respectively. We had an accumulated deficit of $895.0 million and $569.9 million as of
December 31, 2023 and December 31, 2022, respectively. We expect to continue to incur significant expenses
and operating losses for the foreseeable future. In addition, we anticipate that our expenses will increase
significantly in connection with our ongoing activities, as we:
• commercialize OGSIVEO for the treatment of adult desmoid tumor patients who require systemic
treatment in the United States and seek regulatory approval in other jurisdictions;
• advance mirdametinib towards marketing approval for the treatment of adults and children with
NF1-PN;
• advance our development programs for our other product candidates through preclinical and clinical
development and into later-stage clinical development;
• seek marketing approvals for any product candidates that successfully complete clinical trials;
• invest in or in-license other technologies or product candidates for further preclinical and clinical
development;
• hire additional personnel, including clinical, quality control, scientific, medical, business development,
finance and other technical personnel, and continue to build our infrastructure;
• expand our operational, financial and management systems and increase personnel, including
personnel to support our clinical development, manufacturing, business development and
commercialization efforts and our operations as a public company;
• maintain, expand and protect our intellectual property portfolio.
Our license and collaboration agreements
Pfizer license agreements
In August 2017, we entered into a license agreement, or the Nirogacestat License Agreement, with
Pfizer pursuant to which we acquired exclusive worldwide rights to nirogacestat. We subsequently amended
the Nirogacestat License Agreement in July of 2019 with regard to certain provisions relating to intellectual
property. Pursuant to the Nirogacestat License Agreement, as amended, we are required to pay Pfizer
payments of up to an aggregate of $232.5 million upon achievement of certain commercial milestone events.
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One such milestone payment was met upon the first commercial sale of OGSIVEO in December 2023 and a
milestone payment of $11.3 million is due in the second quarter of 2024. We will pay Pfizer tiered royalties
on sales of nirogacestat at percentages ranging from the mid-single digits to the low 20s, which may be subject
to deductions for expiration of valid claims, amounts due under third-party licenses and generic
competition.
In August 2017, we entered into a license agreement, or the Mirdametinib License Agreement, with
Pfizer, collectively with the Nirogacestat License Agreement referred to as the “Pfizer License Agreements”,
pursuant to which we acquired exclusive worldwide rights to mirdametinib. We subsequently amended the
Mirdametinib License Agreement in August of 2019 with regard to certain provisions relating to intellectual
property. Pursuant to the Mirdametinib License Agreement, as amended, we are required to pay Pfizer up
to an aggregate of $229.8 million upon achievement of certain commercial milestone events. We will pay
Pfizer tiered royalties on sales of mirdametinib at percentages ranging from the mid-single digits to the
low 20s, which may be subject to deductions for expiration of valid claims, amounts due under third-party
licenses and generic competition.
TEAD license agreement
In May 2021, we entered into an exclusive worldwide license agreement with Katholieke Universiteit
Leuven, or KU Leuven, and the Flanders Institute for Biotechnology, or VIB, pursuant to which we
in-licensed a portfolio of novel small molecule inhibitors of the TEA Domain, or TEAD, family of
transcription factors, designed for the potential treatment of biomarker-defined solid tumors driven by
aberrant Hippo pathway signaling. Under the terms of the agreement, we made an upfront payment of
$11 million to KU Leuven and VIB. Pursuant to the terms of the agreement, KU Leuven and VIB are also
eligible to receive up to $285 million in development, regulatory and commercial milestones, and tiered single-
digit percentage royalties based on any future net sales of products developed based on the in-licensed
technology.
EGFR license agreement
In October 2021, we entered into an exclusive worldwide license agreement with Dana-Farber and a
sponsored research agreement with Stanford Medicine, or Stanford, for a portfolio of novel small molecule
inhibitors of Epidermal Growth Factor Receptor, or EGFR, designed for the treatment of EGFR-mutant
cancers. Under the terms of the agreement, we made an upfront payment of $0.3 million to Dana-Farber,
which was recorded as research and development expense in the consolidated statement of operations.
Pursuant to the terms of the agreement, Dana-Farber is also eligible to receive up to $2.3 million in
development milestones, up to $39 million in commercial milestones and single-digit percentage royalties
based on any future net sales of products developed based on the in-licensed technology.
Concurrent with the execution of the license agreement with Dana-Farber, we entered a multi-year
sponsored research agreement with Stanford to fund continued research and development in a laboratory at
Stanford Medicine as well as collaborating laboratories at Dana-Farber. The sponsored research agreement
with Stanford is intended to support lead optimization and translational biology efforts as the EGFR inhibitor
portfolio advances towards development candidate nomination. Pursuant to the sponsored research
agreement, we have been granted the option to negotiate for licenses to further intellectual property which
might arise from performance of the sponsored research.
BeiGene clinical collaboration agreement
In August 2018, we entered into a clinical collaboration agreement with BeiGene, Ltd., or BeiGene, to
evaluate the safety, tolerability and preliminary efficacy of combining lifirafenib and mirdametinib in a
Phase 1b clinical trial for patients with advanced or refractory solid tumors. Pursuant to the agreement, each
party is solely responsible for its costs associated with manufacturing and supply of its compound for the
clinical trial. We and BeiGene share equally the other costs associated with the clinical trial.
GSK expanded non-exclusive license and collaboration agreement
In September 2022, we announced an expansion of our ongoing, non-exclusive clinical collaboration
with GSK, which originally commenced in June 2019. The announcement coincided with our entry into the
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GSK License Agreement for the potential continued development and commercialization of nirogacestat in
combination with either belamaf, GSK’s antibody-drug conjugate, or ADC, targeting BCMA or any
other cytotoxic ADC targeting BCMA derived from belantamab that is controlled by GSK, either alone as
a combination therapy, or together with other pharmaceutical agents.
Pursuant to the terms of the GSK License Agreement and concurrent with the execution of such
agreement, we entered into the Stock Purchase Agreement, under which GGL purchased 2,050,819 shares
of our common stock in a private placement transaction for an aggregate purchase price of approximately
$75.0 million, or $36.57 per share. The shares were sold at a 25% premium to the volume-weighted average
share price of our common stock for a specified 30-day period prior to entering into the Stock Purchase
Agreement.
Under the terms of the GSK License Agreement, we are also eligible to receive up to $550.0 million in
additional payments, if certain development and commercial milestones are met. We continue to retain full
commercial rights to nirogacestat. Additionally, SpringWorks will supply nirogacestat for future belamaf
clinical trials and will seek to make nirogacestat commercially available in markets where approval has
been sought by GSK for a combination with belamaf. GSK will continue to fund all development costs,
except for those related to the supply of nirogacestat and certain expenses related to intellectual property
rights.
Other clinical collaboration agreements related to nirogacestat and BCMA-directed therapy combination
development
In addition to the GSK Collaboration Agreement, we have entered into several other clinical trial
collaboration and supply agreements with industry partners to evaluate nirogacestat in combination with
BCMA-directed therapies of various modalities, including CAR T-cell therapies, bispecific antibodies and
monoclonal antibodies, in patients with relapsed or refractory multiple myeloma.
Each partner is responsible for administering the clinical trial to evaluate its respective BCMA-directed
therapy in combination with nirogacestat and is responsible for all costs associated with the direct conduct
of the clinical trial, other than the manufacture and supply of nirogacestat and certain expenses related to
intellectual property rights. Each collaboration is managed by a joint committee by us and the respective
partners.
Unless earlier terminated, each collaboration agreement will expire upon completion of the analyses
contemplated by the clinical trial. Either we or the respective party may terminate the collaboration agreement
for other reasons specified within the collaboration agreement.
Jazz Pharmaceuticals asset purchase and exclusive license agreement
In October 2020, we and Jazz announced the Jazz Agreement, pursuant to which Jazz acquired our
fatty acid amide hydrolase, or FAAH, inhibitor program including PF-04457845. Jazz made an upfront
payment of $35 million to us with potential future payments of up to $375 million based upon the achievement
of certain clinical development, regulatory, and commercial milestones. In addition, Jazz is obligated to
pay us sales-based royalties on future net sales of PF-04457845.
Pursuant to the development plan under the Jazz Agreement, Jazz initially studied PF-04457845, now
known as JZP150, as a treatment for post-traumatic stress disorder, or PTSD. On December 21, 2023, Jazz
announced topline results from its Phase 2 trial of JZP150 in PTSD. The trial did not meet its primary or
secondary endpoints. Jazz disclosed plans to further evaluate the data, but does not anticipate moving
forward with additional JZP150 development in PTSD.
See “Business-License and collaboration agreements” for more information on our license and
collaboration agreements.
Components of our results of operations
Revenue
In November 2023, the FDA approved OGSIVEO for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment. In December 2023, we began to generate revenue from
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sales of OGSIVEO in the United States. We record product revenue net of estimated discounts, chargebacks,
rebates, product returns, and other gross-to-net revenue deductions.
Cost of Product Revenue
Our cost of product revenue includes the cost of goods sold, amortization expense for commercial
milestones and royalty expense. Our cost of goods sold consists of raw materials, third-party manufacturing
costs to manufacture the raw materials into finished product, freight and other costs associated with sales
of commercial products.
Research and development expenses
Our research and development expenses consist of expenses incurred in connection with the development
of our product candidates. These expenses include:
• employee-related expenses, which include salaries, benefits and equity-based compensation for our
research and development personnel;
• fees paid to consultants for services directly related to our research and development programs;
• expenses incurred under agreements with third-party contract research organizations, investigative
clinical trial sites, academic institutions and consultants that conduct research and development
activities on our behalf or in collaboration with us;
• costs associated with discovery biology and medicinal chemistry efforts and with preclinical and
clinical trials;
• costs associated with the manufacture of drug substance and finished drug product for preclinical
testing and clinical trials;
• costs associated with technology and intellectual property licenses; and
• an allocated portion of facilities and facility-related costs, which include expenses for rent and other
facility-related costs and other supplies.
External costs for research and development expenses are tracked on a program-by-program basis.
Expenditures for clinical development, including upfront licensing fees and milestone payments associated
with our product candidates, are charged to research and development expense as incurred. These expenses
consist of expenses incurred in performing development activities, including salaries and benefits, materials
and supplies, preclinical expenses, clinical trial and related clinical manufacturing expenses, depreciation of
equipment, contract services and other outside expenses. Costs for certain development activities, such as
manufacturing and clinical trials, are recognized based on an evaluation of the progress to completion of
specific tasks using either time-based measures or data such as information provided to us by our vendors on
actual activities completed or costs incurred.
We expect our research and development expenses to increase for the foreseeable future as we continue
to invest in activities related to developing our product candidates and our preclinical programs, and as certain
product candidates advance into later stages of development, including nirogacestat, which is being
studied in ovarian granulosa cell tumors, and mirdametinib with the ReNeu trial. The process of conducting
the necessary clinical trials to obtain regulatory approval is costly and time-consuming, and the successful
development of our product candidates is highly uncertain. As a result, we are unable to determine the
duration and completion costs of our research and development projects or when and to what extent we will
generate revenue from the commercialization and sale of any of our product candidates.
Selling, general and administrative expenses
Selling, general and administrative expenses consist primarily of salaries and related costs, including
equity-based compensation, for personnel in executive, finance, corporate, commercial, business development
and administrative functions. Selling, general and administrative expenses also include consulting services,
legal fees relating to patent and corporate matters; professional fees for accounting, auditing and tax services;
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insurance costs; administrative travel expenses; and facility-related expenses, which include direct
depreciation costs and allocated expenses for rent and maintenance of facilities and other operating costs.
We anticipate that our selling, general and administrative expenses will increase in the future as we
increase our headcount to expand operations to support the organization, including commercialization
efforts.
Interest and other income
Interest and other income consists primarily of interest income. Interest income consists of interest
earned on our cash, cash equivalents and available-for-sale marketable securities.
Equity method investment loss
The equity method investment loss represents our share of the losses from the MapKure investment,
which is accounted for using the equity method of accounting.
Income taxes
Income taxes are accounted for using the asset-and-liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period
that includes the enactment date. Changes in deferred tax assets and liabilities are recorded in the provision
for income taxes.
We recognize deferred tax assets to the extent that we believe that these assets are more likely than not
to be realized. In making such a determination, management considers all available positive and negative
evidence, including future reversals of existing taxable temporary differences, projected future taxable income,
tax-planning strategies and results of recent operations. Valuation allowances are provided, if based upon
the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not
be realized. If management determines that we would be able to realize our deferred tax assets in the
future in excess of our net recorded amount, management would make an adjustment to the deferred tax
asset valuation allowance, which would reduce the provision for income taxes.
As of December 31, 2023, we have federal, state and city net operating loss carryforwards of
$472.1 million, $365.5 million and $3.7 million, respectively, which are available to reduce future taxable
income. Federal net operating loss carryforwards generated 2018 through 2023 of $467.8 million, will be
available to offset 80% of taxable income for an indefinite period of time, until fully utilized. Federal net
operating loss carryforwards of $4.3 million reported in 2017, and the state and city net operating loss
carryforwards expire at various dates through 2037. We also have federal tax credits of $33.5 million,
which may be used to offset future tax liabilities. These tax credit carryforwards will expire at various dates
beginning in 2038.
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Results of operations
Comparison of the Years Ended December 31, 2023 and December 31, 2022
The following table summarizes our results of operations for the years ended December 31, 2023 and
December 31, 2022.
(in thousands)
Revenue:
Twelve Months Ended
December 31,
2023
2022
$ Change
% Change
Product revenue, net
. . . . . . . . . . . . . . . . . . .
$
5,447
$
— $ 5,447
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
5,447
Operating expenses:
Cost of product revenue . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . .
422
150,487
197,551
348,460
—
—
146,122
134,552
280,674
5,447
422
4,365
62,999
67,786
Loss from operations . . . . . . . . . . . . . . . . . . . . .
(343,013)
(280,674)
(62,339)
Interest and other income:
Interest and other income, net . . . . . . . . . . . . .
Total interest and other income . . . . . . . . . . . . . .
22,947
22,947
6,147
6,147
16,800
16,800
Equity method investment loss . . . . . . . . . . . . . .
(5,038)
(2,890)
(2,148)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(325,104) $(277,417) $(47,687)
—%
—
—%
3%
47%
24%
22%
273%
273%
74%
17%
Revenue
In November 2023, the FDA approved OGSIVEO for the treatment of adult patients with progressing
desmoid tumors who require systemic treatment. In December 2023, we began to generate product revenue
from sales of OGSIVEO in the United States. We record product revenue net of estimated discounts,
chargebacks, rebates, product returns, and other gross-to-net revenue deductions.
Cost of Product Revenue
Our cost of product revenue includes the cost of goods sold, amortization expense for commercial
milestones and royalties associated with sales of OGSIVEO in the United States.
Research and development expenses
Research and development expense was relatively unchanged, with $150.5 million for the year ended
December 31, 2023 as compared to $146.1 million for the year ended December 31, 2022.
Our research and development expenses are summarized in the table below:
(in thousands)
Twelve Months Ended
December 31,
2023
2022
$ Change
Personnel-related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 82,722
$ 70,876
$11,846
Licensing, trial and drug manufacturing . . . . . . . . . . . . . . . . .
Facility-related and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
57,883
9,882
66,447
(8,564)
8,799
1,083
Total research and development expenses . . . . . . . . . . . . . .
$150,487
$146,122
$ 4,365
The increase in research and development expense was primarily attributable to an increase of
$11.8 million in internal costs driven by the growth in employee costs associated with increases in the
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number of personnel, including an increase in equity-based compensation expense, partially offset by a
decrease of $7.5 million in external costs related to drug manufacturing, clinical trials and other research.
We track research and development expenses on a program-by-program basis to the extent such spend
is attributable to a specific program. Our research and development expenses by program for the periods
presented were as follows:
(in thousands)
Program specific costs:
Twelve Months Ended
December 31,
2023
2022
$ Change
Nirogacestat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 34,812
$ 48,944
$(14,132)
Mirdametinib . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total program specific costs . . . . . . . . . . . . . . . . . . . . . . . . .
Non-program specific costs . . . . . . . . . . . . . . . . . . . . . . . . .
31,735
7,254
73,801
76,686
23,644
10,603
83,191
62,931
8,091
(3,349)
(9,390)
13,755
Total research and development expenses
. . . . . . . . . . . . . . .
$150,487
$146,122
$ 4,365
Selling, general and administrative expenses
Selling, general and administrative expenses were $197.6 million and $134.6 million for the years ended
December 31, 2023 and December 31, 2022, respectively, as follows:
(in thousands)
Twelve Months Ended
December 31,
2023
2022
$ Change
Personnel-related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$120,456
$ 81,441
$39,015
Professional and consulting fees
. . . . . . . . . . . . . . . . . . . . . .
Facility-related and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
64,137
12,958
43,996
20,141
9,115
3,843
Total selling, general and administrative expenses . . . . . . . . .
$197,551
$134,552
$62,999
The increase in selling, general and administrative expense was largely attributable to commercial
readiness activities to support the U.S. launch of OGSIVEO. The increase in selling, general and
administrative expense included a $39.0 million increase in internal costs and a $24.0 million increase in
consulting and professional services. The increase in internal costs was attributable to the growth in employee
costs associated with increases in the number of personnel, including an increase in equity-based
compensation expense, driven by the growth of our commercial organization, which included hiring our
sales force, as well as establishing certain sales support, marketing, and commercialization functions. The
increase in consulting and professional services was also primarily attributable to commercial readiness
activities as we expand the capabilities of the organization.
Other income
The increase in other income was driven by an increase in interest income, net, during the year ended
December 31, 2023 as compared to the year ended December 31, 2022. This increase was attributable to
higher market yield.
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Comparison of the Years Ended December 31, 2022 and December 31, 2021
The following table summarizes our results of operations for the years ended December 31, 2022 and
December 31, 2021.
(in thousands)
Operating expenses:
Twelve Months Ended
December 31,
2022
2021
$ Change
% Change
Research and development . . . . . . . . . . . . . .
$146,122
$ 101,676
$ 44,446
Selling, general and administrative . . . . . . . . .
Total operating expenses
. . . . . . . . . . . . . . . . .
134,552
280,674
71,792
62,760
173,468
107,206
Loss from operations . . . . . . . . . . . . . . . . . . . .
(280,674)
(173,468)
(107,206)
Interest and other income:
Interest and other income, net . . . . . . . . . . . .
Total interest and other income . . . . . . . . . . . . .
6,147
6,147
546
546
5,601
5,601
Equity method investment loss . . . . . . . . . . . . .
(2,890)
(988)
(1,902)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(277,417) $(173,910) $(103,507)
44%
87%
62%
62%
1026%
1026%
193%
60%
Research and development expenses
Research and development expense increased by $44.4 million to $146.1 million for the year ended
December 31, 2022 from $101.7 million for the year ended December 31, 2021, an increase of 44%.
Our research and development expenses are summarized in the table below:
(in thousands)
Twelve Months Ended
December 31,
2022
2021
$ Change
Personnel-related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 70,876
$ 39,102
$31,774
Trial and drug manufacturing . . . . . . . . . . . . . . . . . . . . . . . .
Facility-related and other . . . . . . . . . . . . . . . . . . . . . . . . . . .
66,447
8,799
57,181
5,393
9,266
3,406
Total research and development expenses . . . . . . . . . . . . . .
$146,122
$101,676
$44,446
The increase in research and development expense was primarily attributable to a $31.8 million
increase in internal costs driven by the growth in employee costs associated with increases in the number of
personnel, including an increase in equity-based compensation expense, and an increase of $22.6 million in
external costs related to drug manufacturing, clinical trial and other research, partially offset by an
$11.0 million decrease in licensing costs related to the nonrefundable upfront payment to KU Leuven and
VIB for the in-licensing of the TEAD inhibitor program in May 2021.
111
We track research and development expenses on a program-by-program basis to the extent such spend
is attributable to a specific program. Our research and development expenses by program for the periods
presented were as follows:
(in thousands)
Program specific costs:
Twelve Months Ended
December 31,
2022
2021
$ Change
Nirogacestat . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 48,944
$ 29,101
$ 19,843
Mirdametinib . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
23,644
Upfront Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total program specific costs . . . . . . . . . . . . . . . . . . . . . . . . .
Non-program specific costs . . . . . . . . . . . . . . . . . . . . . . . . .
—
10,603
83,191
62,931
17,454
11,250
2,319
60,124
41,552
6,190
(11,250)
8,284
23,067
21,379
Total research and development expenses
. . . . . . . . . . . . . . .
$146,122
$101,676
$ 44,446
Selling, general and administrative expenses
Selling, general and administrative expenses were $134.6 million and $71.8 million for the years ended
December 31, 2022 and December 31, 2021, respectively, as follows:
(in thousands)
Twelve Months Ended
December 31,
2022
2021
$ Change
Personnel-related . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 81,441
$44,861
$36,580
Professional and consulting fees . . . . . . . . . . . . . . . . . . . . . . .
43,996
20,923
23,073
Facility-related and other . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,115
6,008
3,107
Total selling, general and administrative expenses . . . . . . . . . .
$134,552
$71,792
$62,760
The increase in selling, general and administrative expense was primarily attributable to a $36.6 million
increase in internal costs driven by the growth in employee costs associated with increases in the number of
personnel, including an increase in equity-based compensation expense as we continue to expand our
operations to support the organization, and a $23.1 million increase in information technology costs and
consulting and professional services, including legal, regulatory and compliance, as we continue to build new
capabilities, including commercial.
Other income
The increase in other income was driven by an increase in interest income, net, during the year ended
December 31, 2022 as compared to the year ended December 31, 2021. This increase was attributable to a
significant increase in interest rates, which drove a higher return on cash, cash equivalents and marketable
securities for the full year ended December 31, 2022.
Liquidity and capital resources
Sources of Liquidity
Since our inception, we have funded our operations primarily with proceeds from the sale of our
securities including net proceeds of $67.8 million from the ATM program in August 2022, gross proceeds of
approximately $75.0 million from the Stock Purchase Agreement entered into concurrently with the GSK
License Agreement in September 2022, net proceeds of $216.8 million from the Private Placement in
September 2022 and net proceeds of $299.3 million from the follow-on financing in December 2023. In
November 2023, the FDA approved OGSIVEO for the treatment of adult patients with progressing desmoid
tumors who require systemic treatment. In December 2023, we began to generate product revenue from
sales of OGSIVEO in the United States.
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We have incurred operating losses and experienced negative operating cash flows since our inception
and anticipate that we will continue to incur losses for at least the foreseeable future. Our net loss was
$325.1 million, $277.4 million and $173.9 million for the years ended December 31, 2023, December 31,
2022 and December 31, 2021, respectively. We had an accumulated deficit of $895.0 million and $569.9 million
at December 31, 2023 and December 31, 2022, respectively.
Funding requirements
Our primary use of cash is to fund operating expenses, including our research and development
programs, as well as our commercialization activities and corporate operations. Cash used to fund operating
expenses is impacted by the timing of when we pay these expenses, as reflected in the change in our
outstanding accounts payable, accrued expenses and prepaid expenses.
We believe that our cash, cash equivalents and marketable securities balance as of December 31, 2023,
will be sufficient to fund our operating expenses and capital expenditure requirements for at least the next
12 months from the date of issuance of this Annual Report. We have based this estimate on assumptions that
may prove to be wrong, and we could utilize our available capital resources sooner than we currently
expect. Our marketable securities consist of high-quality, highly liquid available-for-sale debt securities
including corporate debt securities, U.S. government securities, non-U.S. government securities, and
commercial paper.
Our future funding requirements will depend on many factors, including the following:
• the initiation, progress, timing, costs and results of preclinical studies and clinical trials for our
product candidates;
• the cost of establishing sales, marketing and distribution capabilities for any product candidates for
which we may receive regulatory approval in regions where we choose to commercialize our products
on our own;
• the degree of commercial success achieved following the successful completion of development and
regulatory approval activities for a product candidate.
• the clinical development plans we establish for our product candidates;
• the number and characteristics of product candidates that we develop;
• the outcome, timing and cost of meeting regulatory requirements established by the FDA, the EMA
and other comparable foreign regulatory authorities;
• the terms of our existing and any future license or collaboration agreements we may choose to enter
into, including the amount of upfront, milestone and royalty obligations;
• the other costs associated with in-licensing new technologies, such as any increased costs of research
and development and personnel;
• the cost of filing, prosecuting, defending and enforcing our patent claims and other intellectual
property rights;
• the cost of defending intellectual property disputes, including patent infringement actions brought
by third parties against us or our product candidates;
• the effect of competing technological and market developments; and
• the cost and timing of completion of commercial-scale outsourced manufacturing activities;
We may need additional funds to meet operational needs and capital requirements for clinical trials,
other research and development expenditures, commercial activities and business development efforts.
Because of the numerous risks and uncertainties associated with the development and commercialization of
our product candidates, we are unable to estimate the amounts of increased capital outlays and operating
expenditures associated with our current and anticipated clinical studies.
Until such time, if ever, as we can generate substantial product revenue, we expect to finance our
operations through a combination of equity offerings, debt financings, collaborations, strategic alliances
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and marketing, distribution or licensing arrangements. To the extent that we raise additional capital through
the sale of equity or convertible debt securities, current ownership interests will be diluted, and the terms
of these securities may include liquidation or other preferences that adversely affect rights of common
stockholders. 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 acquisitions or 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 have to relinquish valuable rights to our technologies, future revenue streams, research programs or
product candidates, or grant licenses on terms that may not be favorable to us. If we are unable to raise
additional funds through equity or debt financings or other arrangements when needed, we may be required
to delay, limit, reduce or terminate our research, product development or future commercialization efforts,
or grant rights to develop and market product candidates that we would otherwise prefer to develop and
market ourselves.
Cash flows
The following table summarizes our sources and uses of cash for each of the periods presented:
(in thousands)
Twelve Months Ended December 31,
2023
2022
2021
Net cash used in operating activities . . . . . . . . . . . . . . . . .
$(222,795) $(161,563) $(127,877)
Net cash provided by (used in) investing activities . . . . . . . .
34,754
(215,597)
Net cash provided by financing activities . . . . . . . . . . . . . .
296,639
340,702
83,592
1,157
Net increase (decrease) in cash and cash equivalents . . . . . .
$108,598
$ (36,458) $ (43,128)
Cash flows used in operating activities
Net cash used in operating activities was $222.8 million, $161.6 million, and $127.9 million for
the years ended December 31, 2023, December 31, 2022, and December 31, 2021, respectively.
Net cash used in operating activities for the year ended December 31, 2023, was primarily due to our
net loss for the year of $325.1 million, and a net decrease from changes in operating assets and liabilities of
$0.6 million, partially offset by equity-based compensation expense of $94.5 million, equity investment loss of
$5.0 million, and non-cash operating lease and depreciation and amortization expense of $3.3 million. The
change in our net operating assets and liabilities was primarily due to a net decrease of $6.0 million in prepaid
expenses and other non-current assets, $5.9 million in accounts receivable, $3.1 million in inventory,
$1.3 million in lease liability driven by cash payments for operating leases and $0.2 million in accounts
payable, partially offset by a $15.9 million increase in accrued expenses.
Net cash used in operating activities for the year ended December 31, 2022, was primarily due to our
net loss for the year of $277.4 million, adjusted by non-cash charges of $77.8 million and a net change of
$38.1 million in our net operating assets and liabilities. The non-cash charges primarily consisted of
$73.0 million for equity-based compensation expense, $1.1 million for non-cash operating lease expense
amortization and $2.9 million for the equity investment loss associated with our investment in MapKure.
The change in our net operating assets and liabilities was primarily due to a net increase of $17.5 million in
accounts payable and accrued expenses, $19.5 million in deferred revenue, $1.9 million in prepaid expenses
and other non-current assets, partially offset by a $0.9 million decrease in lease liability, driven by cash
payments for operating leases.
Net cash used in operating activities for the year ended December 31, 2021, was primarily due to our
net loss for the year of $173.9 million, adjusted by non-cash charges of $40.9 million and a net change of
$5.1 million in our net operating assets and liabilities. The non-cash charges primarily consisted of
$38.4 million for equity-based compensation expense, $1.0 million for non-cash operating lease expense
amortization and $1.0 million for the equity investment loss associated with our investment in MapKure.
The change in our net operating assets and liabilities was primarily due to a net increase of $12.0 million in
accounts payable and accrued expenses, partially offset by a $5.3 million decrease in prepaid expenses and
other non-current assets, and a $1.4 million decrease in lease liability, driven by cash payments for operating
leases.
114
Cash flows from investing activities
Net cash provided by investing activities of $34.8 million for the year ended December 31, 2023 was
driven by the sale and maturities of available-for-sale debt securities of $620.7 million, partially offset by
purchases of available-for-sale debt securities of $575.7 million, capital expenditures of $7.4 million and our
investment in MapKure of $2.8 million. Net cash used in investing activities of $215.6 million for the year
ended December 31, 2022 was driven by the purchases of available-for-sale debt securities of $481.1 million,
capital expenditures of $10.2 million, our June 2022 investment in MapKure of $4.2 million, offset by the
proceeds from the sale and maturity of available-for-sale debt securities of $279.8 million. Net cash provided
by investing activities was $83.6 million for the year ended December 31, 2021, driven by net sales of available-
for-sale marketable securities of $85.6 million.
Cash flows provided by financing activities
Net provided by financing activities of $296.6 million for the year ended December 31, 2023 was driven
by net proceeds from the issuance of common stock of $299.3 million, partially offset by stock repurchased
to satisfy employee tax withholding obligations on restricted stock releases of $2.8 million. Net cash
provided by financing activities was $340.7 million for the year ended December 31, 2022 was driven by net
proceeds from the issuance of common stock of $340.1 million. Net cash provided by financing activities
was $1.2 million for the year ended December 31, 2021, as a result of proceeds from stock option exercises.
Contractual obligations and other commitments
We enter into contracts in the normal course of business for clinical trials, preclinical studies,
manufacturing and other services and products for operating purposes. These contracts generally provide
for termination following a certain period after notice and therefore we believe that our non-cancelable
obligations under these agreements are not material.
We have not recorded any reserves for uncertain tax positions as of December 31, 2023.
Critical accounting policies and estimates
This management’s discussion and analysis of our financial condition and results of operations is
based on our consolidated financial statements, which have been prepared in accordance with accounting
principles generally accepted in the United States. The preparation of these consolidated financial statements
requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities
and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, as
well as the reported expenses incurred during the reporting periods. Our estimates are based on our
historical experience and on various other factors that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying value of assets and liabilities that
are not readily apparent from other sources. Actual results may differ from these estimates under different
assumptions or conditions.
While our significant accounting policies are described in more detail in Note 3 to our consolidated
financial statements appearing elsewhere in this Annual Report, we believe that the following accounting
policies are those most critical to the judgments and estimates used in the preparation of our consolidated
financial statements.
Revenue
Arrangements Within the Scope of ASC 606, Revenue from Contracts with Customers
We recognize revenue in accordance with ASC 606, which applies to all contracts with customers,
except for contracts that are within the scope of other standards, such as collaboration arrangements and
leases.
Pursuant to ASC 606, we recognize revenue when our customers obtain control of promised goods or
services, in an amount that reflects the consideration which we determine we expect to receive in exchange
for those goods or services. To determine revenue recognition for arrangements that we determine are within
115
the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer;
(ii) identify the performance obligation(s) in the contract; (iii) determine the transaction price; (iv) allocate
the transaction price to the performance obligation(s) in the contract; and (v) recognize revenue when (or as)
we satisfy our performance obligation(s). As part of the accounting for these arrangements, we may be
required to make significant judgments, including identifying performance obligations in the contract,
estimating the amount of variable consideration to include in the transaction price and allocating the
transaction price to each performance obligation.
Once a contract is determined to be within the scope of ASC 606, we assess the goods or services
promised within the contract and determine those that are performance obligations.
We assess whether each promised good or service is distinct for the purpose of identifying the
performance obligations in the contract. This assessment involves subjective determinations and may
require management to make judgments about the individual promised goods or services and whether such
are separable from the other aspects of the contractual relationship. Promised goods and services are
considered distinct provided that: (i) the customer can benefit from the good or service either on its own or
together with other resources that are readily available to the customer (that is, the good or service is capable
of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately
identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct
within the context of the contract). In assessing whether a promised good or service is distinct, we consider
factors such as the research, manufacturing and commercialization capabilities of the customer and the
availability of the associated expertise in the general marketplace. We also consider the intended benefit of
the contract in assessing whether a promised good or service is separately identifiable from other promises in
the contract. If a promised good or service is not distinct, an entity is required to combine that good or
service with other promised goods or services until it identifies a bundle of goods or services that is distinct.
If the consideration promised in a contract includes a variable amount, we estimate the amount of
consideration to which we will be entitled in exchange for transferring the promised goods or services to a
customer. We determine the amount of variable consideration by using the expected value method or the most
likely amount method. We include the unconstrained amount of estimated variable consideration in the
transaction price. The amount included in the transaction price is constrained to the amount for which it is
probable that a significant reversal of cumulative revenue recognized will not occur. At the end of each
subsequent reporting period, we re-evaluate the estimated variable consideration included in the transaction
price 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 in the period of adjustment.
We then recognize as revenue the amount of the transaction price that is allocated to the respective
performance obligation when (or as) each performance obligation is satisfied at a point in time or over time,
and if over time based on the use of an output or input method.
Product revenue, net: Revenues from product sales are recorded at the net sales price, or “transaction
price,” which includes estimates of variable consideration that result from (i) invoice discounts for prompt
payment and specialty distributor and specialty pharmacy service fees, (ii) government and private payer
rebates, chargebacks, discounts and fees, (iii) group purchasing organization (“GPO”) discounts, performance
rebates and administrative fees, (iv) product returns and (v) costs of co-pay assistance programs for
patients. Reserves are established for the estimates of variable consideration based on the amounts we
expect to be earned or to be claimed on the related sales. The reserves are classified as reductions to accounts
receivable, net or accrued expenses and other current liabilities. Where appropriate, we utilize the expected
value method to determine the appropriate amount for estimates of variable consideration based on factors
such as current contractual and statutory requirements, specific known market events and trends, industry
data and forecasted customer buying, payment patterns and our historical experience. The amount of variable
consideration that is included in the transaction price may be constrained and is included in net product
revenues only to the extent that it is probable that a significant reversal in the amount of the cumulative
revenue recognized will not occur in a future period. Actual amounts of consideration ultimately received may
differ from our estimates. If actual results vary from our estimates, we adjust these estimates, which would
affect net product revenue and earnings in the period such variances become known.
116
Licenses of intellectual property: The terms of our license agreements include the license of functional
intellectual property, given the functionality of the intellectual property is not expected to change substantially
as a result of our ongoing activities. For licenses that are bundled with other promises (that is, for licenses
that are not distinct from other promised goods and services in an arrangement), 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.
Up-front Fees:
If a license agreement is determined to be distinct from the other performance
obligations identified in the arrangement, we recognize revenue from the transaction price 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 license is deemed to be the predominant item and if the
combined performance obligation is satisfied over time or at a point in time.
Milestone Payments: At the inception of each arrangement that includes milestone payments
(variable consideration), 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 would not occur, the associated milestone value is included in
the transaction price. Milestone payments such as developmental and regulatory approval milestones, are
generally not considered probable of being achieved until the related activity has been achieved, due to the
uncertain nature of the success of clinical trials and obtaining regulatory approvals, which make it unlikely
that a significant revenue reversal could be deemed not probable, until such time that the related event has
occurred.
Royalties: For arrangements that include sales-based royalties, including commercial milestone
payments based on the level of sales, and the license is deemed to be the predominant item to which the
royalties relate, we recognize revenue at the later of (i) when the related sales occur, or (ii) when the performance
obligation to which some or all the royalty has been allocated has been satisfied (or partially satisfied).
Reimbursement, cost-sharing and profit-sharing payments: Under certain arrangements, we have been
reimbursed for a portion of our research and development expenses or participates in the cost-sharing of
such research and development expenses. Such reimbursements and cost-sharing arrangements have been
reflected as a reduction of research and development expense in our consolidated statements of operations,
as we do not consider performing research and development services for reimbursement to be a part of
our ongoing major or central operations.
Accrued research and development costs
Research and Development expenditures are charged to research and development expense as incurred.
These expenses consist of expenses incurred in performing development activities, including salaries and
benefits, equity-based compensation expense, preclinical expenses, clinical trial and related clinical
manufacturing expenses, contract services and other outside expenses. Expenses incurred for certain research
and development activities, including expenses associated with particular activities performed by contract
research organizations, investigative sites in connection with clinical trials and contract manufacturing
organizations, are recognized based on an evaluation of the progress or completion of specific tasks using
either time-based measures or data such as information provided to us by our vendors on actual costs incurred.
Payments for these activities are based on the terms of the individual arrangements, which may differ from
the pattern of expense recognition. Expenses for research and development activities incurred that have yet to
be invoiced by the vendors that perform the related activities are reflected in the consolidated financial
statements as accrued expenses. Advance payments for goods or services to be received in the future for
research and development activities are recorded as prepaid expenses. The prepaid expense amounts are
expensed as the related goods are delivered or the services are performed.
Recent accounting pronouncements
See Note 3 to our consolidated financial statements “Summary of Significant Accounting Policies —
Recently Issued Accounting Pronouncements” for more information.
117
Item 7A. Quantitative and Qualitative Disclosures About Market Risk
The primary objectives of our investment activities are to ensure liquidity and to preserve capital. We
are exposed to market risks in the ordinary course of our business. These risks include interest rate
sensitivities. We had cash, cash equivalents and marketable securities of $662.6 million and $597.0 million
as of December 31, 2023 and December 31, 2022, respectively, which consisted of bank deposits, highly liquid
money market funds and investments in high-quality, highly liquid available-for-sale debt securities.
Historical fluctuations in interest rates have not been significant for us. We had no outstanding debt as of
December 31, 2023. Due to the short-term maturities of our cash equivalents and the high-quality, highly
liquid nature of our available-for-sale debt marketable securities, an immediate one percentage point change
in interest rates would not have a material effect on the fair market value of our cash equivalents. To
minimize the risk in the future, we intend to maintain our portfolio of cash equivalents and marketable
securities in institutional market funds that are composed of U.S. Treasury and U.S. Treasury-backed
repurchase agreements, short-term U.S. Treasury securities and investments in high-quality, highly liquid
available-for-sale debt securities including corporate debt securities, government-sponsored enterprise
securities and commercial paper. We do not believe that inflation, interest rate changes or exchange rate
fluctuations had a significant impact on our results of operations for any periods presented herein.
We are exposed to market risks in the ordinary course of business. These risks primarily include interest
rate sensitivities.
118
Item 8. Financial Statements and Supplementary Data
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42) . . . . . . . . . . . . . . . . .
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Loss
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statement of Stockholders’ Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
122
123
124
125
126
127
119
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of SpringWorks Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of SpringWorks Therapeutics, Inc.
(“the Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations,
comprehensive loss, stockholders’ equity, and cash flows for each of the three years in the period ended
December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial
position of the Company at December 31, 2023 and 2022, and the results of its operations and its cash flows
for each of the three years in the period ended December 31, 2023, in conformity with U.S. generally
accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31,
2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of
Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February 27,
2024 expressed an unqualified opinion thereon.
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 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. 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 consolidated 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.
120
Description of the Matter
How We Addressed the Matter in Our
Audit
Accrued Clinical Trials
As discussed in Note 3 to the consolidated financial statements,
expenses incurred for certain research and development activities,
including expenses associated with particular activities
performed by contract research organizations and investigative
sites in connection with clinical trials, are recognized based on an
evaluation of the progress or completion of specific tasks using
either time-based measures or data such as information provided
to the Company by its vendors on actual costs incurred.
Payments for these activities are based on the terms of the
individual arrangements, which may differ from the pattern of
costs incurred. Expenses for research and development activities
incurred that have yet to be invoiced by the vendors that perform
the related activities are reflected in the consolidated financial
statements as accrued expenses.
Auditing the Company’s clinical trial accruals is challenging due
to the fact that information necessary to determine the accrual is
accumulated from multiple sources. Additionally, due to the
duration of the clinical trials as well as the timing of invoices
received from third parties, all actual amounts incurred are not
typically known at the time the financial statements are issued.
We obtained an understanding, evaluated the design, and tested
the operating effectiveness of internal controls over the
Company’s accounting for clinical trial expenses, including
controls over the completeness and amount of accrued clinical
trial expenses.
To test the Company’s clinical trial accrual, our audit procedures
included, among others, evaluating the information used by
management to determine the accrual and testing the
completeness and accuracy of the underlying data. To test the
information used, we inspected the Company’s contracts with
third-party service providers and any related amendments,
corroborated the progress of clinical trials with the Company’s
research and development personnel that oversee these activities
and confirmed information received directly with the third
parties, which included the third parties’ indication of costs
incurred to date. We also tested subsequent invoicing received
from third parties to assess the completeness and accuracy of the
recorded accruals.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2018.
Hartford, Connecticut
February 27, 2024
121
SPRINGWORKS THERAPEUTICS, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per-share data)
Assets
Current assets:
December 31,
2023
December 31,
2022
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 176,053
$
67,490
Marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
303,149
524,722
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets
. . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term marketable securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease right-of-use assets
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,930
3,103
12,677
500,912
183,386
17,943
6,144
1,955
613
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,835
—
—
7,548
599,760
4,794
13,571
4,698
4,193
578
2,648
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 725,788
$ 630,242
Liabilities and Stockholders’ equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
7,396
$
8,010
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, current
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue, current . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue, long-term . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65,569
1,061
4,144
78,170
5,996
15,403
99,569
39,242
483
3,314
51,049
4,768
16,233
72,050
Commitments and contingencies
Stockholders’ equity:
Preferred stock, $0.0001 par value, 10,000,000 shares authorized, no shares
issued or outstanding at December 31, 2023 and December 31, 2022.
. . . . . .
Common stock, $0.0001 par value, 150,000,000 shares authorized, 73,620,361
and 62,453,328 shares issued and 73,486,699 and 62,423,129 shares
outstanding at December 31, 2023 and December 31, 2022, respectively.
Additional paid-in capital
Accumulated deficit
Treasury stock, at cost (133,662 and 30,199 shares of common stock at
. . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
7
1,524,196
(895,034)
6
1,130,224
(569,930)
December 31, 2023 and December 31, 2022, respectively).
. . . . . . . . . . . . . .
Accumulated other comprehensive income (loss)
. . . . . . . . . . . . . . . . . . . . . .
(4,141)
1,191
(1,341)
(767)
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
626,219
558,192
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . .
$ 725,788
$ 630,242
See accompanying notes to consolidated financial statements.
122
SPRINGWORKS THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share and per-share data)
2023
2022
2021
Year Ended December 31,
Revenue:
Product revenue, net
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
5,447
$
— $
Total revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5,447
Operating expenses:
Cost of product revenue . . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development . . . . . . . . . . . . . . . . . . . . . . . .
Selling, general and administrative . . . . . . . . . . . . . . . . . . .
Total operating expenses . . . . . . . . . . . . . . . . . . . . . . . .
422
150,487
197,551
348,460
—
—
146,122
134,552
280,674
—
—
—
101,676
71,792
173,468
Loss from operations
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(343,013)
(280,674)
(173,468)
Interest and other income:
Interest and other income, net . . . . . . . . . . . . . . . . . . . . . .
Total interest and other income . . . . . . . . . . . . . . . . . . .
Equity method investment loss . . . . . . . . . . . . . . . . . . . . . . .
22,947
22,947
(5,038)
6,147
6,147
(2,890)
546
546
(988)
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (325,104) $ (277,417) $ (173,910)
Net loss per share, basic and diluted . . . . . . . . . . . . . . . . . . .
$
(5.15) $
(5.21) $
(3.59)
Weighted average common shares outstanding, basic and
diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
63,123,936
53,290,528
48,497,790
See accompanying notes to consolidated financial statements.
123
SPRINGWORKS THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
(in thousands)
Year Ended December 31,
2023
2022
2021
Net loss
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(325,104) $(277,417) $(173,910)
Changes in other comprehensive income (loss):
Unrealized gain (loss) on marketable securities, net . . . . . . . . . . . .
1,958
(455)
Total changes in other comprehensive income (loss) . . . . . . . . . .
$
1,958
$
(455) $
(353)
(353)
Comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$(323,146) $(277,872) $(174,263)
See accompanying notes to consolidated financial statements.
124
SPRINGWORKS THERAPEUTICS, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Year ended December 31, 2021, 2022 and 2023
(in thousands, except share and unit data)
Shares
Amount
Shares
Amount
Common
Treasury
Additional
Paid-In
Capital
Accumulated
Other
Comprehensive
Income (Loss)
Accumulated
Deficit
Total
Balance at December 31, 2020 . . . . . . . . 48,819,591
$ 5
— $ — $ 675,615
$
41
$(118,603) $ 557,058
Equity-based compensation expense . . . .
Issuance of restricted stock awards . . . . .
332,226 —
Forfeitures of restricted stock awards . . .
(55,475) —
Exercise of stock options
. . . . . . . . . . .
151,643 —
Other comprehensive loss, net of tax . . . .
(353)
Net loss . . . . . . . . . . . . . . . . . . . . . . . .
38,444
1,157
38,444
—
—
1,157
(353)
(173,910)
(173,910)
Balance at December 31, 2021 . . . . . . . . 49,247,985
$ 5
— $ — $ 715,216
$ (312)
$(292,513) $ 422,396
Equity-based compensation expense . . . .
Issuance of common stock to GSK . . . .
2,050,819 —
Issuance of common stock in private
placement, net of issuance costs . . . . .
8,650,520
1
Issuance of common stock under
at-the-market offering, net of issuance
costs . . . . . . . . . . . . . . . . . . . . . . . .
2,247,500 —
Issuance of restricted stock awards . . . . .
36,625 —
Forfeitures of restricted stock awards . . .
(27,957) —
Restricted stock units vested . . . . . . . . .
24,369 —
72,965
55,454
216,830
67,782
Exercise of stock options
. . . . . . . . . . .
223,467 —
1,977
Shares of common stock used to satisfy
tax withholding obligations . . . . . . . .
30,199
(1,341)
(1,341)
72,965
55,454
216,831
67,782
—
—
—
1,977
Other comprehensive loss, net of tax . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . .
(455)
(455)
(277,417)
(277,417)
Balance at December 31, 2022 . . . . . . . . 62,453,328
$ 6
30,199 $(1,341) $1,130,224
$ (767)
$(569,930) $ 558,192
Equity-based compensation expense . . . .
Issuance of common stock in
underwritten public offering, net of
issuance cost
. . . . . . . . . . . . . . . . . . 10,905,171
Forfeitures of restricted stock awards . . .
Restricted stock units vested . . . . . . . . .
Exercise of stock options
. . . . . . . . . . .
Shares of common stock used to satisfy
tax withholding obligations . . . . . . . .
Other comprehensive income, net of
tax . . . . . . . . . . . . . . . . . . . . . . . . .
Net loss . . . . . . . . . . . . . . . . . . . . . . . .
1
(21,113) —
238,725 —
44,250 —
94,534
299,299
139
103,463
(2,800)
1,958
94,534
299,300
—
—
139
(2,800)
1,958
(325,104)
(325,104)
Balance at December 31, 2023 . . . . . . . . 73,620,361
$ 7
133,662 $(4,141) $1,524,196
$1,191
$(895,034) $ 626,219
See accompanying notes to consolidated financial statements.
125
SPRINGWORKS THERAPEUTICS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
2023
2022
2021
(in thousands)
Operating activities
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $(325,104) $(277,417) $(173,910)
Adjustments to reconcile net loss to net cash used in operating
activities:
Depreciation and amortization expense . . . . . . . . . . . . . . . . . . . .
Non-cash operating lease expense . . . . . . . . . . . . . . . . . . . . . . . .
Equity-based compensation expense . . . . . . . . . . . . . . . . . . . . . .
Equity method investment loss . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in operating assets and liabilities
1,667
1,653
94,534
5,038
765
1,131
72,965
2,890
490
993
38,444
988
Accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . .
Prepaid expenses and other current assets
Other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lease liability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
—
(4,609)
(707)
2,074
9,912
(1,388)
—
(164)
Net cash used in operating activities . . . . . . . . . . . . . . . . . . . $(222,795) $(161,563) $(127,877)
(5,930)
(3,103)
(5,129)
(838)
(196)
15,906
(1,293)
—
—
—
—
1,861
61
4,168
13,325
(859)
19,547
—
Investing activities
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Purchases of marketable securities . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale and maturity of marketable securities . . . . . . . . . .
(2,016)
—
(305,423)
391,031
Net cash provided by (used in) investing activities . . . . . . . . . . . $ 34,754 $(215,597) $ 83,592
(10,196)
(4,200)
(481,050)
279,849
(7,385)
(2,800)
(575,724)
620,663
Financing activities
Proceeds from issuance of common stock in underwritten public
offering, net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock to GSK . . . . . . . . . . . . . . . .
Proceeds from issuance of common stock in private placement, net of
299,300
—
—
55,454
issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
— 216,830
Proceeds from issuance of common stock under at-the-market offering,
net of issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Treasury stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from stock option exercises . . . . . . . . . . . . . . . . . . . . . . . . .
—
(2,800)
139
67,782
(1,341)
1,977
Net cash provided by financing activities
Net increase (decrease) in cash and cash equivalents . . . . . . . . . .
. . . . . . . . . . . . . . . . . $296,639 $ 340,702 $
108,598
(36,458)
—
—
—
—
—
1,157
1,157
(43,128)
Cash and cash equivalents including restricted cash, beginning of
period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
147,654
Cash and cash equivalents including restricted cash, end of period . . . . . $176,666 $ 68,068 $ 104,526
Supplemental non-cash disclosure
104,526
68,068
Right-of-use assets obtained in exchange for operating lease
obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2,637 $
5,580 $
Milestone payment for first commercial sale of OGSIVEO included in
accrued expenses as of December 31, 2023 . . . . . . . . . . . . . . . . . .
11,250
—
—
—
See accompanying notes to consolidated financial statements.
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SPRINGWORKS THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of Operations
SpringWorks Therapeutics, Inc., or the Company, was formed in Delaware on August 18, 2017.
The Company is a commercial-stage biopharmaceutical company applying a precision medicine
approach to developing and commercializing life-changing medicines for underserved patient populations
suffering from devastating rare diseases and cancer. The Company has a differentiated portfolio of small
molecule targeted oncology assets, including one approved product and several clinical candidates, and is
advancing programs in both rare tumor types as well as highly prevalent, genetically defined
cancers.OGSIVEO™ (nirogacestat) is the Company’s first commercial product. OGSIVEO was approved
by the United States Food and Drug Administration, or FDA, on November 27, 2023 for the treatment of
adult patients with progressing desmoid tumors who require systemic treatment.
Follow-On Offerings
On December 8, 2023, the Company completed the sale of 10,905,171 shares of common stock in an
underwritten public offering, including 1,422,413 shares of common stock sold pursuant to the underwriter’s
full exercise of their option to purchase additional shares, at an offering price of $29.00 per share, resulting
in net proceeds to the Company of $299.3 million.
On October 13, 2020, the Company completed the sale of 5,637,254 shares of common stock in an
underwritten public offering, including 735,294 shares of common stock sold pursuant to the underwriter’s
full exercise of their option to purchase additional shares, at an offering price of $51.00 per share, resulting
in net proceeds to the Company of $269.5 million.
Private Placements
On September 7, 2022, the Company and certain accredited investors, or the Investors, entered into a
securities purchase agreement pursuant to which the Company agreed to sell and issue to the Investors in a
private placement transaction, or the Private Placement, an aggregate of 8,650,520 shares of Common Stock
at a purchase price of $26.01 per share. In connection with the Private Placement, the Company received
gross proceeds of approximately $225 million, and after deducting commissions and offering costs, net
proceeds were approximately $216.8 million. In connection with the Private Placement, the Company and the
Investors also entered into a registration rights agreement, dated September 7, 2022, providing for the
registration for resale of the shares. The shares were registered for resale pursuant to the Registration
Statement and the prospectus supplement relating to the shares filed with the SEC on September 26, 2022.
On September 6, 2022, the Company entered into an expanded global, non-exclusive license and
collaboration agreement with GSK, plc, formerly GlaxoSmithKline plc, or GSK, for nirogacestat in
combination with belantamab mafodotin (belamaf) and, concurrent with the execution of such agreement,
we entered into a stock purchase agreement, or the Stock Purchase Agreement, with an affiliate of GSK,
Glaxo Group Limited, or GGL, under which GGL agreed to purchase from the Company in a private
placement transaction 2,050,819 shares of Common Stock for an aggregate purchase price of approximately
$75.0 million, or $36.57 per share. The shares were sold at a 25% premium to the volume-weighted average
share price of the Company’s Common Stock for a specified 30-day period prior to entering into the Stock
Purchase Agreement.
At-the-Market Offering
In August 2022, the Company sold 2,247,500 shares of Common Stock under an ATM Program,
resulting in gross proceeds of $69.7 million, less commissions and other fees of $1.9 million for net proceeds
of $67.8 million.
2. Risks and Liquidity
The Company has incurred losses and negative operating cash flows since inception and had an
accumulated deficit of $895.0 million and $569.9 million, and working capital of $422.7 million and
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$548.7 million at December 31, 2023 and December 31, 2022, respectively. In November 2023, the FDA
approved OGSIVEO (nirogacestat) for the treatment of adult patients with desmoid tumors. In
December 2023, the Company began to generate revenue from sales of OGSIVEO in the United States, for
which the Company recorded net revenue of $5.4 million in 2023. The Company is subject to those risks
associated with any biopharmaceutical company that has substantial expenditures for development. There
can be no assurance that the Company’s development projects will be successful, that products developed will
obtain necessary regulatory approval, or that any approved product will be commercially viable. In addition,
the Company operates in an environment of rapid technological change and is largely dependent on the
services of its employees, advisors, consultants and vendors.
The Company had cash, cash equivalents and marketable securities of $662.6 million and $597.0 million
as of December 31, 2023 and December 31, 2022, respectively. Based on the Company’s cash, cash equivalents
and marketable securities at December 31, 2023, management estimates that its current liquidity will
enable it to meet operating expenses through at least twelve months after the date that these financial
statements were issued.
3. Summary of Significant Accounting Policies
Basis of Presentation
These consolidated financial statements have been prepared in accordance with accounting principles
generally accepted in the United States, or U.S. GAAP.
Principles of Consolidation
The consolidated financial statements include the accounts of SpringWorks Therapeutics, Inc. and its
subsidiaries, collectively, the Company. All intercompany transactions and balances have been eliminated in
consolidation. Investments in business entities in which the Company lacks control but does have the
ability to exercise significant influence over operating and financial policies are accounted for using the
equity method of accounting.
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make
estimates and assumptions that affect the reported amounts in the financial statements and accompanying
notes. Significant estimates and assumptions reflected in these consolidated financial statements include, but
are not limited to, accrued research and development expenses and the valuation of equity-based
compensation awards. The Company bases its estimates on historical experience, known trends and other
market-specific or relevant factors that it believes to be reasonable under the circumstances. Actual results
may differ from those estimates. On an ongoing basis, management evaluates its estimates, and adjusts those
estimates and assumptions when facts or circumstances change. Changes in estimates are recorded in the
period in which they become known.
Segment Information
Operating segments are defined as components of an entity 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 operating segment.
Cash and Cash Equivalents
The Company considers all highly liquid instruments that have maturities of three months or less when
acquired to be cash equivalents. The Company had cash and cash equivalents as of December 31, 2023 and
December 31, 2022 of $176.1 million and $67.5 million, respectively.
Marketable Securities
Marketable debt securities are reported at fair value with unrealized gains and losses included in
accumulated other comprehensive income. Each reporting period, the Company evaluates whether there are
128
declines in fair value below amortized cost and if these declines are due to credit losses, as well as the
Company’s ability and intent to hold the investment until a forecasted recovery occurs. If both criteria
regarding the intent or ability to hold are met, any decline in fair value due to credit losses is recorded as an
allowance through other income (expense); limited by the amount that the fair value is less than the
amortized costs basis. If either criterion is not met, any previously recorded allowance for credit losses and
any excess amortized cost basis over fair value is recorded in other income (expense). As of, and for the years
ended December 31, 2023 and December 31, 2022, the Company did not have any allowance for credit
losses or impairments of its marketable securities.
Concentration of Credit Risk
Financial instruments that potentially expose the Company to concentrations of credit risk consist
primarily of cash, cash equivalents and available-for-sale marketable securities. The Company maintains
each of its cash, cash equivalent balances and marketable securities balances with high quality, financial
institutions and the Company’s marketable securities are invested in high-quality, highly liquid debt securities
including corporate debt securities, U.S. government securities and commercial paper.
Accounts Receivable, net
Accounts receivable, net consists of trade receivables which are amounts due from customers related to
product sales. The Company records trade receivables net of chargebacks, invoice discounts, distribution
service fees and any allowances for potential credit losses. An allowance for credit losses is determined based
on the financial condition and creditworthiness of customers and the Company considers economic
factors and events or trends expected to affect future collections experience. Any allowance would reduce
the net receivables to the amount that is expected to be collected. The payment history of the Company’s
customers will be considered in future assessments of collectibility as these patterns are established over a
longer period of time. As of December 31, 2023, the Company determined an allowance for credit losses
was insignificant.
Inventory and Pre-Approval Inventory
The Company began capitalizing inventory for OGSIVEO upon approval by the FDA in November 2023.
OGSIVEO is approved for the treatment of adult patients with desmoid tumors. Prior to regulatory approval,
all direct and indirect manufacturing costs were charged to research and development expense in the
period incurred.
Inventory is comprised of raw materials, work-in-process and finished goods, and includes costs related
to third-party contract manufacturing, packaging, freight-in and overhead. Inventory is stated at the lower
of cost or net realizable value with cost based on the first-in-first-out method.
Property and Equipment
Property and equipment consist of computer equipment, software, furniture and leasehold improvements
and are recorded at cost. Property and equipment are depreciated on a straight-line basis over their estimated
useful lives.
Intangible Asset, net
The Company’s finite-lived intangible asset resulted from the capitalization of a milestone payment
due under a license and collaboration agreement in connection with the first commercial sale of OGSIVEO
in the United States in December 2023. The intangible asset will be amortized on a straight-line basis over
its remaining useful life, which is estimated to be the remaining patent life of OGSIVEO. Amortization
expense is recorded as cost of product revenue in the consolidated statement of operations.
Impairment of Long-Lived Assets
The Company reviews its long-lived assets, including property and equipment and finite-lived intangible
assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an
129
asset may not be recoverable. If such circumstances are determined to exist, an estimate of undiscounted
future cash flows produced by the long-lived asset, including its eventual residual value, is compared to the
carrying value to determine whether impairment exists. In the event that such cash flows are not expected to
be sufficient to recover the carrying amount of the asset, the asset is written-down to its estimated fair
value.
Revenue Recognition
Arrangements Within the Scope of ASC 606, Revenue from Contracts with Customers
The Company recognizes revenue in accordance with ASC 606, which applies to all contracts with
customers, except for contracts that are within the scope of other standards, such as collaboration
arrangements and leases.
Pursuant to ASC 606, the Company recognizes revenue when its customers obtain control of promised
goods or services, in an amount that reflects the consideration which the Company determines it expects to
receive in exchange for those goods or services. To determine revenue recognition for arrangements that the
Company determines are within the scope of ASC 606, the Company performs the following five steps:
(i) identify the contract(s) with a customer; (ii) identify the performance obligation(s) in the contract;
(iii) determine the transaction price; (iv) allocate the transaction price to the performance obligation(s) in the
contract; and (v) recognize revenue when (or as) the Company satisfies its performance obligation(s). As
part of the accounting for these arrangements, the Company may be required to make significant judgments,
including identifying performance obligations in the contract, estimating the amount of variable
consideration to include in the transaction price and allocating the transaction price to each performance
obligation.
Once a contract is determined to be within the scope of ASC 606, the Company assesses the goods or
services promised within the contract and determines those that are performance obligations.
The Company assesses whether each promised good or service is distinct for the purpose of identifying
the performance obligations in the contract. This assessment involves subjective determinations and may
require management to make judgments about the individual promised goods or services and whether such
are separable from the other aspects of the contractual relationship. Promised goods and services are
considered distinct provided that: (i) the customer can benefit from the good or service either on its own or
together with other resources that are readily available to the customer (that is, the good or service is capable
of being distinct) and (ii) the entity’s promise to transfer the good or service to the customer is separately
identifiable from other promises in the contract (that is, the promise to transfer the good or service is distinct
within the context of the contract). In assessing whether a promised good or service is distinct, the Company
considers factors such as the research, manufacturing and commercialization capabilities of the customer
and the availability of the associated expertise in the general marketplace. The Company also considers the
intended benefit of the contract in assessing whether a promised good or service is separately identifiable from
other promises in the contract. If a promised good or service is not distinct, an entity is required to
combine that good or service with other promised goods or services until it identifies a bundle of goods or
services that is distinct.
If the consideration promised in a contract includes a variable amount, the Company estimates the
amount of consideration to which it will be entitled in exchange for transferring the promised goods or
services to a customer. The Company determines the amount of variable consideration by using the expected
value method or the most likely amount method. The Company includes the unconstrained amount of
estimated variable consideration in the transaction price. The amount included in the transaction price is
constrained to the amount for which it is probable that a significant reversal of cumulative revenue recognized
will not occur. At the end of each subsequent reporting period, the Company re-evaluates the estimated
variable consideration included in the transaction price 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 in the period of adjustment.
The Company then recognizes as revenue the amount of the transaction price that is allocated to the
respective performance obligation when (or as) each performance obligation is satisfied at a point in time or
130
over time, and if over time based on the use of an output or input method that most faithfully depicts the
transfer of goods and services to the customer.
Product revenue, net: Revenues from product sales are recorded at the net sales price, or “transaction
price,” which includes estimates of variable consideration that result from (i) invoice discounts for prompt
payment and specialty distributor and specialty pharmacy service fees, (ii) government and other rebates,
chargebacks, discounts and fees, (iii) group purchasing organization (“GPO”) discounts, performance rebates
and administrative fees, (iv) product returns and (v) costs of co-pay assistance programs for patients.
Reserves are established for the estimates of variable consideration based on the amounts the Company
expects to be earned or to be claimed on the related sales. The reserves are classified as reductions to accounts
receivable, net or accrued expenses and other current liabilities. Where appropriate, the Company utilizes
the expected value method to determine the appropriate amount for estimates of variable consideration based
on factors such as current contractual and statutory requirements, specific known market events and
trends, industry data and forecasted customer buying, payment patterns and the Company’s historical
experience. The amount of variable consideration that is included in the transaction price may be constrained
and is included in net product revenues only to the extent that it is probable that a significant reversal in
the amount of the cumulative revenue recognized will not occur in a future period. Actual amounts of
consideration ultimately received may differ from the Company’s estimates. If actual results vary from the
Company’s estimates, these estimates are adjusted, which would affect net product revenue and earnings in the
period such variances become known.
Licenses of intellectual property: The terms of the Company’s license agreements include the license
of functional intellectual property, given the functionality of the intellectual property is not expected to
change substantially as a result of the Company’s ongoing activities. For licenses that are bundled with other
promises (that is, for licenses that are not distinct from other promised goods and services in an
arrangement), 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.
Up-front Fees:
If a license agreement is determined to be distinct from the other performance
obligations identified in the arrangement, the Company recognizes revenues from the transaction price
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 license is deemed to be
the predominant item and if the combined performance obligation is satisfied over time or at a point in time.
Milestone Payments: At the inception of each arrangement that includes milestone payments
(variable consideration), 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 would not occur, the associated milestone value is
included in the transaction price. Milestone payments such as developmental and regulatory approval
milestones, are generally not considered probable of being achieved until the related activity has been
achieved, due to the uncertain nature of the success of clinical trials and obtaining regulatory approvals,
which make it unlikely that a significant revenue reversal could be deemed not probable, until such time that
the related event has occurred.
Royalties: For arrangements that include sales-based royalties, including commercial milestone
payments based on the level of sales, and the license is deemed to be the predominant item to which the
royalties relate, the Company recognizes revenue at the later of (i) when the related sales occur, or (ii) when
the performance obligation to which some or all the royalty has been allocated has been satisfied (or partially
satisfied).
Reimbursement, cost-sharing and profit-sharing payments: Under certain arrangements, the Company
has been reimbursed for a portion of its research and development expenses or participates in the cost-
sharing of such research and development expenses. Such reimbursements and cost-sharing arrangements
have been reflected in research and development expense in the Company’s consolidated statements of
operations, as the Company does not consider performing research and development services for
reimbursement to be a part of its ongoing major or central operations.
131
Cost of Product Revenue
Our cost of product revenue includes the cost of goods sold, amortization expense for commercial
milestones and royalty expense. Our cost of goods sold consists of raw materials, third-party manufacturing
costs to manufacture the raw materials into finished product, freight and other costs associated with sales
of commercial products.
Research and Development
Expenditures for clinical development, including upfront licensing fees and milestone payments
associated with products that have not yet been approved by the U.S. Food and Drug Administration, are
charged to research and development expense as incurred. These expenses consist of expenses incurred in
performing development activities, including salaries and benefits, equity-based compensation expense,
preclinical expenses, clinical trial and related clinical manufacturing expenses, contract services and other
outside expenses. Expenses incurred for certain research and development activities, including expenses
associated with particular activities performed by contract research organizations, investigative sites in
connection with clinical trials and contract manufacturing organizations, are recognized based on an
evaluation of the progress or completion of specific tasks using either time-based measures or data such as
information provided to the Company by its vendors on actual activities completed or costs incurred.
Payments for these activities are based on the terms of the individual arrangements, which may differ from
the pattern of expense recognition. Expenses for research and development activities incurred that have yet to
be invoiced by the vendors that perform the related activities are reflected in the consolidated financial
statements as accrued expenses. Advance payments for goods or services to be received in the future for
research and development activities are deferred and recorded as prepaid expenses. The prepaid amounts
are expensed as the related goods are delivered or the services are performed.
Selling, General and Administrative
Selling, general and administrative expenses consist primarily of salaries and related costs, including
equity-based compensation for personnel in executive, finance, corporate, commercial, business development
and administrative functions. Selling, general and administrative expenses also include consulting services,
legal fees relating to patent and corporate matters; professional fees for accounting, auditing and tax services;
insurance costs; administrative travel expenses; and facility-related expenses, which include direct
depreciation costs and expenses for rent and maintenance of facilities and other operating expenses.
Equity-based compensation expense
Equity-based compensation expense is recognized using the straight-line method, based on the grant
date fair value, over the requisite service period of the award, which is generally the vesting term. The
Company recognizes forfeitures at the time of the actual forfeiture event.
For awards subject to performance conditions, as well as awards containing both market and
performance conditions, the Company recognizes equity award compensation expense using an accelerated
recognition method over the remaining service period when management determines that achievement of the
milestone is probable. Management evaluates when the achievement of a performance-based milestone is
probable based on the expected satisfaction of the performance conditions as of the reporting date.
The grant-date fair value of performance-based awards with market conditions is estimated using a
Monte Carlo simulation method that incorporates the probability of the performance conditions being met
as of the grant date.
For stock options issued, the Company estimates the grant date fair value and the resulting equity-
based compensation expense using the Black-Scholes option-pricing model.
The Black-Scholes option-pricing model requires the use of certain subjective assumptions which
determine the fair value of equity-based awards. Inputs used in the Black-Scholes option-pricing model are:
• Fair value of common stock, which is the trading price of the Company’s common stock on the
grant date of the award.
132
• Expected term — The expected term represents the period that the equity-based awards are expected
to be outstanding. The Company uses the simplified method to calculate the expected term due to
the limited Company-specific historical information available for the Company.
• Expected volatility — The Company lacks sufficient Company-specific historical and implied
volatility information. Therefore, the Company includes the historical volatility of a publicly traded
set of peer companies to determine its expected stock volatility and expects to continue to do so until
it has adequate historical data regarding the volatility of its own traded stock.
• Risk-free interest rate — The risk-free interest rate is based on the U.S. Treasury yield in effect at the
time of grant for zero-coupon U.S. Treasury notes with maturities approximately equal to the
expected term of the awards.
• Expected dividend — The Company has never paid dividends on its common units or stock and has
no plans to pay dividends on its common stock. Therefore, the expected dividend yield is zero.
Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted average number of shares
outstanding for the period. Diluted net loss per share excludes the potential impact of unvested restricted
stock and stock options because their effect would be anti-dilutive due to the Company’s net loss. Since the
Company had a net loss in each of the periods presented, basic and diluted net loss per share are the same.
Income Taxes
Income taxes are accounted for using the asset-and-liability method. Deferred tax assets and liabilities
are recognized for the future tax consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax basis and operating loss and tax
credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized as income in the period
that includes the enactment date. Changes in deferred tax assets and liabilities are recorded in the provision
for income taxes.
The Company recognizes deferred tax assets to the extent that it believes that these assets are more
likely than not to be realized. In making such a determination, management considers all available positive
and negative evidence, including future reversals of existing taxable temporary differences, projected future
taxable income, tax-planning strategies and results of recent operations. Valuation allowances are provided,
if based upon the weight of available evidence, it is more likely than not that some or all of the deferred tax
assets will not be realized. If management determines that the Company would be able to realize its
deferred tax assets in the future in excess of their net recorded amount, management would make an
adjustment to the deferred tax asset valuation allowance, which would reduce the provision for income
taxes.
The Company records uncertain tax positions in accordance with ASC 740 on the basis of a two-step
process in which (1) management determines whether it is more likely than not that the tax positions will be
sustained on the basis of the technical merits of the position and (2) for those tax positions that meet the
more-likely-than-not recognition threshold, management recognizes the largest amount of tax benefit that
is more than 50% likely to be realized upon ultimate settlement with the related tax authority.
The Company provides reserves for potential payments of tax to various tax authorities related to
uncertain tax positions. These reserves are based on a determination of whether and how much of a tax
benefit taken by the Company in its filings or positions is more likely than not to be realized following
resolution of any potential contingencies related to the tax benefit. Potential interest related to the
underpayment of income taxes will be classified as a component of income tax expense and any related
penalties will be classified as income tax expense.
Recently Adopted and Recently Issued Accounting Pronouncements
There were no recently adopted accounting pronouncements that had a material impact on the
Company’s financial statements.
133
In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures, to
provide more detailed income tax disclosure requirements. The guidance requires entities to disclose
disaggregated information about their effective tax rate reconciliation as well as information on income
taxes paid. The disclosure requirements should be applied on a prospective basis, with the option to apply it
retrospectively. The effective date for the standard is for fiscal years beginning after December 15, 2024.
Early adoption is permitted. The Company does not expect ASU 2023-09 to have a material impact on the
Company’s financial statements.
4. Marketable Securities
The following table summarizes the Company’s available-for-sale marketable securities as of
December 31, 2023 and December 31, 2022:
(in thousands)
Marketable securities:
Short-term investments:
As of December 31, 2023
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated Fair
Value
U.S. government securities . . . . . . . . . . . . . . . . . . .
$228,579
$ 212
$
— $228,791
Corporate debt securities . . . . . . . . . . . . . . . . . . . .
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . .
9,629
64,724
Long-term investments:
U.S. government securities . . . . . . . . . . . . . . . . . . .
141,102
Corporate debt securities . . . . . . . . . . . . . . . . . . . .
41,310
2
3
755
219
—
—
9,631
64,727
141,857
—
41,529
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$485,344
$1,191
$
— $486,535
(in thousands)
Marketable securities:
Short-term investments:
As of December 31, 2022
Amortized
Cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Estimated Fair
Value
U.S. government securities . . . . . . . . . . . . . . . . . . .
$232,229
$ —
$(690)
$231,539
Non-U.S. government securities
. . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . . . .
9,388
45,710
Commercial paper . . . . . . . . . . . . . . . . . . . . . . . . .
238,160
—
—
—
(31)
(44)
—
9,357
45,666
238,160
Long-term investments:
Corporate debt securities . . . . . . . . . . . . . . . . . . . .
4,796
(2)
4,794
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$530,283
$ —
$(767)
$529,516
The Company’s marketable securities are available-for-sale securities and consist of high-quality, highly
liquid debt securities including corporate debt securities, U.S. government securities, non-U.S. government
securities, and commercial paper.
The Company’s securities classified as short-term marketable securities mature within one year or less
of the balance sheet date. Marketable securities that mature greater than one year from the balance sheet
date are classified as long-term. As of December 31, 2023, the Company did not hold any investments that
matured beyond five years.
5. Fair Value Measurements
The fair value of the Company’s financial assets measured on a recurring basis are classified based
upon a fair value hierarchy consisting of the following three levels:
134
Level 1 — Unadjusted quoted prices in active markets that are accessible at the measurement date
for identical, unrestricted assets, or liabilities.
Level 2 — Quoted prices for similar assets and liabilities in active markets, quoted prices in
markets that are not active, or inputs which are observable, either directly or indirectly, for substantially
the full term of the instrument.
Level 3 — Prices or valuation techniques that require inputs that are both significant to the fair
value measurement and unobservable (i.e., supported by little or no market activity).
The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are
either observable or unobservable. Observable inputs reflect assumptions market participants would use in
pricing an asset or liability based on market data obtained from independent sources while unobservable
inputs reflect a reporting entity’s pricing based upon their own market assumptions.
The following tables sets forth the fair value hierarchy of the Company’s financial assets and liabilities
measured on a recurring basis as of December 31, 2023 and December 31, 2022:
As of December 31, 2023
Fair Value Hierarchy
(in thousands)
Total
Level 1
Level 2
Level 3
Financial instruments carried at fair value (asset position):
Cash equivalents:
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 14,434
$ 14,434
$
— $ —
Commercial paper
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
49,631
—
49,631
Short-term investments:
U.S. government securities . . . . . . . . . . . . . . . . . . . . . . .
228,791
228,791
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
9,631
64,727
—
—
—
9,631
64,727
Long-term investments:
U.S. government securities . . . . . . . . . . . . . . . . . . . . . . .
141,857
141,857
—
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . .
41,529
—
41,529
—
—
—
—
—
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$550,600
$385,082
$165,518
$ —
As of December 31, 2022
Fair Value Hierarchy
(in thousands)
Total
Level 1
Level 2
Level 3
Financial instruments carried at fair value (asset position):
Cash equivalents:
Money market funds . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ 22,494
$ 22,494
$
— $ —
Short-term investments:
U.S. government securities . . . . . . . . . . . . . . . . . . . . . . .
Non-U.S. government securities . . . . . . . . . . . . . . . . . . .
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . .
Commercial paper
. . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term investments:
231,539
9,357
45,666
238,160
—
231,539
9,357
—
45,666
—
— 238,160
Corporate debt securities . . . . . . . . . . . . . . . . . . . . . . . .
4,794
—
4,794
—
—
—
—
—
Total
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$552,010
$254,033
$297,977
$ —
The Company’s financial assets measured at fair value on a recurring basis included cash equivalents,
which consist of money market funds, commercial paper and marketable securities.
135
The Company’s money market funds are readily convertible into cash and the net asset value of each
fund on the last day of the quarter is used to determine fair value. The U.S. government securities are classified
as Level 1 and valued utilizing quoted market prices. The Company’s corporate debt securities, non-U.S.
government securities, and commercial paper are classified as Level 2 and valued utilizing various observable
market and industry inputs.
The carrying amounts reflected in the Company’s consolidated balance sheets for cash equivalents,
accounts receivable, accounts payable, and accrued expenses approximate fair value due to their short-term
nature.
6. Property and Equipment, net
Property and equipment, net consisted of the following:
(in thousands)
December 31,
2023
2022
Useful Life
Leasehold improvements . . . . . . . . . . . . . . . . . . . . . . .
$
Computer equipment . . . . . . . . . . . . . . . . . . . . . . . . .
Lab equipment
. . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Furniture . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
826
380
2,439
437
Software . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12,954
Construction in process
. . . . . . . . . . . . . . . . . . . . . . .
3,565
$
826
368
—
437
6,048
7,137
Property and equipment, gross . . . . . . . . . . . . . . . . .
20,601
14,816
Less accumulated depreciation . . . . . . . . . . . . . . . . . . .
(2,658)
(1,245)
Property and equipment, net . . . . . . . . . . . . . . . . . .
$17,943
$13,571
Length of lease or 5 years,
whichever is shorter
3 – 5 years
5 – 15 years
5 years
3 – 10 years
Depreciation expense was $1.6 million, $0.8 million, and $0.5 million for the years ended December 31,
2023, December 31, 2022 and December 31, 2021, respectively.
7.
Intangible Assets, net
Intangible assets, net, which is included in other assets, consisted of the following:
(in thousands)
Definite-lived intangible assets
December 31,
2023
2022
License agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,250
$ —
Intangible assets, gross
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11,250
—
Less accumulated amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(50) —
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,200
$ —
The Company’s finite-lived intangible asset results from the commercial milestone payment due under
its license agreement with Pfizer, Inc., or Pfizer. For intangible assets related to products with patent
exclusivity, the useful life is the remaining patent exclusivity period of approximately 19.4 years. The
Company incurred amortization expense of $0.1 million for the year ended December 31, 2023.
136
The expected future amortization expense for amortizable finite-lived intangible assets as of
December 31, 2023 is as follows:
(in thousands)
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
600
600
600
600
600
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,200
Total future expected amortization expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$11,200
8. Leases
Operating Leases
The company’s operating leases relate to real estate.
In August 2018, the Company entered into a five-year operating lease in Durham, NC, for additional
office space which houses various corporate functions including clinical development operations. In
May 2023, the Company amended this lease agreement to extend the lease term through September 30, 2026,
with two consecutive five-year renewal options. Pursuant to the amendment, the lease payments increase
by 3.0% each year, commencing October 1, 2023.
In October 2018, the Company entered into a lease for its corporate headquarters in Stamford, CT. In
January 2022, the Company amended this lease agreement to extend the lease term through April 2028,
with two five-year renewal options or one ten-year renewal option. Pursuant to the amended agreement, lease
payments increase by 2.5% each year.
In March 2023, the Company entered into a five-year operating lease in Research Triangle Park in
Durham, NC (the location of the Company’s discovery lab and translational operations), with two
consecutive five-year renewal options. Pursuant to the amended agreement, lease payments increase by 3.0%
in each of the subsequent four years of the five-year operating lease term. Rental payments under the
renewal period will be at current market rates for the premises.
The components of lease cost recorded in the Company’s consolidated statement of operations were as
follows:
(in thousands)
Twelve Months Ended December 31,
2023
2022
2021
Operating lease cost
Fixed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Variable(1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total lease cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,653
866
$2,519
$1,131
336
$1,467
$ 993
548
$1,541
(1) Variable lease costs consist primarily of taxes, utilities and common area maintenance costs.
137
The Company’s leases are included on its consolidated balance sheets as follows:
(in thousands)
Operating leases
As of December 31,
2023
As of December 31,
2022
Operating lease right-of-use-assets . . . . . . . . . . . . . . . . . . .
Total operating lease assets . . . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, current . . . . . . . . . . . . . . . . . . . .
Operating lease liabilities, long-term . . . . . . . . . . . . . . . . . .
Total operating lease liabilities . . . . . . . . . . . . . . . . . . . .
$6,144
$6,144
$1,061
5,996
$7,057
$4,698
$4,698
$ 483
4,768
$5,251
Maturities of the Company’s operating lease liabilities as of December 31, 2023 were as follows:
(in thousands)
Operating
Leases
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$1,476
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,999
2,002
1,904
646
—
Total lease payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8,027
Less: imputed interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(970)
Present value of lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$7,057
The weighted-average remaining lease term and discount rate related to the Company’s leases were as
follows:
As of
December 31, 2023
As of
December 31, 2022
Weighted-average remaining lease term (in years)
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.2
Weighted-average discount rate
Operating leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.8%
5.2
4.2%
Supplemental cash flow information related to the Company’s leases was as follows:
(in thousands)
Cash paid for amounts included in the measurement of
lease liabilities:
Operating cash flows from operating leases . . . . . . . .
Right-of-use assets obtained in exchange for new
December 31,
2023
December 31,
2022
December 31,
2021
$1,293
$ 859
$1,388
operating lease liabilities . . . . . . . . . . . . . . . . . . . . .
2,637
5,580
—
138
9. Accrued Expenses
Accrued expenses consisted of the following:
(in thousands)
December 31,
2023
December 31,
2022
Accrued compensation and benefits
. . . . . . . . . . . . . . . . . . . . . . . .
$26,047
Accrued research and development . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued milestone . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15,129
11,250
13,143
$19,142
12,321
—
7,779
Total accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$65,569
$39,242
10. Equity-Based Compensation
The Company recorded total equity-based compensation expense for the periods presented as follows:
(in thousands)
Year Ended December 31,
2023
2022
2021
Research and development . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$34,398
$29,373
$14,664
Selling, general and administrative . . . . . . . . . . . . . . . . . . . . . .
60,136
43,592
23,780
Total equity-based compensation expense . . . . . . . . . . . . . . . .
$94,534
$72,965
$38,444
2019 Equity Incentive Plan
The 2019 Equity Incentive Plan provides for the grant of incentive stock options, nonqualified stock
options, stock appreciation rights, restricted stock units, restricted stock awards, unrestricted stock awards
and dividend equivalent rights to the Company’s officers, employees, directors and other key persons
(including consultants). The number of shares available for issuance under the 2019 Equity Incentive Plan is
cumulatively increased each January 1, through and including January 1, 2030, by 5% of the number of
shares of the Company’s common stock outstanding on the immediately preceding December 31 or such
lesser number of shares determined by the Company’s compensation committee. As of December 31, 2023,
there were 2,543,163 shares available for future issuance under the 2019 Equity Incentive Plan.
The terms of stock options and restricted stock awards, including vesting requirements, are determined
by the Board of Directors or its delegates, subject to the provisions of the 2019 Equity Incentive Plan. Stock
options and restricted stock awards granted by the Company to employees generally vest over 3 or 4 years,
and stock options and restricted stock awards granted by the Company to directors generally vest over 1 or
3 years.
2019 Employee Stock Purchase Plan
On August 30, 2019, the Company’s stockholders approved the 2019 Employee Stock Purchase Plan,
or the ESPP, which became effective immediately preceding the effectiveness of the Company’s registration
statement on September 12, 2019 in connection with the IPO. A total of 442,153 shares of common stock were
reserved for issuance under the ESPP. In addition, the number of shares of common stock that may be
issued under the ESPP will automatically increase each January 1, through and including January 1, 2028,
by the lesser of (i) 663,229 shares of common stock, (ii) 1% of the number of shares of the Company’s
common stock outstanding on the immediately preceding December 31 or (iii) such lesser number of
shares determined by the administrator of the ESPP. As of December 31, 2023, there were 2,477,122 shares
reserved for issuance under the ESPP. No offering periods under the ESPP had been initiated as of
December 31, 2023.
139
Stock Options
A summary of the changes in the Company’s stock options during the periods presented is as follows:
Weighted Average
Exercise
Price
Shares
Weighted
Average
Remaining
Contractual
Life
(Years)
Outstanding at December 31, 2020 . . . . . . . . . .
4,505,546
$15.51
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,547,813
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/cancelled . . . . . . . . . . . . . . . . . . . . .
(151,643)
(188,303)
Outstanding at December 31, 2021 . . . . . . . . . .
6,713,413
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,207,347
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited/cancelled . . . . . . . . . . . . . . . . . . . . .
(223,467)
(520,478)
Outstanding at December 31, 2022 . . . . . . . . . .
9,176,815
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2,994,704
Exercised . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(44,250)
Forfeited/cancelled . . . . . . . . . . . . . . . . . . . . .
(538,693)
Outstanding at December 31, 2023 . . . . . . . . . .
11,588,576
Exercisable at December 31, 2023 . . . . . . . . . . .
6,711,390
73.37
7.62
37.34
37.03
43.28
8.84
68.33
38.13
27.65
3.15
44.01
35.28
32.83
8.7
—
—
—
8.2
—
—
—
8.0
—
—
—
7.4
6.6
Intrinsic
Aggregate
Value
$256,860,405
—
—
—
196,012,147
—
—
—
53,719,297
—
—
—
117,631,827
88,814,151
Aggregate intrinsic value is calculated by subtracting the exercise price of the option from the closing
price of the Company’s common stock on closing date, multiplied by the number of shares per each option.
Assumptions used in determining the fair value of the stock options granted in 2023 include risk-free
interest rates of 3.46% – 4.73%, expected dividend yield of 0.00%, expected term in years of
5.5 years – 6.1 years and expected volatility of 76.7% – 78.8%.
At December 31, 2023, the total unrecognized compensation expense related to unvested stock options
was $117.7 million, which the Company expects to recognize over a weighted-average remaining period of
approximately 2.4 years. For the year ended December 31, 2023, total equity-based compensation expense for
stock options was $66.0 million.
Restricted Stock Awards
A summary of the changes in the Company’s restricted stock awards for the periods presented is as
follows:
Weighted
Average
Grant Date
Fair Value
Number
of Shares
Unvested and outstanding at December 31, 2020 . . . . . . . . . . . . . . . . . .
686,868
$ 1.26
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
332,226
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(493,309)
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(55,475)
Unvested and outstanding at December 31, 2021 . . . . . . . . . . . . . . . . . .
470,310
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,625
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(257,219)
73.31
1.19
13.75
50.76
61.74
32.03
140
Weighted
Average
Grant Date
Fair Value
Number
of Shares
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(27,957)
Unvested and outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . .
221,759
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(93,812)
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21,113)
Unvested and outstanding at December 31, 2023 . . . . . . . . . . . . . . . . . .
106,834
79.25
70.71
—
71.50
63.38
70.48
At December 31, 2023, the total unrecognized compensation expense related to unvested restricted
stock awards was $2.6 million, which the Company expects to recognize over a weighted-average remaining
period of approximately less than one year. For the year ended December 31, 2023, total restricted stock
awards compensation expense was $6.6 million.
Restricted Stock Units
A summary of the changes in the Company’s restricted stock units for the periods presented is as
follows:
Weighted
Average
Grant Date
Fair Value
Number
of Shares
Unvested and outstanding at December 31, 2021 . . . . . . . . . . . . . . . . . .
— $ —
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
738,508
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(24,369)
(42,185)
Unvested and outstanding at December 31, 2022 . . . . . . . . . . . . . . . . . .
671,954
Granted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,163,390
Vested . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(238,725)
Forfeited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(110,079)
Unvested and outstanding at December 31, 2023 . . . . . . . . . . . . . . . . . .
1,486,540
49.77
24.62
58.76
50.11
27.68
49.14
31.27
34.11
At December 31, 2023, the total unrecognized compensation expense related to unvested restricted
stock units was $32.9 million, which the Company expects to recognize over a weighted-average remaining
period of approximately 1.9 years. For the year ended December 31, 2023, total restricted stock unit
compensation expense was $19.4 million.
Performance Stock Units
On January 5, 2023, the CEO was granted a supplemental equity award consisting of performance
based restricted stock units, or the 2023 CEO PSU award. The 2023 CEO PSU award covers a target of
284,362 shares of the Company’s common stock, which are subject to vesting based upon the passage of time,
once the Company achieves certain regulatory milestones and the CEO’s continued service with the
Company. In addition, the target number of shares of the Company’s common stock covered is subject to
modification (upwards or downwards) by up to 25% based upon the relative total shareholder return of the
Company’s shares compared to the NASDAQ Biotech Index as of the end of the performance period.
At December 31, 2023, the total unrecognized compensation expense related to unvested performance
stock units was $4.3 million, which the Company expects to recognize over a weighted-average remaining
period of approximately 2.0 years. For the year ended December 31, 2023, total performance stock unit
compensation expense was $2.4 million.
141
11. License and Collaboration Agreements
Pfizer Inc.
Pursuant to the terms of its licenses with Pfizer, the Company is required to pay Pfizer milestones
payments of up to an aggregate of $232.5 million for nirogacestat and up to an aggregate of $229.8 million
for mirdametinib, each upon achievement of certain commercial milestone events. Royalties are also
payable under each License Agreement based on a specified percentage of net sales ranging from mid-single
digit percentages to low 20s. Royalty payments under each License Agreement continue until the expiration
of the last to expire licensed patent applicable to such product, but not less than ten years after the first
commercial sale on a country-by-country basis.
A milestone was met upon the first commercial sale of OGSIVEO in December 2023, and a milestone
payment of $11.3 million is due to Pfizer, which has been accrued and included in accrued expenses as of
December 31, 2023, and is expected to be paid in the second quarter of 2024.
In August 2018, the Company entered into a clinical collaboration agreement with BeiGene Ltd., or
BeiGene to conduct a clinical study of the combination of mirdametinib and a BeiGene compound
designated as lifirafenib. In accordance with the terms of the agreement, the Company and BeiGene share
equally the costs associated with the clinical study. BeiGene is required to supply the BeiGene compound and
the Company is required to supply mirdametinib to conduct the clinical study.
The collaboration is guided by a joint steering committee. Specified areas of development require
unanimous agreement among all members of the joint steering committee.
The Company recorded expense of $1.9 million for the year ended December 31, 2023, and $1.1 million
for each of the years ended December 31, 2022 and December 31, 2021, in connection with this collaboration
agreement.
TEAD inhibitor portfolio license agreement
In May 2021, the Company announced an exclusive worldwide license agreement with Katholieke
Universiteit Leuven, or KU Leuven, and the Flanders Institute for Biotechnology, or VIB, pursuant to
which the Company in-licensed a portfolio of novel small molecule inhibitors of the TEA Domain, or TEAD,
family of transcription factors, designed for the potential treatment of biomarker-defined solid tumors
driven by aberrant Hippo pathway signaling. Under the terms of the agreement, the Company made an
upfront payment of $11 million to KU Leuven and VIB, which was recorded as research and development
expense in the consolidated statement of operations. Pursuant to the terms of the agreement, KU Leuven and
VIB are also eligible to receive, in the aggregate, up to $120 million in development milestones, up to
$165 million in commercial milestones and tiered single-digit percentage royalties based on any future net
sales of products developed based on the in-licensed technology.
EGFR inhibitor portfolio license agreement and sponsored research agreement
In October 2021, the Company announced an exclusive worldwide license agreement with Dana-Farber
Cancer Institute, or Dana-Farber, pursuant to which it in-licensed a portfolio of novel small molecule
inhibitors of Epidermal Growth Factor Receptor, or EGFR, designed for the treatment of EGFR-mutant
lung cancers. Under the terms of the agreement, the Company made an upfront payment of $0.3 million to
Dana-Farber, which was recorded as research and development expense in the consolidated statement of
operations. Pursuant to the terms of the agreement, Dana-Farber is also eligible to receive up to $2.3 million
in development milestones, up to $39 million in commercial milestones and single-digit percentage royalties
based on any future net sales of products developed based on the in-licensed technology.
Concurrent with this license agreement, the Company entered a multi-year sponsored research
agreement with Stanford Medicine to fund continued research and development in a laboratory at Stanford
Medicine as well as collaborating laboratories at Dana-Farber. This sponsored research agreement is
intended to support lead optimization and translational biology efforts as the EGFR inhibitor portfolio
advances towards development candidate nomination.
142
GSK expanded non-exclusive license and collaboration agreement
In September 2022, the Company announced an expansion of its ongoing, non-exclusive clinical
collaboration with GSK, which originally commenced in June 2019. The announcement coincided with the
entry by the Company and GSK into an amended and restated collaboration and license agreement, or the
GSK License Agreement, for the potential continued development and commercialization of nirogacestat
in combination with either belantamab mafodotin (belamaf), GSK’s antibody-drug conjugate, or ADC,
targeting B-cell maturation antigen, or BCMA, or any other cytotoxic ADC targeting BCMA derived from
belantamab that is controlled by GSK, either alone as a combination therapy, or together with other
pharmaceutical agents.
Pursuant to the terms of the GSK License Agreement and concurrent with the execution of such
agreement, the Company entered into a Stock Purchase Agreement with GGL, under which GGL purchased
2,050,819 shares of the Company’s Common Stock in a private placement transaction for an aggregate
purchase price of approximately $75.0 million, or $36.57 per share. The shares were sold at a 25% premium
to the volume-weighted average share price of the Company’s Common Stock for a specified 30-day
period prior to entering into the Stock Purchase Agreement. The fair value of the Common Stock based on
the closing price of Common Stock on the day prior to the effective date of the Stock Purchase Agreement
was $55.5 million and was recorded to equity. The $19.5 million received in excess of the fair value of the
Common Stock represents consideration for the license for the potential continued development and
commercialization of nirogacestat in combination with GSK compounds, together with the clinical supply
of nirogacestat for future belamaf clinical trials and certain research and development costs associated with
nirogacestat. The Company recorded the $19.5 million as deferred revenue in September of 2022 and will
recognize revenue as the corresponding performance obligation is satisfied in proportion to expenses incurred,
including clinical supply and research and development expenses, associated with the GSK License
Agreement. For the year ended December 31, 2023, the Company did not recognize any revenue related to
the upfront consideration received from the GSK License Agreement.
Under the terms of the GSK License Agreement, the Company is also eligible to receive up to
$550.0 million in additional payments, if certain development and commercial milestones are met. The
Company continues to retain full commercial rights to nirogacestat. Additionally, SpringWorks will seek to
make nirogacestat commercially available in markets where approval has been sought by GSK for a
combination with belamaf.
Jazz Pharmaceuticals asset purchase and exclusive license agreement
In October 2020, the Company and Jazz announced an asset purchase and exclusive license agreement,
pursuant to which Jazz acquired the Company’s fatty acid amide hydrolase, or FAAH, inhibitor program
including PF-4457845. The FAAH inhibitor program was obtained by the Company as part of the License
Agreements in 2018. Jazz made an upfront payment of $35 million to the Company with potential future
payments of up to $375 million based upon the achievement of certain clinical development, regulatory,
and commercial milestones. In addition, Jazz is obligated to pay the Company tiered sales-based royalties on
future net sales of PF-4457845 in the single-digit range.
Pursuant to the Jazz Agreement, Jazz is obligated to use commercially reasonable efforts to develop
and seek regulatory approval for at least one product in the United States and if regulatory approval is
obtained, to commercialize such product in the United States.
Pursuant to the development plan under the Jazz Agreement, Jazz initially studied PF-04457845, now
known as JZP150, as a treatment for post-traumatic stress disorder, or PTSD. On December 21, 2023, Jazz
announced topline results from its Phase 2 trial of JZP150 in PTSD. The trial did not meet its primary or
secondary endpoints. Jazz disclosed plans to further evaluate the data, but does not anticipate moving
forward with additional JZP150 development in PTSD.
12. Equity Method Investment
MapKure
In June 2019, the Company announced the formation of MapKure LLC, or MapKure, an entity jointly
owned by the Company and BeiGene Ltd., or BeiGene. BeiGene licensed to MapKure exclusive rights to
143
brimarafenib (BGB-3245), an investigational oral, small molecule selective inhibitor of specific BRAF
driver mutations and genetic fusions. MapKure is advancing brimarafenib through clinical development for
solid tumor patients harboring BRAF driver mutations and genetic fusions that were observed to be
sensitive to the compound in preclinical studies. In addition to the Company’s equity ownership in MapKure,
the Company maintains a member on each of MapKure’s joint steering committee and board of directors.
The Company also contributes to clinical development and other operational activities for brimarafenib
through a service agreement with MapKure.
In conjunction with the formation of MapKure in June 2019, the Company purchased 3,500,000
Series A preferred units of MapKure, or a 25.0% ownership interest, for $3.5 million and in June 2020, the
Company purchased an additional 3,500,000 Series A preferred units of MapKure for $3.5 million, increasing
its ownership interest to 38.9%, as required by the terms of the Series A unit purchase agreement.
In June 2022, the Company made an additional investment in MapKure and purchased 4,200,000
Series B preferred units of MapKure for $4.2 million, pursuant to the terms of a Series B preferred unit
purchase agreement. In January 2023, pursuant to terms of the Series B preferred unit purchase agreement,
the Company purchased an additional 2,800,000 Series B preferred units of MapKure for $2.8 million. As
of December 31, 2023, the Company’s ownership interest in MapKure was 38.9%.
The Company determined that MapKure is a variable interest entity. The Company is not the primary
beneficiary, as the Company does not have the power to direct the activities that most significantly impact
the economic performance of MapKure. Accordingly, the Company does not consolidate the financial
statements of this entity and accounts for this investment using the equity method of accounting. The
Company reaffirmed its assessment as of December 31, 2023. The Company records its portion of MapKure’s
earnings or losses based on a one quarter lag.
For the year ended December 31, 2023, the Company recognized a $5.0 million loss for its portion of
MapKure’s losses. The Company’s investment in MapKure is included in equity method investment. The
balance of the Company’s investment was $2.0 million at December 31, 2023, representing the maximum
exposure to loss as a result of the Company’s involvement with MapKure.
In January 2024, as part of a Series C financing round, the Company made an additional investment in
MapKure and purchased 8,235,200 Series C preferred units of MapKure for $8.2 million, pursuant to the
terms of a Series C preferred unit purchase agreement. The Company is required to make subsequent
purchases at each of the second and third closings established by such agreement, in each case for an
additional 6,176,400 Series C preferred units of MapKure for $6.2 million. This additional investment does
not significantly modify the Company’s ownership interest or the Company’s ability to direct the activities
that most significantly impact the economic performance of MapKure.
13. Commitments and Contingencies
As of December 31, 2023, and December 31, 2022, the Company had obligations consisting of
operating leases for facilities. Refer to Footnote 8: Leases for more information.
The Company enters into contracts in the normal course of business for clinical trials, preclinical
studies, manufacturing and other services and products for operating purposes. These contracts generally
provide for termination following a certain period after notice and the Company believes that non-cancelable
obligations under these agreements are insignificant.
Contingencies
From time to time, the Company may be involved in disputes or regulatory inquiries that arise in the
ordinary course of business. When the Company determines that a loss is both probable and reasonably
estimable, a liability is recorded and disclosed if the amount is material to the financial statements taken as
a whole. When a material loss contingency is only reasonably possible, the Company does not record a liability,
but instead discloses the nature and the amount of the claim, and an estimate of the loss or range of loss,
if such an estimate can reasonably be made.
144
As of December 31, 2023, and December 31, 2022, there was no litigation or contingency that created
at least a reasonable possibility of a material loss.
14.
Income Taxes
As of December 31, 2023 and December 31, 2022, the Company did not have a current or deferred
income tax expense or benefit as the Company has incurred losses since inception.
As of December 31, 2023, the Company has federal, state and city net operating loss carryforwards of
$472.1 million, $365.5 million and $3.7 million, respectively, which are available to reduce future taxable
income. Federal net operating loss carryforwards generated 2018 through 2023 of $467.8 million, will be
available to offset 80% of taxable income for an indefinite period of time, until fully utilized. Federal net
operating loss carryforwards of $4.3 million reported in 2017, and the state and city net operating loss
carryforwards expire at various dates through 2037. The Company also has federal tax credits of
$33.5 million, which may be used to offset future tax liabilities. These tax credit carryforwards will expire at
various dates beginning in 2038.
The net operating loss and tax credit carryforwards are subject to review and possible adjustment by
the Internal Revenue Service and state tax authorities. Net operating loss and tax credit carryforwards may
become subject to an annual limitation in the event of certain cumulative changes in the ownership interest of
significant shareholders over a three-year period in excess of 50%, as defined under Sections 382 and 383
of the Internal Revenue Code, respectively, as well as similar state provisions and other provisions within the
Internal Revenue Code. This could limit the amount of tax attributes that can be utilized annually to offset
future taxable income or tax liabilities. The amount of the annual limitation is determined based on the value
of the Company immediately prior to an ownership change. Subsequent ownership changes may further
affect the limitation in future years.
The Company has not recorded any reserves for uncertain tax positions as of December 31, 2023 or
December 31, 2022.
Interest and penalty charges, if any, related to unrecognized tax benefits will be recorded as income tax
expense. As of December 31, 2023, the Company had no accrued interest or penalties related to uncertain
tax positions.
Since the Company is in a loss carryforward position, it is generally subject to examination by the U.S.
federal, state and local income tax authorities for all tax years in which a loss carryforward is available. The
Company is not currently under examination by the Internal Revenue Service or any other jurisdictions for
any tax years.
The principal components of deferred tax assets and liabilities are as follows:
(in thousands)
Deferred tax assets:
As of December 31,
2023
2022
Net operating loss carryforwards
. . . . . . . . . . . . . . . . . . . . . . . . . .
Research and development credits . . . . . . . . . . . . . . . . . . . . . . . . . .
Orphan drug credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capitalized research and development . . . . . . . . . . . . . . . . . . . . . . .
Equity-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
$121,029
6,069
27,515
41,588
26,429
4,105
3,031
$ 93,032
3,422
19,401
21,262
20,286
—
1,525
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
229,766
158,928
Deferred tax liability:
Operating lease right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1,290)
(1,255)
(987)
(113)
145
(in thousands)
As of December 31,
2023
2022
Other
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(2)
(2)
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(227,219)
(157,826)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
— $
—
A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of
available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be
realized. After consideration of all evidence, both positive and negative, the Company has recorded a full
valuation allowance against its deferred tax assets at December 31, 2023 and December 31, 2022 because the
Company has determined that it is more likely than not that these assets will not be realized. The increase
in the valuation allowance of $69.4 million in 2023 primarily relates to the net loss incurred by the Company
as well as federal research and orphan drug credits generated.
The effective tax rate for the Company for the years ended December 31, 2023, December 31, 2022 and
December 31, 2021 was zero percent. A reconciliation of the income tax expense at the federal statutory tax
rate to the Company’s effective income tax rate follows:
Year Ended December 31,
2023
2022
2021
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.00% 21.00% 21.00%
U.S. state and local income taxes, net of U.S. federal income tax
benefit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.17
2.33
5.15
Equity-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.21)
(0.77)
(0.03)
Research and development credit . . . . . . . . . . . . . . . . . . . . . . . . . . .
Orphan drug credit
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Section 162(m) limitation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
0.81
2.50
(3.39)
(0.54)
0.27
1.87
—
—
0.50
4.99
—
—
Change in valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(21.34)
(24.70)
(31.61)
Effective tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—% —% —%
15.
401(k) Plan
The Company has a tax-qualified employee savings and retirement plan, or the 401(k) Plan, that covers
all of its full-time employees who are at least 21 years of age. Pursuant to the 401(k) Plan, participants may
elect to contribute up to the federally allowed maximum limits of their pre-tax earnings to the 401(k)
Plan. For the years ended December 31, 2023, December 31, 2022 and December 31, 2021, expense for
matching contributions was $1.3 million, $1.0 million and $0.5 million, respectively.
16. Net Loss per Share
Basic and diluted net loss per unit and share is calculated as follows:
(in thousands, except share and per-share data)
2023
2022
2021
Year Ended December 31,
Numerator:
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$ (325,104) $ (277,417) $ (173,910)
Net loss attributable to common stockholders . . . . . . . . .
(325,104)
(277,417)
(173,910)
Denominator:
Weighted average shares outstanding, basic and diluted . . . .
63,123,936
53,290,528
48,497,790
Net loss per share, basic and diluted . . . . . . . . . . . . . . . .
$
(5.15) $
(5.21) $
(3.59)
146
Potentially dilutive securities that were not included in the diluted per share calculations because they
would be anti-dilutive were as follows:
Common stock options issued and outstanding . . . . . . . . . . . . . . . . .
11,588,576
9,176,815
Restricted stock units subject to future vesting . . . . . . . . . . . . . . . . .
1,486,540
671,954
Performance stock units subject to future vesting . . . . . . . . . . . . . . .
Restricted stock awards subject to future vesting . . . . . . . . . . . . . . . .
284,362
106,834
—
221,759
Total potentially dilutive securities . . . . . . . . . . . . . . . . . . . . . . . .
13,466,312
10,070,528
As of December 31,
2023
2022
147
Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer
(our principal executive officer and principal financial officer, respectively), conducted an evaluation of the
effectiveness of the design and operation of our disclosure controls and procedures, as defined in
Rules 13a-15(e) and 15d-15(e) under the Exchange Act, as of the end of the period covered by this report.
Based on our evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of
December 31, 2023, our disclosure controls and procedures were effective to provide reasonable assurance
that the information we are required to disclose in reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in SEC rules and forms,
and that such information is accumulated and communicated to our management, including our principal
executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required
disclosures.
Internal Control Over Financial Reporting
Management’s Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over
financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act, as a process designed by,
or under the supervision of, the company’s principal executive and principal financial officers and effected
by the company’s board of directors, management and other personnel, 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 and includes those policies and procedures
that: (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions
are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of our company are being made only in
accordance with authorizations of management and directors of the company; and (iii) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of our
company’s assets that could have a material effect on the financial statements.
In connection with the preparation of this Annual Report, our management, including our Chief
Executive Officer and Chief Financial Officer, assessed the effectiveness of our internal control over
financial reporting as of December 31, 2023 based on criteria established in Internal Control — Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013
framework) (the “COSO criteria”). Based on its assessment, our management concluded that our internal
control over financial reporting was effective as of December 31, 2023.
Attestation Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been
audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their report
included elsewhere in this Annual Report on Form 10-K.
Limitations on the Effectiveness of Controls
Our management, including our Chief Executive Officer and Chief Financial Officer, does not expect
that our disclosure controls and procedures or our internal control over financial reporting will prevent all
error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met. Further, the design of a control
148
system must reflect the fact that there are resource constraints, and the benefit of controls must be considered
relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls
can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) of
the Exchange Act) identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 of
the Exchange Act, which occurred during the fourth quarter of the year ended December 31, 2023 which
has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
149
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of SpringWorks Therapeutics, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited SpringWorks Therapeutics, Inc.’s internal control over financial reporting as of
December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).
In our opinion, SpringWorks Therapeutics, Inc. (the Company) maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight
Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2023
and 2022, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and
cash flows for each of the three years in the period ended December 31, 2023, and the related notes and our
report dated February 27, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial
reporting and for its assessment of the effectiveness of internal control over financial reporting included in
the accompanying Management’s Report on Internal Controls Over Financial Reporting. Our responsibility
is to express an opinion on the Company’s internal control over financial reporting based on our audit. We
are a public accounting firm registered with the 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 audit in accordance with the standards of the PCAOB. Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether effective internal control over
financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing
the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of
internal control based on the assessed risk, and performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable
assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting principles. A company’s internal control
over financial reporting includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that
receipts and expenditures of the company are being made only in accordance with authorizations of
management and directors of the company; and (3) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a
material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with
the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Hartford, Connecticut
February 27, 2024
150
Item 9B. Other Information
Rule 10b5-1 Trading Plans
During the three months ended December 31, 2023, none of the Company’s directors or officers
adopted, materially modified, or terminated any contract, instruction, or written plan for the purchase or
sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c)
or any non-Rule 10b5-1 trading arrangement.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
151
Item 10. Directors, Executive Officers and Corporate Governance
PART III
The information required by this item will be included in our definitive proxy statement with respect to
our 2024 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
Item 11. Executive Compensation
The information required by this item will be included in our definitive proxy statement with respect to
our 2024 Annual Meeting of Shareholders (excluding the information under the subheading “Pay versus
Performance Disclosure”) to be filed with the SEC, and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
The information required by this item will be included in our definitive proxy statement with respect to
our 2024 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by this item will be included in our definitive proxy statement with respect to
our 2024 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
Item 14. Principal Accounting Fees and Services
The information required by this item will be included in our definitive proxy statement with respect to
our 2024 Annual Meeting of Shareholders to be filed with the SEC, and is incorporated herein by reference.
152
PART IV
Item 15. Exhibits and Financial Statement Schedules
Financial Statements
The consolidated financial statements filed as part of this report are listed on the Index to Financial
Statements on page 103.
Financial Statement Schedule
All schedules for which provision is made in the applicable accounting regulations of the Securities and
Exchange Commission are not required under the related instructions or are inapplicable and, therefore, have
been omitted.
Exhibits
The exhibits required by Item 601 of Regulation S-K and Item 15(b) of this Annual Report on
Form 10-K are listed in the Exhibit Index immediately preceding the signature page of this Annual Report
on Form 10-K. The exhibits listed in the Exhibit Index are incorporated by reference herein.
Item 16. Form 10-K Summary
The Company has elected not to include summary information.
153
Exhibit
Number
3.1
3.2
3.3
4.1
4.2
4.3*
4.4
10.1
10.2
10.3
10.4
10.5
10.6
10.7
EXHIBIT INDEX
Description
Amended and Restated Certificate of Incorporation, as amended, of the Registrant, as
currently in effect. (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current
Report on Form 8-K filed with the Securities and Exchange Commission on September 17,
2019).
Bylaws of the registrant, as currently in effect. (Incorporated by reference to Exhibit 3.2 to
the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange
Commission on September 17, 2019).
Amendment to Bylaws of the Registrant, as currently in effect. (Incorporated by reference to
Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the Securities and
Exchange Commission on May 27, 2020).
Specimen Stock Certificate evidencing shares of common stock (Incorporated by reference to
Exhibit 4.1 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-233351)
filed with the Securities and Exchange Commission on September 12, 2019).
Amended and Restated Investors’ Rights Agreement among the Registrant and certain of its
stockholders, dated August 30, 2018 (Incorporated by reference to Exhibit 4.2 to the
Registrant’s Registration Statement on Form S-1 (File No. 333-233351) filed with the
Securities and Exchange Commission on September 12, 2019).
Description of the Registrant’s Securities.
Amendment to the Amended and Restated Investors’ Rights Agreement, dated as of
February 25, 2021 (Incorporated by Reference to Exhibit 4.4 to the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2020 filed with the Securities and
Exchange Commission on February 25, 2021).
2019 Stock Option and Incentive Plan and forms of award agreements thereunder
(Incorporated by reference to Exhibit 10.1 to the Registrant’s Registration Statement on
Form S-1/A (File No. 333-233351) filed with the Securities and Exchange Commission on
September 12, 2019).
Amended and Restated 2019 Stock Option and Equity Incentive Plan and forms of award
agreements thereunder (Incorporated by Reference to Exhibit 10.2 to the Registrant’s Annual
Report on Form 10-K for the year ended December 31, 2021 filed with the Securities and
Exchange Commission on February 24, 2022).
2019 Employee Stock Purchase Plan (Incorporated by reference to Exhibit 10.3 to the
Registrant’s Registration Statement on Form S-1/A (File No. 333-233351) filed with the
Securities and Exchange Commission on September 12, 2019).
Senior Executive Cash Incentive Bonus Plan (Incorporated by reference to Exhibit 10.4 to the
Registrant’s Registration Statement on Form S-1/A (File No. 333-233351) filed with the
Securities and Exchange Commission on September 12, 2019).
Second Amended and Restated Non-Employee Director Compensation Policy (Incorporated
by Reference to Exhibit 10.5 to the Registrant’s Annual Report on Form 10-K for the year
ended December 31, 2021 filed with the Securities and Exchange Commission on
February 24, 2022).
Form of Indemnification Agreement, by and between the Registrant and each of its
Directors (Incorporated by reference to Exhibit 10.6 to the Registrant’s Registration
Statement on Form S-1/A (File No. 333-233351) filed with the Securities and Exchange
Commission on September 12, 2019).
Form of Indemnification Agreement, by and between the Registrant and each of its Officers
(Incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on
Form S-1/A (File No. 333-233351) filed with the Securities and Exchange Commission on
September 12, 2019).
154
Exhibit
Number
10.8§
10.9§
10.10§
10.10.1§
10.11§
10.12#
10.13#
10.14#
10.15#
10.16#
10.17#
10.18#
Description
Amended and Restated License Agreement by and among the Registrant, Pfizer Inc.,
SpringWorks Subsidiary 2, Inc. and Pfizer Products, Inc., dated July 31, 2019 (Incorporated
by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1/A
(File No. 333-233351) filed with the Securities and Exchange Commission on September 12,
2019).
Amended and Restated License Agreement by and among the Registrant, Pfizer Inc.,
SpringWorks Subsidiary 3, Inc. and Warner-Lambert Company LLC, dated August 7, 2019
(Incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on
Form S-1/A (File No. 333-233351) filed with the Securities and Exchange Commission on
September 12, 2019).
Clinical Trial Collaboration and Supply Agreement by and between the Registrant and
GlaxoSmithKline LLC, dated June 25, 2019 (Incorporated by reference to Exhibit 10.11 to
the Registrant’s Registration Statement on Form S-1/A (File No. 333-233351) filed with the
Securities and Exchange Commission on September 12, 2019).
Amendment No. 1 dated October 22, 2021, to the Clinical Trial Collaboration and Supply
Agreement, dated as of June 25, 2019, between GlaxoSmithKline LLC and SpringWorks
Therapeutics, Inc. (Incorporated by reference to Exhibit 1.1 to the Registrant’s Current
Report on Form 8-K (File No. 001-39044) filed with the Securities and Exchange
Commission on October 27, 2021).
Assignment and Assumption of Lease, dated as of October 10, 2018, by and between R&D
Subsidiary and Structured Portfolio Management LLC (Incorporated by reference to
Exhibit 10.12 to the Registrant’s Registration Statement on Form S-1/A (File
No. 333-233351) filed with the Securities and Exchange Commission on September 12, 2019).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Saqib Islam (Incorporated by Reference to Exhibit 10.1 to the Registrant’s
Quarterly Report on Form 10-Q filed with the Securities and Exchange Commission on
August 4, 2021).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Francis I. Perier, Jr. (Incorporated by Reference to Exhibit 10.2 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 4, 2021).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Badreddin Edris (Incorporated by Reference to Exhibit 10.3 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 4, 2021).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Bhavesh Ashar (Incorporated by Reference to Exhibit 10.4 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 4, 2021).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Daniel J. Pichl (Incorporated by Reference to Exhibit 10.7 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 4, 2021).
Amended and Restated Employment Agreement, dated as of July 30, 2021, by and between
the Registrant and Herschel S. Weinstein (Incorporated by Reference to Exhibit 10.8 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on August 4, 2021).
Employment Agreement, dated as of August 16, 2021, by and between the Registrant and
James Cassidy (Incorporated by Reference to Exhibit 10.20to the Registrant’s Annual Report
on Form 10-K for the year ended December 31, 2022filed with the Securities and Exchange
Commission on February 28, 2022).
155
Exhibit
Number
10.19
10.20
10.21
21.1
23.1*
24.1*
31.1*
31.2*
32.1†
32.2†
97.1*
101.INS
101.SCH
101.CAL
101.DEF
101.LAB
101.PRE
104
Description
Second Lease Modification Agreement, dated as of January 31, 2022, by and between Two
Harbor Point Square LLC and SpringWorks Therapeutics, Inc. (Incorporated by Reference
to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with the Securities
and Exchange Commission on May 5, 2022).
Amended and Restated Clinical Trial Collaboration and License Agreement, dated
September 6, 2022, by and between SpringWorks Therapeutics, Inc. and GlaxoSmithKline
Intellectual Property Development Limited (Incorporated by Reference to Exhibit 10.4 to the
Registrant’s Quarterly Report on Form 10-Q filed with the Securities and Exchange
Commission on November 3, 2022).
Third Amended and Restated Non-Employee Director Compensation Policy (Incorporated
by Reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed with
the Securities and Exchange Commission on May 5, 2023).
Subsidiaries of the Registrant (Incorporated by reference to Exhibit 21.1 to the Registrant’s
Registration Statement on Form S-1/A (File No. 333-233351) filed with the Securities and
Exchange Commission on September 12, 2019).
Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.
Power of Attorney (included on signature page to this Annual Report on Form 10-K).
Certification of Principal Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of
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 Rule 13a-14(a) or Rule 15d-14(a) of
the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002.
Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted
pursuant to by Section 906 of the Sarbanes-Oxley Act of 2002.
Registrant’s Compensation Recovery Policy.
Inline XBRL Instance Document.
Inline XBRL Taxonomy Extension Schema Document.
Inline XBRL Taxonomy Extension Calculation Linkbase Document.
Inline XBRL Taxonomy Extension Definition Linkbase Document.
Inline XBRL Taxonomy Extension Label Linkbase Document.
Inline XBRL Taxonomy Extension Presentation Linkbase Document.
Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)
*
Filed herewith.
** Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. A copy of
any omitted schedule and/or exhibit will be furnished to the Securities and Exchange Commission upon
request.
# Indicates a management contract or any compensatory plan, contract or arrangement.
†
§
This certification will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act
of 1934, as amended, or otherwise subject to the liability of that section. Such certification will not
be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended,
except to the extent specifically incorporated by reference into such filing.
Confidential treatment has been granted with respect to redacted portions of this exhibit. Redacted
portions of this exhibit have been filed separately with the Securities and Exchange Commission.
156
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
Date: February 27, 2024
SPRINGWORKS THERAPEUTICS, INC.
By:
/s/ Saqib Islam
Saqib Islam
Chief Executive Officer
POWER OF ATTORNEY
Each person whose individual signature appears below hereby authorizes and appoints Saqib Islam
and Francis I. Perier, Jr., and each of them, with full power of substitution and resubstitution and full
power to act without the other, as his or her true and lawful attorney-in-fact and agent to act in his or her
name, place and stead and to execute in the name and on behalf of each person, individually and in each
capacity stated below, and to file any and all amendments to this annual report on Form 10-K 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, and each of them, full power and
authority to do and perform each and every act and thing, ratifying and confirming all that said attorneys-in-
fact and agents or any of them or their or his substitute or substitutes may lawfully do or cause to be done
by virtue thereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed
below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ Saqib Islam
Saqib Islam, J.D.
Chief Executive Officer and Director
(Principal Executive Officer)
February 27, 2024
/s/ Francis I. Perier, Jr.
Francis I. Perier, Jr.
Chief Financial Officer
(Principal Financial Officer)
/s/ Michael P. Nofi
Michael P. Nofi
Chief Accounting Officer
(Principal Accounting Officer)
February 27, 2024
February 27, 2024
Chairman
February 27, 2024
/s/ Daniel S. Lynch
Daniel S. Lynch, M.B.A.
/s/ Carlos Albán
Carlos Albán
/s/ Alan Fuhrman
Alan Fuhrman
/s/ Julie Hambleton
Julie Hambleton, M.D.
Director
Director
Director
/s/ Freda Lewis-Hall
Freda Lewis-Hall, M.D, DFAPA
Director
157
February 27, 2024
February 27, 2024
February 27, 2024
February 27, 2024
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