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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
☐ 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
For the transition period from to
Commission file number 001-38650
Y-mAbs Therapeutics, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or Other Jurisdiction of Incorporation or Organization)
47-4619612
(I.R.S. Employer Identification No.)
230 Park Avenue, Suite 3350 New York, NY
(Address of Principal Executive Offices)
10169
(Zip Code)
Registrant’s telephone number, including area code (646)-885-8505
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
Common Stock, $0.0001 par value
Trading Symbol(s)
YMAB
Name of each exchange on which registered:
The Nasdaq Global Select Market
Securities registered pursuant to Section 12(g) of the Act:
NONE
(Title of class)
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
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 ☒
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.
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 ☐
Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of
“large accelerated filer”, “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer ☐
Accelerated filer ☐
Non-accelerated filer ☒
Smaller reporting company ☒
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards
provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b)
of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to
previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers
during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).
Yes ☐ No ☒
As of June 30, 2023 the aggregate market value of the common stock held by non-affiliates of the registrant, based on the closing price of a share of common stock as reported by the Nasdaq
Global Select Market on such date, was approximately $246 million. This calculation does not reflect a determination that certain persons are affiliates of the registrant for any other purpose. The number
of outstanding shares of the registrant’s common stock as of February 22, 2024 was 43,777,105.
Documents Incorporated by Reference:
Portions of the Registrant’s Definitive Proxy Statement relating to the 2024 Annual Meeting of Stockholders, which will be filed with the Securities and Exchange Commission within 120
days after the end of the Registrant’s fiscal year ended December 31, 2023 are incorporated by reference into Part III of this Annual Report on Form 10-K. With the exception of the portions of the 2024
Proxy Statement expressly incorporated into this Annual Report on Form 10-K by reference, such document shall not be deemed to constitute part of this Annual Report on Form 10-K.
Table of Contents
PART I
TABLE OF CONTENTS
Business
Item 1.
Item 1A. Risk Factors
Item 1B. Unresolved Staff Comments
Item 1C. Cybersecurity
Item 2.
Item 3.
Item 4. Mine Safety Disclosures
Properties
Legal Proceedings
PART II
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Reserved
Item 6.
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.
Item 9A. Controls and Procedures
Item 9B. Other Information
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Item 11.
Item 12.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Item 14.
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Principal Accountant Fees and Services
PART IV
Item 15.
Item 16.
Exhibits and Financial Statement Schedules
Form 10-K Summary
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FORWARD LOOKING STATEMENTS.
This Annual Report on Form 10-K contains forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995, about us and our industry that involve substantial risks and uncertainties. All
statements, other than statements of historical facts, contained in this Annual Report on Form 10-K, including statements
regarding our business strategy, future operations and results thereof, future financial position, future revenue, projected
costs, prospects, current and prospective products, product approvals, research and development costs, current and
prospective collaborations, timing and likelihood of success, plans and objectives of management, expected market growth
and future results of current and anticipated products, are forward-looking statements. These statements involve known and
unknown risks, uncertainties and other important 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 the forward-looking
statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “contemplate,” “intend,” “may,”
“might,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” “would” and similar expressions are intended
to identify forward-looking statements, although not all forward-looking statements contain these identifying words.
We have based these forward-looking statements largely on our current expectations and projections about future
events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and
long-term business operations and objectives, and financial needs. These forward-looking statements are subject to a
number of risks, uncertainties and assumptions, including those described in Part I, Item 1A, "Risk Factors" in this Annual
Report on Form 10-K. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our forward-looking statements. Actual results or events could
differ materially from the plans, intentions and expectations disclosed in the forward-looking statements we make.
Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is
not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the
extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in
any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the future events and
trends discussed in this Annual Report on Form 10-K may not occur and actual results could differ materially and
adversely from those anticipated or implied in the forward-looking statements.
We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements,
and you should not place undue reliance on our forward-looking statements. Actual results or events could differ materially
from the plans, intentions and expectations disclosed in the forward-looking statements we make. We have included
important factors in the cautionary statements included in this Annual Report on Form 10-K, particularly in the “Risk
Factors” section, that could cause actual results or events to differ materially from the forward-looking statements that we
make. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions,
licensing agreements, collaborations, joint ventures or investments that we may make.
The forward-looking statements contained in this Annual Report on Form 10-K are made as of the date of this
Annual Report on Form 10-K, and we undertake no obligation to publicly update or review any forward-looking statement,
whether as a result of new information, future developments or otherwise, except as required by law.
Unless expressly indicated or the context requires otherwise, the terms "Y-mAbs," "company," "we," "us," and
"our" in this document refer to Y-mAbs Therapeutics, Inc., a Delaware corporation, and, where appropriate, the Company’s
subsidiary.
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SUMMARY OF RISK FACTORS
Our business is subject to a number of risks, including risks that may prevent us from achieving our business
objectives or may adversely affect our business, financial condition, results of operations, cash flows, and prospects.
These risks are discussed more fully below under “Risk Factors” and include, but are not limited to, the following:
● We may not be able to successfully implement our business model, including our plans to expand the
●
●
commercialization of DANYELZA® (naxitamab-gqgk), referred to as DANYELZA, and to develop, obtain
regulatory approval of and commercialize our other product candidates;
Our expectations with respect to the rate and degree of market acceptance and clinical utility for
DANYELZA or any current or future product candidates for which we may receive marketing approval may
not be realized;
Our expectations with respect to the commercial value of any of our product candidates, including antibody
constructs based on Self-Assembly DisAssembly Pretargeted Radioimmunotherapy, or SADA PRIT,
technology platform, may not be realized;
● We may not be successful in implementing our business strategy, including our ability and plans in
continuing to build out our commercial infrastructure and successfully launching, marketing, expanding the
indications for, and selling DANYELZA and any current or future product candidates for which we may
receive marketing approval. This includes our plans with respect to the focus and activities of our sales
force, the nature of our marketing, market access and patient support activities of DANYELZA and related
assumptions;
Our expectations with respect to the pricing, coverage and reimbursement of, and the extent to which patient
assistance programs are utilized for DANYELZA or other product candidates for which we may receive
marketing approval may not be realized;
Our expectations with respect to our ongoing and future clinical trials whether conducted by us or by any of
our collaborators, may not be realized, including the timing of initiation of these trials, the pace of
enrollment, the completion of enrollment, the availability of data from, and the outcome of, these trials, and
expectations with respect to regulatory submissions and potential regulatory approvals may not be realized
on the anticipated timing or at all;
The SADA PRIT technology that we use has not been approved for commercial use by the FDA or any other
regulatory authority and our clinical effort may not result in approval or marketable products;
The outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later
clinical trials, interim results of a clinical trial do not necessarily predict final results, and the results of our
clinical trials may not satisfy the requirements of the FDA or comparable foreign regulatory authorities, and
if an adverse safety issue, clinical hold or other adverse finding occurs in one or more of our clinical trials of
our product candidates, such event could adversely affect other clinical trials of our product candidates;
●
●
●
●
● We may be unable to attract, integrate, manage and retain qualified personnel or key employees;
●
Our expectations with respect to the timing of and our ability to obtain and maintain regulatory, marketing
and reimbursement approvals for our product candidates may not be realized;
● We may be unable to successfully implement our commercialization, marketing and manufacturing
●
capabilities and strategy;
If we are unable to establish and maintain sufficient intellectual property position, strategy and scope of
protection for the intellectual property rights covering our product candidates and technology, or if the scope
of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and
commercialize products similar or identical to ours and our ability to successfully commercialize our
products, product candidates and other proprietary technologies, if approved, may be adversely affected;
● We may be unable to identify and develop additional product candidates and technologies with significant
commercial potential;
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● We may be unable to enter into collaborations or strategic partnerships for the development and
commercialization of our product candidates and future operations, and the potential benefits of any such
collaboration or partnership may not be realized;
Any collaboration agreement that we may enter into may not be successful, which could adversely affect our
ability to develop and commercialize our products or to enter new therapeutic areas;
●
● We currently depend on third parties for a portion of our operations, and we may not be able to control their
work as effectively as if we performed these functions ourselves. If the third parties fail to comply with
regulations, our financial results and financial condition could be adversely affected;
● We are dependent on our relationship with Memorial Sloan Kettering Cancer Center, or MSK, including our
ability to maintain our exclusive rights under the 2015 MSK License Agreement (as amended), or MSK
License, and the 2020 SADA License Agreement, or SADA License Agreement as well as our relationship
with MSK as a user of DANYELZA and any future products;
Our expectations related to the use of our cash and cash equivalents, and how long our cash resources are
expected to last, may be inaccurate and we may require additional funding sooner than we expect;
● We will require substantial additional funding to finance our operations, complete the development and
●
commercialization of our product and product candidates, and evaluate future product candidates, programs
or other operations;
The timing and amount of any future financing transaction and our common stock price and other factors
may impact our ability to raise additional capital on favorable terms;
Our expectations with respect to our financial performance, including our estimates regarding revenues,
expenses, cash flow, and capital expenditure requirements may not be realized;
●
●
● We face significant competition in an environment of rapid technological and scientific change, and there is
●
a possibility that our competitors may achieve regulatory approval before us or develop therapies that are
safer or more effective than ours;
Our business, financial condition and results of operations have been and may in the future be adversely
affected by health crises, macroeconomic conditions, such as inflation and high interest rates, uncertain
global financial markets, supply-chain disruptions, and by geopolitical events, including the invasion of
Ukraine by Russia, and sanctions related thereto, which resulted in the suspension of our clinical trial and
regulatory activities in Russia; as well as the state of war between Israel and Hamas and the related risk of a
larger conflict;
● We currently depend on a small number of third-party contract manufacturing organizations, or CMOs, and
expect it would be difficult to find a suitable replacement for the complex and difficult manufactures of
DANYELZA and our product candidates. The loss of any of these CMOs or the failure of any of them to
meet their obligations to us could affect our ability to continue to sell DANYELZA or to develop our other
product candidates in a timely manner;
● We are subject to government laws and regulations, and we may be unable to comply with healthcare laws
●
and regulations in the United States and any applicable foreign countries, including, without limitation, those
applying to the marketing and sale of pharmaceutical products;
Any litigation to which we are a party could result in substantial damages or other adverse consequences to
our business and may divert management’s time and attention from our business. Any litigation that is
successful against us may result in the incurrence of substantial liability if our insurance is inadequate.
PART I
ITEM 1.
BUSINESS.
We are a commercial-stage biopharmaceutical company focused on the development and commercialization of
novel radioimmunotherapy and antibody-based therapeutic products for the treatment of cancer. We are leveraging our
proprietary radioimmunotherapy and antibody platforms and expertise to develop a broad portfolio of innovative
medicines.
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Our approved drug DANYELZA (naxitamab gqgk) received accelerated approval by the United States Food and
Drug Administration, or the FDA, in November 2020 for the treatment, in combination with Granulocyte Macrophage
Colony Stimulating Factor, or GM-CSF, of pediatric patients one year of age and older and adult patients with relapsed or
refractory, or R/R, high risk neuroblastoma, or NB, in the bone or bone marrow who have demonstrated a partial response,
minor response, or stable disease to prior therapy. We are commercializing DANYELZA in the United States and began
shipping in February 2021. In December 2022, we announced a distribution agreement with WEP Clinical Ltd., or WEP, in
connection with an early access program for DANYELZA in Europe.
DANYELZA has been evaluated in a Phase 2 clinical study in front-line NB, a pilot study of
chemoimmunotherapy for high-risk NB, and is currently being evaluated in a pivotal-stage multicenter trial (Study 201),
which is designed to satisfy the accelerated approval confirmatory study and post-marketing requirements of the FDA, as
well as a Phase 2 clinical study in second-line relapsed osteosarcoma patients.
We are using our proprietary Self-Assembly DisAssembly Pretargeted Radioimmunotherapy, or SADA PRIT,
technology platform, a concept we also refer to as Liquid RadiationTM, to advance a series of antibody constructs, using a
two-step pre-targeting approach. The bispecific antibody fragments bind to the tumor before a radioactive payload is
subsequently injected. The aim is specifically to deliver the radioactive payload to the tumor while minimizing exposure to
normal tissue as indicated in non-clinical studies.
GD2-SADA for potential use in GD2-positive solid tumors is our first SADA PRIT construct. The first patient
was dosed in April 2023 in our Phase 1, dose-escalation, single-arm, open-label, non-randomized, multicenter clinical trial
for the treatment of certain solid tumor cancers, including small cell lung cancer, sarcoma, and malignant melanoma. We
currently have six active treatment sites and are continuing to add additional sites. We are pleased with our observations so
far and in particular that patients dosed with the GD2-SADA protein have not experienced treatment related pain, dose
limiting toxicities, related severe adverse events or serious adverse events. Based on the SPECT/CT scans performed, we
believe that we have demonstrated proof of concept for GD2-SADA by demonstrating that the GD2-SADA molecules can
find and bind to tumors and that the radionuclide targets the GD2-SADA molecules. As of the date hereof, we are treating
patients in cohort 4 at 3mg/kg. The initial blood PK profile of the construct in patients appears to match our pre-clinical
models in terms of clearance data, and the blood PK profiles from patients are comparable and we believe are supportive of
the current dose interval of two to five days.
The Investigational New Drug application, or IND for our first hematological target, the CD38-SADA construct
for the treatment of patients with Relapsed or Refractory Non-Hodgkin Lymphoma was cleared by the U.S. FDA in
October 2023, and we expect to dose the first patient in 2024. We believe the SADA PRIT technology platform could
potentially improve the efficacy of immunological therapeutics (e.g., naked monoclonal antibodies), in tumors that have
not historically demonstrated meaningful responses to immunological agents.
In January 2023 we announced a strategic restructuring plan designed to extend our cash resources and prioritize
resources on the commercialization and potential label extension of DANYELZA and development of the SADA PRIT
technology platform. In addition to deprioritizing the omburtamab program (described below) for all indications and
product candidates, we have deprioritized other pipeline programs, including activities relating to the GD2-GD3 Vaccine
and CD33 bispecific antibody constructs by delaying trial initiation and overall timelines as part of the restructuring plan.
We completed the restructuring in May 2023, which resulted in an approximately 35% reduction to our then workforce.
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As summarized in the overview below, we are advancing development of a focused clinical pipeline of novel
radioimmunotherapy and antibody-based therapeutic candidates aimed at improving the lives of patients afflicted with a
variety of cancers:
(1) DANYELZA received accelerated approval from the FDA in November 2020. Pivotal registration studies supporting the BLA submission, comprised
of Study 12-230 measuring pharmacokinetic, toxicity and efficacy and an additional pivotal multicenter Phase 2 study, Study 201, designed to prove
comparability between study sites using a current good manufacturing practices, or cGMP, commercial manufacturer. Study 201 has also been
designed to satisfy the confirmatory study and post-marketing requirements by the FDA.
(2) Initial study represents pediatric and young adult patients with ages ranging from 1 to 40 years.
Our mission is to become the global leader in developing better and safer radioimmunotherapy and antibody based
oncology therapies addressing clear unmet medical needs and, as such, have a transformational impact on the lives of
patients. We intend to advance and expand our pipeline of therapeutic candidates into certain adult cancer indications either
independently or in collaboration with potential partners.
DANYELZA
DANYELZA, our first FDA approved product is a recombinant humanized immunoglobulin G, subtype 1k, or
IgG1κ, monoclonal antibody, or mAb, that targets ganglioside GD2, which is highly expressed in various neuroectoderm
derived tumors and sarcomas. DANYELZA received accelerated approval by the FDA in November 2020 for the
treatment, in combination with GM CSF, of pediatric patients 1 year of age and older and adult patients with R/R high-risk
NB in the bone or bone marrow who have demonstrated a partial response, minor response, or stable disease to prior
therapy. We are commercializing DANYELZA in the United States and began shipping it in February 2021. Sales of
DANYELZA for the years ended December 31, 2023 and 2022 were $84.3 million and $49.3 million, respectively. In 2023
SciClone Pharmaceuticals International Ltd., or SciClone, launched DANYELZA for the treatment of patients with R/R
high-risk NB in China, and Takeda Israel, or Takeda, launched DANYELZA in Israel. In addition, we received regulatory
approval for DANYELZA in Brazil and in Mexico during 2023.
The accelerated approval of DANYELZA is subject to certain post-marketing requirements and commitments,
including a confirmatory post-marketing trial of clinical benefit, that must be completed in order to convert the Biologics
License Application, or BLA, to full approval and prevent withdrawal of the license by the FDA. The confirmatory post-
marketing clinical trial required by the FDA to verify and to further characterize the clinical benefit is our ongoing Study
201, which is designed to enroll a minimum of 80 evaluable patients and report overall rate of response, or ORR, duration
of response, or DOR, progression free survival, or PFS, and overall survival, or OS. The ORR is the primary
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endpoint for the study, DOR is the secondary endpoint and PFS and OS are secondary endpoints in long-term follow-up.
We anticipate completing the study no later than by March 31, 2027.
In addition, DANYELZA is currently being studied in several ongoing clinical trials, including a pivotal-stage
multicenter trial (Study 201), which is also designed to satisfy the confirmatory study and post marketing requirements by
the FDA, and a Phase 2 clinical trial (Study 15-096) for relapsed osteosarcoma. DANYELZA was also studied in a Phase 2
clinical trial (Study 16-1643) in front line NB and a pilot study (Study 17-251) of chemoimmunotherapy for high-risk NB.
In addition, investigator sponsored studies, or ISS, are ongoing with Beat Childhood Cancer Research Consortium, or
BCC, which is conducting a Phase 2 multi-center trial evaluating naxitamab in combination with standard induction
therapy in patients with newly diagnosed high-risk NB, and we are planning to initiate an ISS Phase 1b/2 trial investigating
TGFβ NKs, gemcitabile and naxitamab in patients with metastatic breast cancer at the Ohio State University in the first
half year of 2024.
We believe DANYELZA has multiple potential advantages over other GD2 targeting antibody-based therapies. In
particular, its toxicity profile allows for doses two and a half times greater than existing GD2 targeting antibody based
therapies. Unlike currently approved GD2 targeting therapies for NB, which require 10 to 20 hours of infusion and
hospitalization for several days, DANYELZA is administered in approximately 30 to 60 minutes in an outpatient setting.
We believe this significantly shorter administration time is an important advantage considering the overall pain associated
with treatment.
Other than DANYELZA, there are no FDA approved therapies for primary refractory or second line pediatric NB
patients. DANYELZA has also received orphan drug designation, or ODD, and rare pediatric disease designation, or
RPDD, from the FDA for the treatment of NB. In addition, DANYELZA has received breakthrough therapy designation,
or BTD, in combination with GM CSF, for the treatment of high risk NB refractory to initial therapy or with incomplete
response to salvage therapy in patients greater than 12 months of age with persistent, refractory disease limited to bone
marrow with or without evidence of concurrent bone involvement. In 2018, the European Commission granted orphan
medicinal product designation for naxitamab for the treatment of NB, and in 2023, European Medicine Agency, or EMA
agreed to the Company’s proposed Pediatric Investigation Plan, or PIP, for naxitamab.
While our current clinical efforts for DANYELZA are focused on rare pediatric cancers, we believe that we can
potentially expand its application to the treatment of adults with cancers that express GD2. We estimate that there were
more than 200,000 new adult patients diagnosed with GD2 positive cancers in the United States in 2023.
SADA PRIT Technology Platform
On April 15, 2020, we entered into a license agreement, or the SADA License Agreement, with MSK and
Massachusetts Institute of Technology, or MIT, that grants us an exclusive, worldwide, sublicensable license to certain
patent and intellectual property rights developed by MSK and MIT to develop, make, and commercialize licensed products
and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments. The
patents and patent applications covered by the SADA License Agreement are directed, in part, to the SADA PRIT
Technology, as well as a number of SADA PRIT constructs developed by MSK.
We are using the potential first-in-class SADA PRIT technology to advance a series of antibody constructs, where
bispecific antibody fragments bind to the tumor before a radioactive payload is injected in a two-step approach. GD2-
SADA for potential use in GD2-positive solid tumors is our first SADA PRIT construct, and we had our first clinical
patient dosed in April 2023 in our Phase 1, dose-escalation, single-arm, open-label, non-randomized, multicenter trial, for
the treatment of certain solid tumor cancers, including small cell lung cancer, sarcomas, and malignant melanoma. In
addition, the IND for our first hematological target, the CD38-SADA construct for the treatment of patients with Relapsed
or Refractory Non-Hodgkin Lymphoma was cleared by the FDA in October 2023, and we expect to dose the first patient in
2024.
In addition to GD2-SADA and CD38-SADA, we have two additional SADA PRIT programs in pre-clinical
development: B7H3-SADA and HER2-SADA. We expect to file INDs for these two programs in 2025.
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We believe the SADA PRIT technology could potentially improve the safety and efficacy of radiolabeled
therapeutics in tumors that have not historically demonstrated meaningful responses to radiolabeled agents.
Omburtamab
Omburtamab is a murine monoclonal antibody that targets B7-H3, an immune checkpoint molecule that is widely
expressed in tumor cells of several cancer types, including pediatric central nervous system, or CNS, and leptomeningeal
metastases, or LM from NB. 131I-omburtamab, which is omburtamab radiolabeled with Iodine-131, has been studied in
several clinical trials including development Study 101 and Study 03-133 for the treatment of pediatric patients who have
CNS/LM from NB. We submitted a BLA to the FDA for radiolabeled 131I omburtamab for central nervous system, or CNS,
leptomeningeal metastases, or LM, from NB in August 2020, and received a Refusal to File letter from the FDA in October
2020. The reason for the FDA’s decision to issue the Refusal to File letter was that upon preliminary review, the FDA
determined that certain parts of the Chemistry, Manufacturing and Control, or CMC Module and the Clinical Module of the
BLA required further detail. Among other things, the FDA requested that detailed validation data be included in the CMC
Module, that clinical study data and external control data be reanalyzed using a propensity score adjusted analysis for
important baseline characteristics, such as prior receipt of irradiation, and that further supportive evidence in the form of
direct anti-tumor effect be included in the Clinical Module. We held a number of Type B meetings with the agency,
including a pre-BLA meeting in January 2022, before we resubmitted the BLA for omburtamab in March 2022. In October
2022 we met with the U.S. Food and Drug Administration, or FDA, and the ODAC, who reviewed 131I-omburtamab and
voted 16 to 0 that we had not provided sufficient evidence to conclude that omburtamab improves overall survival. In
November 2022, we received a CRL for the BLA. In the CRL, and in our Type A meeting held subsequent to receipt of the
CRL, the FDA made recommendations for us to consider in terms of trial design to demonstrate substantial evidence of
effectiveness and a favorable benefit-risk profile. We are currently considering the future for our omburtamab development
program and have received an 18-month extension of the BLA, which expires on May 30, 2025. We can provide no
assurance that the development of omburtamab will continue or that omburtamab will ultimately receive FDA approval.
As part of our restructuring plan executed in 2023, we also deprioritized 124I-omburtamab, which is omburtamab
radiolabeled with Iodine-124, that was being studied for the treatment of Diffuse Intrinsic Pontine Glioma, or DIPG, and
131I-omburtamab that was being studied for the treatment of Desmoplastic Small Round Cell Tumors, or DSRCT.
In addition, our Phase 1 multicenter study for 177Lu-omburtamab-DTPA, for the treatment of medulloblastoma,
and our Phase 1 multicenter study with 177Lu-omburtamab-DTPA targeting B7-H3 positive CNS/LM tumors in adults were
deprioritized in 2022.
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Overview of Active INDs
The table below sets forth our product candidates, date of the initial submission of the IND to the FDA, as well as
the current sponsor, the subject matter and the current status of each such IND.
Product Candidate
DANYELZA
Date of
Initial Submission
Current
Sponsor
June 14, 2011
MSK
Subject Matter
of IND
NB and other GD2-positive
tumors
Current Status
Clinical trials completed
DANYELZA
September 5, 2017
Y‑mAbs
Pediatric NB
Clinical trials ongoing
GD2-SADA
December 30, 2021
Y-mAbs
GD2-positive tumors solid
Clinical trial ongoing
CD38-SADA
September 15, 2023
Y-mAbs
Non-Hodgkin’s lymphoma
(NHL)
Planning clinical trial in 2024
Omburtamab*
(131I‑omburtamab and
124I‑omburtamab)
September 22, 2000
Y‑mAbs
(MSK
original
sponsor)
CNS/LM from NB,
DSRCT, DIPG and other
B7‑H3 positive tumors
Clinical trials completed for
CNS/LM NB, DSRCT and DIPG.
Deprioritized
GD2-GD3 Vaccine*
July 29, 2008
MSK
Pediatric NB
Clinical trial ongoing at MSK.
Deprioritized
* In November 2022, we received a CRL for the BLA. We are currently considering the future for the omburtamab development
program. We can provide no assurance that the development of omburtamab will continue or that omburtamab will ultimately receive
FDA approval. In addition, we have deprioritized the GD2-GD3 Vaccine program as part of our 2023 restructuring.
MSK License Agreements
We have exclusive rights to MSK’s rights in all of our current product candidates under our 2015 license
agreement, or the MSK License, with MSK. The MSK License also provides us with non-exclusive access to technology
that involves the creation of a novel human protein tag that can potentially dimerize, or link together, bispecific T-cell
engagers, or BiTEs, which we refer to as the MULTI-TAG technology. We believe that our strong relationship with MSK,
one of the world’s leading cancer treatment centers, and our access to certain of MSK’s technologies and substantial
research capabilities affords us several competitive advantages. In addition, under a separate SADA License Agreement
with MSK and MIT we have exclusive, worldwide, sublicensable license to certain patent and intellectual property rights
developed by MSK and MIT to develop, make, and commercialize licensed products and to perform services for all
therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments using the SADA PRIT technology.
Material Funding Activities
Since our inception in April 2015, we have raised approximately $488.8 million through private placements of our
securities, our initial public offering in September 2018 and our public offerings in November 2019 and February 2021. As
of December 31, 2023, we had cash and cash equivalents of $78.6 million.
Our Strategy
Our mission is to become the global leader in developing better and safer radioimmunotherapy and antibody-
based cancer therapies addressing clear unmet medical needs and, as such, have a transformational impact on the lives of
patients. We intend to advance and expand our product pipeline into certain adult cancer indications either independently or
in collaboration with potential partners.
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Key elements of our strategy to achieve this goal are:
● Independently commercialize DANYELZA in indications and territories where we believe we can
maximize value. On November 25, 2020, DANYELZA received accelerated approval by the FDA following
an expedited regulatory pathway and priority review under the BTD granted in 2018. We initiated
commercialization of DANYELZA in the United States following the FDA approval. We commercialize
DANYELZA independently focusing on already-identified key treatment centers, as well as educating
doctors, patients and payors about DANYELZA and its current and future indication to drive acceptance and
uptake. We believe that we will need to engage a small number of physician specialists for training regarding
the appropriate administration and use of DANYELZA. The sales call points for DANYELZA in the United
States are highly concentrated and generally addressable by a small commercial organization, which we
believe allow us to cost-effectively maintain our own commercial capability. Finally, we have already, and
we intend to further form in the future commercial and development collaborations for indications and in
territories that are we believe may be better served by the resources of local specialists or larger
biopharmaceutical companies.
● Expand the indications and target patient populations for our existing product candidates. Our goal is
to maximize the potential of our existing product candidates in areas where there is a significant unmet
medical need by exploring additional indications, as well as expanding the target population within existing
indications. For example, we are developing DANYELZA for the potential treatment of front-line and third-
line NB and relapsed osteosarcoma and we intend to discuss our BLA strategy in these indications with the
FDA. We believe that we may qualify for a supplemental BLA, or sBLA, in each of these indications
assuming positive pivotal data.
● Advance our novel SADA PRIT Technology platform focusing on targets that we believe may offer
potential substantial benefits over existing therapies. We are also advancing a series of SADA PRIT
constructs that we believe have the potential to allow for easy adaptation to different tumor targets and a
variety of payloads. Our first two clinical trials are the GD2-SADA construct for the treatment of GD2-
positive solid tumors and CD38-SADA for non-Hodgkin’s Lymphoma. In addition, we have two additional
programs SADA PRIT programs in pre-clinical development: B7H3-SADA and HER2-SADA.
● Leverage our relationships with leading academic and clinical institutions to develop additional
product candidates. We intend to continue to partner with leading centers, such as MSK, for cancer
treatments worldwide in various jurisdictions, to identify and develop additional product candidates. We
believe that our relationship with MSK, our access to several of their technologies and MSK’s significant
expertise in pediatric cancer care provides us with significant competitive advantages. For example, our
Investigator-Sponsored Master Clinical Trial Agreement, or the MCTA, with MSK provides us with ready
access to patients for clinical trial enrollment, which is a significant advantage in rare disease drug
development where patients are often hard to locate and recruit. Our Sponsored Research Agreement, or the
SRA, with MSK, pursuant to which we agreed to provide research funding to MSK, grants us a first option to
negotiate an exclusive license to MSK’s rights in any new joint inventions discovered under the SRA. We
plan to leverage our strong relationship with institutions such as MSK and their expertise and research
capabilities to augment our own capabilities in order to identify new product candidates for the treatment of
cancers where there is a significant unmet medical need and no effective therapy currently available.
Current Approaches to the Treatment of Cancer
Cancer Overview
Cancer is a broad group of diseases in which cells divide and grow in an uncontrolled fashion, forming
malignancies that can invade other parts of the body. Cancers can subsequently spread throughout the body by processes
known as invasion and metastases. Cancer cells that arise in the lymphatic system and bone marrow, or BM, are referred to
as hematological malignancies. Cancer cells that arise in other tissues or organs are referred to as solid tumors.
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Cancer is a major public health problem in the United States and worldwide. The National Cancer Institute, or
NCI, estimated that approximately 40% of all men and women in the United States will be diagnosed with some form of
cancer during their lifetime (based on 2017-2019 data). According to the U.S. Centers for Disease Control, or CDC, cancer
is currently the second leading cause of death in the United States and is expected to surpass heart disease as the leading
cause of death in the next several years. Although progress has been made in the diagnosis and treatment of cancer, the
American Cancer Society, or ACS, estimates that an estimated 2.0 million new cancer cases will be diagnosed in the
United States and over 600,000 people will have died from cancer in 2023 (Cancer statistics, 2023 - Siegel - 2023 - CA: A
Cancer Journal for Clinicians - Wiley Online Library). Thus, there remains a significant need for novel and improved
treatment options for cancer patients.
Cancer treatment has traditionally included chemotherapy, radiotherapy, hormone therapy, surgery or a
combination of these approaches. While small molecule chemotherapy agents and cytotoxic agents have demonstrated
efficacy in treating certain types of cancers, they can also cause toxicities that may lead to life-threatening consequences,
lower quality of life or untimely termination of treatment. Furthermore, these treatments are only partially effective in solid
tumors, in part because the maximal achievable doses are limited by systemic toxicity, which consequently hinders the
prospects of long-term remission in patients. Over a course of more than 20 years, cancer research and treatment has
shifted to more targeted therapies, such as monoclonal antibodies, and immuno-oncology, a new field of cancer therapy
focused on enhancing antitumor immune responses.
Advances in understanding the immune system’s role in treating cancer have established immunotherapy, or the
practice of harnessing immune system functions to combat malignant cell growth, as an important treatment approach.
Cancer immunotherapy began with treatments that nonspecifically activated the immune system and had limited efficacy
and/or significant toxicity. In contrast, new immunotherapy treatments can activate specific, key immune cells, leading to
improved targeting of cancer cells, efficacy, and safety.
Cancer therapies are sometimes characterized as front-line, second-line, or third-line, and the FDA often approves
new therapies initially only for third-line use. When cancer is detected early enough, front-line therapy is sometimes
adequate to effectively treat the cancer or prolong life. Whenever front-line therapy, usually chemotherapy, radiation
therapy, surgery, or a combination of these, proves unsuccessful, second-line therapy may be administered. Second-line
therapies often consist of more chemotherapy, surgery, tumor-targeted therapies such as monoclonal antibodies and small
molecules, or a combination of these. Third-line therapies can include bone marrow transplantation, antibody and small
molecule targeted therapies, more invasive forms of surgery, and new technologies.
Immune System and Introduction to Antibodies
The immune system is often described as having two main branches—innate (non-specific) and adaptive
(acquired) immunity. It defends against invading pathogens such as viruses, parasites, and bacteria, and provides
surveillance against cancers. The innate immune system is the initial response to an infection, and the response is the same
every time regardless of prior exposure to the infectious agent. The adaptive immune system includes B-cells, which
secrete antibodies and T-cells, which can be either helper T-cells, suppressor T-cells or cytotoxic T-cells.
An antibody, also known as an IgG, is a large, Y-shaped protein produced mainly by plasma cells in response to
foreign substances, such as viruses or cancer cells. Antibodies circulating in the bloodstream function by binding to the
target or antigen they are generated to fight. The binding process involves a lock-and-key mechanism in which the paratope
region of the antibody, analogous to a lock, binds to one particular epitope of a specific antigen, analogous to a key. This
allows the antibody to bind to a specific antigen with precision, thereby attacking only its intended target.
Different types of antibodies include: (i) Monoclonal Antibodies—laboratory-made antibodies typically derived
from immune cells of mammals that have been immunized with a desired antigen and are all clones of a unique parent;
(ii) Humanized/Chimeric Antibodies—antibodies with both mouse and human antibody proteins that are humanized
(i.e., engineered to replace mouse components with more human components) to reduce the immune system response
against antibodies identified as foreign (i.e., from a different species) in nature; (iii) Naked Monoclonal Antibodies—
antibodies without any drug or radioactive material attached and which are the most common type of antibodies in treating
cancer; (iv) Antibody Drug Conjugates, or ADCs—monoclonal antibodies that are joined to a chemotherapy
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drug, a radioactive particle or cancer cell killing agent, in which the monoclonal antibody is used as a homing device to
deliver these substances directly to the cancer cell; and (v) Bispecific antibodies comprised of two different monoclonal
antibody constructs, which allows the antibody to bind to two specific therapeutic targets at the same time, typically one
target on the tumor cell and one target on an immune system cell.
Antibodies may function through multiple mechanisms simultaneously, including binding to cancer cells and
flagging for B-cells and T-cells to more easily detect the target, or delivering radiation treatment by acting as a vehicle to
transfer small radioactive particles directly to the cancer cells and to minimize the effect of radiation on normal cells. Other
mechanisms include triggering cell-membrane destruction, preventing cell growth or blood vessel growth, blocking
immune system inhibitors, directly attacking cancer cells and delivering chemotherapy or binding cancer cells and immune
cells simultaneously.
Studies have shown that, as a drug class, antibodies have transformed oncology treatment and include some of the
best-selling therapies on the biopharmaceutical market.
Our Product and Product Candidates
We have one FDA-approved product and a product pipeline including product candidates primarily targeting
clinically validated tumors that express GD2 and CD38, respectively.
On November 25, 2020, DANYELZA, was approved by the FDA, in combination with granulocyte-macrophage
Colony-Stimulating factor, or GM-CSF, for the treatment of pediatric patients 1 year of age and older and adult patients
with relapsed or refractory high-risk neuroblastoma in the bone or bone marrow who have demonstrated a partial response,
minor response, or stable disease to prior therapy. We began to commercialize DANYELZA in the United States upon
receipt of FDA approval in November 2020. DANYELZA is also in mid-stage clinical development for additional cancers.
We are using our proprietary SADA PRIT Technology platform, a concept we also refer to as Liquid RadiationTM,
to advance a series of antibody constructs, where bispecific antibody fragments bind to the tumor before a radioactive
payload is injected in a two-step approach. GD2-SADA for potential use in GD2-positive solid tumors is our first SADA
construct. We obtained clearance of our IND for GD2-SADA in July 2022. The first patient was treated with GD2-SADA
in March 2023. We announced our first hematological target CD38-SADA in December 2022, and submitted an IND for
this construct in September 2023. The IND was cleared in October 2023 and we expect the first patient to be treated in
2024. In addition, we have two additional programs SADA PRIT programs in pre-clinical development: B7H3-SADA and
HER2-SADA. We expect INDs for these two programs will be filed in 2025. We believe the SADA PRIT technology could
potentially improve the efficacy of radiolabeled therapeutics in tumors that have not historically demonstrated meaningful
response to radiolabeled agents.
We have exclusive worldwide commercial rights to all of our current product candidates and we have granted
commercialization partners certain exclusive rights to develop and commercialize DANYELZA and omburtamab in select
territories, including Greater China, Israel, Latin America, Russia and certain Eastern European countries.
DANYELZA Overview
DANYELZA is a humanized monoclonal antibody approved by the FDA in combination with Granulocyte-
Macrophage Colony-Stimulating factor, or GM-CSF, for the treatment of pediatric patients 1 year of age and older and
adult patients with relapsed or refractory high-risk neuroblastoma in the bone or bone marrow who have demonstrated a
partial response, minor response, or stable disease to prior therapy, and being evaluated for the treatment of other GD2-
positive tumors, including osteosarcoma. DANYELZA targets GD2, which, based on our research, is expressed on almost
all NB cancer cells regardless of disease stage and in almost all osteosarcomas.
As of December 31, 2023, DANYELZA has been administered to more than 1,319 patients in clinical trials,
including patients treated under our expanded access and compassionate use programs. Sales of DANYELZA for the year
ended December 31, 2023 were $84.3 million.
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In clinical studies, DANYELZA has been shown to cause serious infusion reactions including anaphylaxis,
cardiac arrest, bronchospasm, stridor, and hypotension. The most common adverse events were mainly mild and moderate
and included infusion-related reaction, pain, tachycardia, vomiting, cough, nausea, diarrhea, decreased appetite,
hypertension, fatigue, erythema multiforme, peripheral neuropathy, urticaria, pyrexia, headache, edema, anxiety, localized
edema and irritability. DANYELZA has been approved with a boxed warning for serious infusion reactions and
neurotoxicity.
In pediatric R/R high-risk NB, we believe that DANYELZA has multiple potential advantages over other GD2-
targeting antibody-based therapies. In particular, the modest toxicity it exhibits allows for doses 2.5 times greater than the
other GD2-targeting antibody-based therapies. DANYELZA also has a significantly shorter infusion time (approximately
30 to 60 minutes compared to 10 to 20 hours for other GD2-targeting antibody-based therapies being used in front-line
therapy), which we believe is an important factor given that DANYELZA is administered in an outpatient setting.
In addition, DANYELZA has been evaluated in a Phase 2 clinical study (Study 16-1643) in front-line NB, a pilot
study (Study 17-251) of chemoimmunotherapy for high-risk NB and is currently being evaluated in a Phase 2 clinical study
(Study 15-096) in second-line relapsed osteosarcoma patients. Study 15-096 completed enrollment in December 2023, and
assuming positive results of this study, we will be planning an international multicenter randomized pivotal clinical study
with DANYELZA compared to Standard of Care in patients with relapsed osteosarcoma with Pulmonary Only Recurrence
(Study 205).
Furthermore, DANYELZA is being studied in Study BCC-018, which is a Phase 2 study sponsored by Beat
Childhood Cancer Research Consortium investigating Naxitamab added to induction therapy for subjects with newly
diagnosed high-risk neuroblastoma. This is an ongoing, multicenter clinical trial to evaluate the efficacy and safety of
administering naxitamab in combination with standard induction chemotherapy.
GD2 Overview
We believe that monoclonal antibodies such as DANYELZA that target ganglioside GD2 are one of the most
promising cancer immunotherapy approaches. Gangliosides, including GD2, GM2, GD3, NGcGM3 and OAcGD2, have
been shown to be expressed at very high levels in tumor cells of several types of cancers.
As a potential target molecule for anti-tumor therapy, GD2 has certain advantages when compared to other tumor
associated gangliosides because it is highly expressed in tumor cells of several types of cancers and is not expressed at all,
or expressed at very low levels, in normal cells. A National Cancer Institute pilot program for the prioritization of the most
important cancer antigens ranks GD2 as number 12 out of 75 potential targets for cancer therapy based on therapeutic
function, immunogenicity, role of the antigen in oncogenicity, specificity, expression level and percent of antigen-positive
cells, stem cell expression, number of patients with antigen-positive cancers, number of antigenic epitopes, and cellular
location of antigen expression. GD2 ranks as number six when compared to antigens that are directly targetable on the cell
surface. Antibodies directed against GD2 have been shown to effectively induce cell death through a combination of both
apoptosis and tumor cell necrosis in GD2-positive tumors.
GD2 Expression in Various Cancer Types
Studies have shown that GD2 is highly expressed on neuroectoderm-derived tumors and sarcomas, including NB,
retinoblastoma, melanoma, small cell lung cancer, brain tumors, osteosarcoma, rhabdomyosarcoma, Ewing’s sarcoma in
children and adolescents, as well as liposarcoma, fibrosarcoma, leiomyosarcoma and other soft-tissue sarcomas in adults.
These cancers have a high mortality rate ranging from 20-80% depending on the tumor type.
We believe there is a large market opportunity for the treatment of solid tumors that express GD2. Based on our
own research and our review of published research, we believe GD2 expression occurs in approximately 60-100% of tumor
samples from various cancer types, and in substantially all NB and osteosarcoma tumor samples (Cancer Molecular Targets
and Therapeutics, Nazha et al., 2022: Disialoganglioside GD2 Expression in Solid Tumors and Role as a Target for Cancer
Therapy). We estimate that there were more than 200,000 new patients diagnosed with GD2-
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positive cancer in the United States in 2017. While our clinical development efforts for DANYELZA are primarily focused
on rare pediatric cancers, we believe we have the potential to expand DANYELZA’s application beyond pediatric cancers
to the treatment of adults with cancers that express GD2. For example, we are supporting pre-clinical in-vitro and in-vivo
studies evaluating the effect of naxitamab in breast cancer cells. In addition, we are supporting an investigator sponsored
Phase 1b/2 study evaluating at the combination of naxitamab, gemcitabine and NK cells in advanced breast cancer patients.
DANYELZA—mechanism of action
Our pre-clinical studies have shown that DANYELZA binds to GD2 molecules on tumor cells with high affinity
and a slow off-rate, which indicates DANYELZA’s strong binding ability. In mice that have been transplanted with human
NB tissue, DANYELZA demonstrated dose-dependent inhibition of tumor growth and generally increased survival. In
vitro studies show that when DANYELZA binds to tumor cells, it induces tumor cell death through antibody dependent
cell-mediated cytotoxicity and complement-dependent cytotoxicity. DANYELZA may also inhibit tumor cell migration
through its inhibitory effect on GD2 molecules, which are involved in tumor cell adhesion and migration. In vitro studies
also show that Granulocyte-Macrophage Colony-Stimulating Factor, or GM-CSF, enhances the activity of DANYELZA in
a dose-dependent manner and is therefore generally combined with DANYELZA in our clinical trials.
DANYELZA for the treatment of pediatric relapsed or refractory high-risk neuroblastoma
On November 25, 2020 DANYELZA received accelerated approval by the FDA in the United States for treatment
in combination with GM-CSF of high-risk R/R NB. This approval was based primarily on interim data from the Study 201
and Study 12-230. In order to meet certain post-marketing commitments issued by the FDA, Study 201 with DANYELZA
is currently still ongoing for pediatric R/R high-risk NB. The FDA has issued a post-marketing commitment to provide
data on PFS, supporting the efficacy of the product. As of January 1, 2024 we have enrolled 103 patients and we anticipate
completing the study by March 31, 2027. We believe DANYELZA has multiple potential advantages over other GD2-
targeting antibodies such as higher doses and administration on an outpatient basis.
In our studies to date, DANYELZA has demonstrated a manageable safety profile, which allows for 2.5 times
greater dosing as compared to other GD2-targeting antibody-based therapies. This results in fewer doses per cycle and a
significantly shorter infusion time (approximately 30 to 60 minutes versus 10 to 20 hours for dinutuximab). Notably, since
severe pain is one of the most common side effects of treatment with GD2-targeting antibody-based therapies, we believe
that the ability to reduce infusion time to approximately 30 to 60 minutes is very important for patients and may result in a
significant reduction in demand for pain medication such as morphine. These factors allow DANYELZA to be
administered in an outpatient setting whereas other GD2-targeting antibody-based therapies require hospitalization which
usually lasts for four days or more.
Overview of Neuroblastoma
NB is a rare and almost exclusively a pediatric cancer that develops in the sympathetic nervous system, a network
of nerves that carries messages from the brain throughout the body. It is the third most common childhood cancer, after
leukemia and brain tumors, and is the most common solid extracranial tumor in children. NB is a life-threatening disease
associated with poor long-term survival. It accounts for approximately six percent of all childhood cancers and
approximately 15% of pediatric cancer deaths. Nearly 90% of patients with NB are diagnosed by age five and NB is very
rare in people over the age of 10 years. The average age of children when they are diagnosed with NB is one to two years.
The stage of NB, which describes how far the cancer has spread, is based on results of physical exams, imaging
tests, and biopsies. The International Neuroblastoma Staging System stages the disease from Stage 1 to Stage 4. Other
factors that also affect prognosis of NB include age and amplification of MYCN oncogene.
NB patients can also be placed into different risk groups from low, intermediate to high based on the stage and
other prognostic factors. High-risk NB is defined as MYCN amplified Stage 2, 3, 4S and 4 in patients of any age and
MYCN non amplified Stage 4 in patients over 18 months of age.
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There are estimated to be approximately 700 children diagnosed with high-risk NB in the United States each year
(American Cancer Society, 2021: Key Statistics about Neuroblastoma). We believe the European market is at least one and
a half times the size of the U.S. market and that there are approximately 1,050 patients diagnosed with high-risk NB in
Europe each year. We believe the current addressable market for DANYELZA consists of approximately 960 new front-
line high-risk NB patients each year and 675 primary or second-line eligible R/R NB pediatric patients each year,
representing approximately 40% of all pediatric patients diagnosed with NB in the United States and Europe, combined.
Moreover, based on the protocol we have developed with MSK, between treatment and maintenance therapy, we believe
that typically patients will receive five to ten treatment cycles of DANYELZA, each cycle consisting of three doses.
DANYELZA for Pediatric Relapsed or Refractory High-Risk Neuroblastoma—Current Treatment Landscape and
Associated Limitations
Currently, front-line treatment for pediatric NB patients usually occurs in three stages: induction, consolidation,
and maintenance. During the induction phase, patients receive chemotherapy, radiotherapy and possibly surgery to
eliminate as much tumor tissue and as many tumor cells as possible. Commonly used agents for induction treatment
include cisplatin, etoposide, doxorubicin, cyclophosphamide, and vincristine. Following surgery and/or radiotherapy, most
patients enter into consolidation therapy with the goal of eliminating any residual tumor usually with single dose
myeloablative agents (e.g. carboplatin-etoposide-melphalan) with stem cell support or an autologous stem cell transplant or
repeated transplants with thiotepa-cyclophosphamide followed by cyclophosphamide, etoposide, and ranimustine. Many
treatment centers also use immunotherapy as part of the consolidation stage of treatment. Relapse is a frequent occurrence
after consolidation.
Other than DANYELZA, there are no approved therapies in the United States for R/R NB patients. Other
treatments typically include chemotherapy, radiotherapy and other experimental therapies.
In 2015, the FDA and the European Commission, approved Unituxin® (dinutuximab), a monoclonal GD2-
targeting antibody developed by United Therapeutics Corporation, or United Therapeutics, and administered in
combination with GM-CSF, interleukin-2, or IL-2, and isotretinoin, also known as 13-cis-retinoic acid, for the treatment of
pediatric patients with high-risk NB who achieve at least a partial response, or PR, to prior front-line multiagent,
multimodality therapy. The marketing authorization for Unituxin was voluntarily withdrawn by United Therapeutics in the
European Union in 2017. In 2017 the European Commission approved Dinutuximab beta Apeiron (also known as
dinutuximab beta, ch14.18/CHO, Isqette and currently being commercialized under the name Qarziba® in the European
Union), a monoclonal GD2-targeting antibody, for the treatment of high-risk NB in patients aged 1 year and older, who
have had some improvement with previous treatments or patients whose NB has not improved with other cancer treatments
or has relapsed.
DANYELZA for Pediatric Relapsed or Refractory High-Risk Neuroblastoma—Clinical Development Program
DANYELZA has been studied in several clinical trials for the treatment of pediatric R/R NB and other diseases,
of which Study 201 and Study 15-096 are currently ongoing. The accelerated approval of DANYELZA by the FDA was
based primarily on interim data from Study 201 and Study 12-230.
Study 12-230: Phase 1/2 Study of Combination Therapy of Antibody Naxitamab with Granulocyte-Macrophage Colony-
Stimulating Factor (GM-CSF) in Patients with Relapsed/Refractory High-Risk Neuroblastoma
Phase 1 Portion of Study 12-230
The Phase 1 portion of Study 12-230 assessed dose escalation of intravenous, or IV, naxitamab (days one, three,
five) in the presence of subcutaneous GM-CSF (days minus four through five). These three doses of naxitamab and 10 days
of GM-CSF constituted a single treatment cycle. Patients who completed 4 cycles without PD were eligible to continue
treatment for up to 24 months. For the Phase 2 part of the study, patients were eligible to continue treatment for up to 4
cycles after major clinical response was obtained again with a maximum treatment period of 24 months.
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Phase 2 Portion of Study 12-230
The Study 12-230 protocol was amended in May 2016 to include an expansion Phase 2 portion. In October 2020,
topline results from the first 71 patients (including 29 patients with no evidence of disease, or NED patients) in this Phase 2
study were presented, which continued to show response rates at the same levels as in the dose escalation part of the study
with 13 of 15 evaluable, or 87% of, primary refractory patients responding and 7 of 23 evaluable, or 30% of, secondary
refractory patients responding.
The expansion Phase 2 single-arm portion of Study 12-230 was designed to assess the anti NB activity of
naxitamab and GM-CSF in patients who presented with lesions that could be objectively measured and/or monitored by
123I-MIBG scans and who were deemed to have measurable disease and be eligible for response classification by the INRC
classification incorporating 123I-MIBG scans. These patients were classified as having evaluable disease and consisted of
patients that were primary refractory patients or secondary refractory patients. Another group of patients included those
with NED but with a high-risk of relapse.
Primary Objectives
● In Group 1: (NED patients) To assess the impact of naxitamab and GM-CSF on PFS in patients in greater
than or equal to second CR/very good partial response, or VGPR, but at high-risk of another relapse.
● In Group 2: To assess the activity of naxitamab and GM-CSF in patients who have primary refractory disease
in the bone and BM by measuring response and by calculating PFS.
● In Group 3: To assess the activity of naxitamab and GM-CSF in patients who have secondary refractory
disease in the bone and BM by measuring response and by calculating PFS.
Secondary Objectives
● In patients with primary refractory or relapsed disease (groups 1 and 3):
o To evaluate the PFS from the start of hu3F8+GM-CSF treatment.
o To evaluate human anti-human antibody (HAHA).
In patients in >2nd CR (Group 2):
o To evaluate PFS from the start of hu3F8+GM-CSF treatment.
o Evaluate event free survival (EFS) from the start of hu3F8+GM-CSF treatment.
● In all patients: To evaluate the safety of naxitamab
Patient Population
In addition to satisfying certain other criteria, patients must be over one year of age and will be mainly children
and adolescents.
Study 12-230 is now completed and the data is currently being evaluated and prepared for publication.
Study 201: A Phase 2 Trial of Antibody Naxitamab and Granulocyte-Macrophage Colony-Stimulating Factor (GM-
CSF) in High-Risk Neuroblastoma Patients with Primary or Secondary Refractory Osteomedullary Disease
Study 201 is a single-arm multi-center pivotal study using current Good Manufacturing Practices, or cGMP,
manufactured naxitamab, which commenced recruitment in the second quarter of 2018 and was the basis for FDA’s
accelerated approval of DANYELZA in 2020. We have completed the initial enrollment target of 37 patients and continue
recruitment at sites outside the U.S.
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Primary Objective
● To evaluate the efficacy of IV naxitamab and GM-CSF.
Secondary Objectives
● To evaluate the safety of IV naxitamab and GM-CSF.
● To evaluate the duration of response from the start of naxitamab and GM-CSF. Duration of response is
defined as the length of time from patient response to PD.
● To evaluate PFS of naxitamab and GM-CSF.
● To evaluate median OS at two years following naxitamab and GM-CSF.
● To evaluate the pharmacokinetics of naxitamab and investigate the formation of HAHAs.
Patient Population
In addition to satisfying certain other criteria, patients must have high-risk NB with primary or secondary
refractory osteomedullary disease. Primary refractory disease is defined as no prior relapse but incomplete response to
treatment in BM as documented by histology and/or 123I-MIBG scan. Secondary refractory disease is defined as prior
relapse and incomplete response to salvage therapy in BM as documented by histology and/or 123I-MIBG scan. Patients
must be older than one year of age.
Treatment Protocol
Study 201 follows the same treatment protocol as described for Study 12-230 above.
We initiated Study 201 with the objective of establishing the primary basis for our BLA, aiming to establish
comparability of study population with Study 12-230 and to satisfy the post-marketing requirements outlined by the FDA.
The FDA granted approval under the accelerated approval regulation. The post-marketing clinical trial required by the
FDA to verify and to further characterize the clinical benefit is our ongoing Study 201, which aims to enroll a minimum of
80 evaluable patients with evaluable disease, with a minimal follow-up of 12 months from the onset of Complete
Response/Partial Response, which is equivalent to at least a total 122 patients in Study 201. The study will report ORR,
DOR, PFS and OS. The ORR is the primary endpoint for the study, DOR is the secondary endpoint, and PFS and OS are
secondary endpoints in long-term follow-up. As of December 31, 2023, we have enrolled 103 patients, and we anticipate
completing the study by March 31, 2027. The interim results from the BLA submission, and as per the label, showed that
of the for 22 patients included in the efficacy analysis, an ORR of 45% (95% CI: 24%, 68%) was observed with a
Complete Response of 36% and a Partial response of 9%. The response rates were assessed in accordance with
International Neuroblastoma Response Criteria, or INRC. Approximately 30% of responders demonstrated a DOR lasting
at least 6 months, defined as the time from randomization to disease progression, or death, in patients who achieved
completed or partial response. Among 25 patients involved in safety analysis who received DANYELZA in combination
with GM-CSF, 12% were exposed for 6 months or longer and none were exposed for greater than one year. Serious adverse
reactions were observed in 32% of patients receiving DANYELZA in combination with GM-GSF, including anaphylactic
reaction (12%) and pain (8%). Permanent discontinuation of DANYELZA due to an adverse reaction occurred in 12% of
patients. The interim results have been submitted for publication.
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Study 16-1643: Naxitamab/GM-CSF Immunotherapy Plus Isotretinoin for Consolidation of First Remission of Patients
with High-Risk Neuroblastoma: A Phase 2 Study
Study 16-1643 was a Phase 2 single-arm clinical trial where patients with high-risk NB in first CR/VGPR undergo
consolidation with naxitamab and GM-CSF for five cycles and isotretinoin for six cycles. The primary objective of the
study was to determine relapse-free survival following treatment with naxitamab combined with GM-CSF and isotretinoin.
A total of 59 patients have completed enrollment in the study which constituted full accrual. The results have been
submitted for publication.
Study 17-251: Pilot Study of Naxitamab, Irinotecan/Temozolomide and Sargramostim (HITS) Chemoimmunotherapy
for High-Risk Neuroblastoma
Study 17-251 was a single-arm pilot, Phase 2 study conducted at MSK focusing on high-risk R/R NB patients
with soft-tissue disease. Patients received treatment combining naxitamab with irinotecan, temozolomide, and
sargramostim, collectively referred to as HITS. A total of 38 patients completed enrollment at MSK. Additionally, 52
patients received treatment on a compassionate use basis at Hospital Sant Joan de Déu Barcelona, and their outcomes were
amalgamated. The final patient was treated in the second quarter of 2021.
Responses rates comprised Complete Response rate of 26%, Partial Response rate of 11%, mixed response rate of
9%, and stable disease rate of 27% (American Society of Clinical Oncology 2022 Abstract, Modak et. al). Objective
Responses were observed in 64% of cases, with soft tissue uptake in 48% and skeletal MIBG uptake in 66%. Complete
Response in bone marrow was evident in 57% of the patents. Response rates were assessed in accordance with INRC.
Among patients who had previously been exposed to dinutuximab/immunotherapy, the Objective Response Rate to HITS
treatment stood at 42%. Toxicities encompassed myelosuppression and diarrhea, anticipated with immunotherapy, as well
as pain and hypertension, expected with naxitamab. Additionally, febrile neutropenia occurred in 4% of the patients. No
unexpected toxicities exceeding grade 2 were recorded.
Study BCC-018: A Phase 2 Study sponsored by Beat Childhood Cancer Research Consortium investigating Naxitamab
Added to Induction Therapy for Subjects with Newly Diagnosed High-Risk Neuroblastoma
This investigator sponsored study is an ongoing multicenter clinical trial in subjects with newly diagnosed high-
risk neuroblastoma to evaluate the efficacy and safety of administering naxitamab in combination with standard induction
chemotherapy.
Primary Objectives
● To evaluate the VGPR(+) rate (VGPR + CR rate) to naxitamab with standard induction therapy for subjects
with newly-diagnosed high-risk neuroblastoma according to the 1993 INRC Criteria and compare to relevant
historical controls
Secondary Objectives
● To assess objective response rate (ORR) to naxitamab with standard 5 cycle induction therapy
● To assess the objective response rate (ORR) to naxitamab after 2 cycles of induction therapy
● To evaluate event-free survival (EFS), and overall survival (OS)
● To assess the response rate of naxitamab in combination with salvage chemotherapy in subjects who have a
poor response (as defined as PR/MR/SD/NR) after 5 cycles of induction
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● Safety and tolerability of naxitamab with standard induction therapy
In parallel, the BCC consortium is currently planning a transition to a randomized controlled trial comparing
patients who receive standard induction therapy, to patients who receive naxitamab in combination with standard induction
therapy. A key endpoint will be complete response at the end of induction treatment. The study is aimed to start during the
second quarter of 2024.
DANYELZA for the Treatment of Relapsed Osteosarcoma
DANYELZA is currently being evaluated in an ongoing Phase 2 clinical study (Study 15-096) for the treatment of
patients with relapsed osteosarcoma that have been rendered surgically free of evident disease.
Overview of Osteosarcoma
Osteosarcoma is the most commonly diagnosed primary malignancy of bone, particularly among children and
adolescents. It is relatively rare and represents less than one percent of all cancers diagnosed in the United States.
According to the ACS, most osteosarcomas occur in children and adolescents between the ages of 10 and 30. In young
patients, it most often arises in the metaphyses of long bones, such as the distal femur, proximal tibia, and proximal
humerus.
Each year, approximately 1,000 new patients are diagnosed with osteosarcoma in the United States (American
Cancer Society, 2021: Key Statistics for Osteosarcoma; MDPI, Rathore et al., 2021: Pathogenesis and Current Treatment of
Osteosarcoma: Perspectives for Future Therapies). We estimate that approximately 1,500 patients are diagnosed with
osteosarcoma per year in Europe.
DANYELZA for Relapsed Osteosarcoma—Current Treatment Landscape and Associated Limitations
Current treatment options for front-line and relapsed osteosarcoma consist of surgery, chemotherapy, radiotherapy,
or a combination of the three. Multimodality treatment is increasingly recognized as an important approach for increasing a
patient’s chance of prolonged survival. Approximately 50% to 70% of patients treated with aggressive surgical resection
and systemic therapy (combination methotrexate, doxorubicin, and cisplatin chemotherapy) achieve long-term EFS if they
have localized disease at diagnosis (MDPI, Rathore et al., 2021: Pathogenesis and Current Treatment of Osteosarcoma:
Perspectives for Future Therapies). However, as discussed below, the prognosis for patients with metastatic disease at
diagnosis or those with relapsed disease is very poor. Over the past three decades, several attempts at improving the
prognosis for these patients have achieved little success. Strategies that incorporated dose-intensification of existing agents
or addition of other conventional chemotherapeutic agents as well as biological agents, have not achieved long-term benefit
in patients with relapsed osteosarcoma. We believe that at present, there are no novel compounds that have demonstrated
activity in relapsed osteosarcoma and few therapeutic options exist for patients with relapsed disease.
The poor prognosis in relapsed osteosarcoma has been confirmed in several reports. A study from the Cooperative
Osteosarcoma Study Group reported that while only one of 205 patients with recurrence survived past five years without
surgical resection, the five-year OS and EFS rates were 32% and 18% for second recurrence, 26% and 0% for third
recurrence, 28% and 13% for fourth recurrence, and 53% and 0% for fifth recurrence, respectively, in which a renewed
surgical remission was achieved (PubMed, Bielack et al., 2009: Second and Subsequent Recurrences of Osteosarcoma:
Presentation, Treatment, and Outcomes of 249 Consecutive Cooperative Osteosarcoma Study Group Patients) .
DANYELZA for Relapsed Osteosarcoma—Clinical Development Program
Currently, DANYELZA is being evaluated in an ongoing Phase 2 clinical trial (Study 15-096) for the treatment of
relapsed osteosarcoma. This Phase 2 clinical trial is designed to assess the efficacy of DANYELZA when combined with
GM-CSF in patients with relapsed osteosarcoma who have been rendered surgically free of evident disease. The
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study commenced in July 2015, and as of December 31, 2023, 46 patients had been enrolled. This trial is designed to
distinguish between a 12-month EFS of 30% versus 50%.
Study 15-096: A Phase 2 Study of Monoclonal Antibody Naxitamab with Granulocyte-Macrophage Colony-Stimulating
Factor (GM-CSF) in the Treatment of Recurrent Osteosarcoma
Study 15-096 is a Phase 2 clinical trial to assess the efficacy of naxitamab combined with GM-CSF, in patients
with recurrent osteosarcoma who have been rendered surgically free of evident disease. This study has completed
enrolment of 46 patients as of December 31, 2023, and is currently in the treatment and follow-up period.
Primary Objective
● To evaluate EFS at 12 months
Secondary Objectives
● To evaluate time to recurrence, OS and toxicity associated with naxitamab and GM-CSF
Patient Population
In addition to satisfying certain other criteria, patients must be older than one year and up to 40 years of age. To
enroll, patients must have a diagnosis of relapsed osteosarcoma. Patients must also be in or beyond their second CR.
Treatment Protocol
Each cycle of therapy is 10 days. The treatment protocol defined one cycle of treatment with IV naxitamab at a
dose of 2.4 mg/kg/dose for three days (days one, three, and five) in the presence of subcutaneous GM-CSF (administered
on day minus four before dose one of naxitamab). These three doses of naxitamab with GM-CSF administered
subcutaneously before dose one of naxitamab constitute a treatment cycle. Cycles can be repeated at two-to-four-week
intervals between the first days of naxitamab, through five cycles. A maximum of five cycles were administered on
protocol. No simultaneous anti-cancer therapy was permitted while on study.
Study 205: A Global Randomized Pivotal Trial of Naxitamab Compared to Standard of Care in Patients with Pulmonary
Only Recurrent Osteosarcoma
Study 205 is a planned international multicenter randomized pivotal clinical study with naxitamab compared to
Standard of Care in patients with Pulmonary Only Recurrent Osteosarcoma. We plan to submit an IND for this study after
the read-out for Study 15-096, which is expected in the first quarter of 2025.
SADA PRIT Technology Platform
The SADA PRIT technology platform, also referred to as Liquid RadiationTM, represents a two-step pre-targeting
radio immuno therapy. The radiation payload is encaged into a carrier molecule (DOTA) which in a non-clinical setting has
been demonstrated specifically to bind to the DOTA binding domain of the SADA molecule. Such payload deliveries have
been achieved in non-clinical in-vivo settings, where xenograft tumors have been shown to shrink or completely disappear,
with less exposure to other tissues. No clearing agent was needed, and no significant toxicity to bone marrow, kidneys or
liver tissues has been observed in the non-clinical settings. Based on non-clinical data, we believe that the SADA PRIT
technology may allow for rapid clearance of the unbound compound, while maintaining target uptake, and thereby causing
optimal tumor to normal tissue ratio. As SADA reflects a humanized protein structure, less immunogenicity is expected. In
addition, the SADA PRIT technology appears to be modular,
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embracing a tumor-binding domain, a DOTA binding domain and a tetramerization domain. Hence, DOTA-modified
radioactive payloads combined with different tumor-binding domains seems possible.
We are advancing a series of antibody constructs based on the SADA PRIT technology, with the initial approach
using 177Lu-DOTA as the radioactive payload (b-emitter). We have moved GD2-SADA and CD38-SADA into clinical
development in Phase I clinical trials in the United States. We believe the SADA PRIT technology could potentially
improve the efficacy of radiolabeled therapeutics in tumors that have not historically demonstrated meaningful responses to
radiolabeled agents.
GD2-SADA
Our first SADA PRIT molecule to enter clinical development is GD2-SADA for potential use in GD2 positive
solid tumors. The IND for GD2-SADA is open and four clinical sites in the U.S are open for enrollment. As of January 1,
2024, we have treated 9 patients and cleared cohorts 1, 2 and 3. We are currently treating patients in cohort 4.
In the first in human clinical Phase 1 trial (Study 1001), GD2-SADA is administered at various timepoints before
administration of 177Lu-DOTA payload. The trial is composed of three serial parts. The first part addresses optimization of
protein doses and spacing between SADA protein administration and payload administration. The second part addresses
optimal, safe levels of the payload delivery. In the third part, repeated exposures are investigated in order to monitor long-
term safety signals.
Patient populations to be exposed in Study 1001 include those patients with small cell lung cancer, or SCLC,
melanoma or one of several types of sarcomas, including osteosarcomas, soft tissue sarcomas, Ewing and angiosarcomas
that can all be enrolled in the study. The target, disialoganglioside GD2, has limited expression in normal human tissues
though it is expressed on peripheral neurons, central nervous system and skin melanocytes. It is highly expressed in the
targeted indications.
Overview of SCLC
GD2 is highly expressed in SCLC. In addition, data for a radio-conjugated anti-GD2 monoclonal antibody
(antibody 3F8, with similar scFv as GD2-SADA) demonstrated binding in 10 of 10 patients with SCLC. Lung cancer is the
second most common cancer in both men and women, with an estimate of more than 200,000 new cases diagnosed
annually in the United States. SCLC accounts for approximately 13% to 15% of all lung cancers. This high-grade
neuroendocrine tumor is characterized by rapid growth and early development of metastases to both regional lymph nodes
and distant sites, including the central nervous system. SCLC generally has a poor prognosis, and less than 5% of patients
with extensive disease survive two years or more. Currently, the only approved first-line treatment approach for extensive
disease, or ED, in SCLC is platinum-based chemotherapy with or without the addition of an immune checkpoint inhibitor.
Second line therapies can include topotecan and lurbinectidin. There is no approved therapeutic agent for patients with
progressive SCLC following second-line treatment.
Overview of Sarcomas
Sarcomas are a group of cancers which arise in the bones and connective tissue. GD2 is highly expressed
in several sarcomas including osteosarcomas, soft tissue sarcomas, angiosarcomas and Ewing sarcoma. Patients with any of
these types of sarcomas are eligible to be enrolled into Study 1001.
Overview of osteosarcomas
Osteosarcoma is the most common type of cancer that arises in bone, accounting for two-thirds of all bone cancer
cases. Most osteosarcomas occur in children, adolescents, and young adults. The treatment approach has not changed
significantly over the past three decades. Conventional treatment regimens typically include neoadjuvant chemotherapy
(e.g., high-dose methotrexate, doxorubicin, cisplatin) followed by surgical resection and reconstruction (with the goal of
limb salvage) and adjuvant chemotherapy.
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Overview of soft tissue sarcoma
According to American Cancer Society, 2023: Key Statistics for Soft Tissue Scarcomas, the incidence of new soft
tissue sarcomas is estimated to be approximately 13,590 in the United States in 2024. GD2 is highly expressed in soft tissue
sarcomas. Treatment options include surgery, radiotherapy, chemotherapy, and tyrosine kinase inhibitors. Different
therapeutic approaches targeting GD2 in sarcoma are in early clinical development. For patients with localized disease at
diagnosis the 5-year survival rate is approximately 80%. However, this survival rate declines to only 15% for patients with
metastatic disease.
Overview of angiosarcoma
Angiosarcoma is an aggressive subtype of soft-tissue sarcoma. According to National Center for Biotechnology
Information, Spiker et al., 2023: Angiosarcoma, it is rare, representing <1% of soft-tissue sarcomas. The origin is the
endothelial cell of blood or lymphatic vessels. It can affect any organ throughout the body, but the cutaneous form is the
most common with the skin of the head and neck region, a frequent tumor location. Angiosarcoma can occur at any age,
but the median age at diagnosis is 60-70 years. Treatment options include surgery, radiotherapy, chemotherapy, and
tyrosine kinase inhibitors. The response to therapy is impacted location and size of the tumor, but generally the prognosis is
poor with 5-year survival rates ranging from 12% to 35%.
Overview of Ewing sarcoma
Ewing sarcoma is a rare malignancy that occurs primarily in the bone or in the soft tissue around a bone. The
tumor is most common in older children and adolescents, but it can occur at any age. According to American Cancer
Society, 2021: Key Statistics for Ewing Tumors, ewing sarcoma accounts for about 1% of all childhood cancers and
approximately 200-250 children and adolescents in the United States are diagnosed with a tumor in the Ewing family of
tumors each year. Treatment options include surgery, radiotherapy, chemotherapy, and tyrosine kinase inhibitors. The
response to therapy is dependent on the stage of the tumor. The 5-year survival rates range from 81% for patients with
localized disease to 38% for patients with metastatic disease.
Overview of malignant melanoma
GD2 is expressed in the majority of melanomas. Melanoma is an uncommon type of skin cancer that arises in the
epidermis from melanocytes. According to Cancer Molecular Targets and Therapeutics, Nazha et al., 2020:
Disialoganglioside GD2 Expression in Solid Tumors and Role as a Target for Cancer Therapy, melanoma accounts for
approximately 1% of all skin cancers but accounts for approximately 75% of deaths from skin cancers. In one estimate, in
2024 by American Cancer Society, 2024: Key Statistics for Melanoma Skin Cancer, the incidence in the United States of
newly diagnosed melanomas was approximately 101,000 and approximately 8,000 people were projected to die from
melanoma in the United States.
Treatment is dependent on the extent of disease. Excision is the treatment for Stage 0 and Stage I melanomas.
Sentinel lymph node biopsy, or SLNB, may be done for Stage I and Stage II disease. A positive SLNB may lead to
adjuvant treatment with an immune checkpoint inhibitor or targeted drug therapy. Treatment for Stage III and Stage IV
disease is based on the location and extent of disease. The primary tumor is usually excised, followed by adjuvant
treatment with immune checkpoint inhibitors, high-dose interleukin-2 or targeted therapy drugs; and local treatments e.g.
radiation. Immune checkpoint inhibitors include the anti-PD1 antibodies nivolumab, pembrolizumab, and the anti-CTLA-4
antibody, ipilimumab. Targeted therapies include treatments for melanoma with mutations in the BRAF gene, including
vemurafenib, dabrafenib, and encorafenib. Chemotherapy may be used to treat refractory or recurrent Stage IV disease,
most commonly temozolomide or Dacarbazine. Recurrent disease is treated in a similar manner to Stage IV disease.
Treatment Protocol
Clinical Trial 1001; Phase 1 trial with GD2-SADA:177Lu-DOTA Complex, or GD2-SADA, in adult patients with
recurrent or refractory metastatic solid tumors known to express GD2, including SLCA, sarcoma and malignant
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melanoma. An estimated 60 participants will participate in the trial and we expect that this trial will initially run in the
United States. The IND is open and we began activating clinical trial sites in the fourth quarter of 2022. As of January 1,
2024, we have treated 9 patients and cleared cohorts 1, 2 and 3. We are currently treating patients in cohort 4.
The trial is planned as a Phase 1 trial with three parts, A, B and C. Escalation in this trial will be based on a
classical 3+3 trial design. Part A is a GD2-SADA dose escalation phase, in which patients will receive one treatment cycle.
Part B is a 177Lu-DOTA dose escalation phase, in which patients will receive up to 2 treatment cycles. Part C is a repeated
dosing phase where the doses determined in Part A and B will be administered. Patients will receive repeated treatment
cycles with a maximum of 5 cycles.
Currently we are still in Part A and the trial is progressing. We had six active sites by the end of 2023. We
advanced through the first three cohorts and are currently dosing patients in cohort 4. We believe we have demonstrated
proof of concept for the GD2-SADA by demonstrating that the SADA molecules can find and bind to tumors and that the
radionuclide targets the SADA molecule as visualized on the spec CT scans performed. It is important to note that these
early data are not complete and are not necessarily indicative of the full results or ultimate success of the SADA
development program trials.
Primary Objectives
● To determine the optimal, safe GD2-SADA protein dose and dosing interval between GD2-SADA and 177Lu-
DOTA administrations
● To determine maximum tolerable activity of 177Lu-DOTA
● Occurrence of DLTs (Part A and B)
● To assess cumulative toxicity signals and safety profile following repeated dosing and determine the
recommended Phase 2 dose (RP2D)
Pediatric development with GD2-SADA:
In 2024, we plan to submit an IND to the FDA for a Phase 1 multicenter study of GD2-SADA for the potential
treatment of neuroblastoma.
CD38-SADA
In October 2023, the IND for our CD38-SADA, our second SADA construct was cleared by the FDA. This trial is
a first in human, dose-escalation, open-label, single-arm, multi-center trial (Study 1201) investigating the safety and
tolerability of the CD38-SADA:177Lu-DOTA Drug Complex in Relapsed or Refractory non-Hodgkin Lymphoma. We
currently expect that the trial will be conducted at sites in the United States and start enrolling patient in the second quarter
of 2024.
In the first in-human clinical Phase 1 trial (Study 1201), CD38-SADA is administered at various timepoints before
administration of 177Lu-DOTA payload. The trial will be composed of two serial parts. The first part addresses
optimization of protein doses and spacing between SADA protein administration and payload administration. The second
part seeks to identify the optimal and safe levels of the payload delivery.
CD38-SADA will be administered at various timepoints before administration of 177Lu-DOTA payload. The trial
will be composed of three serial parts. The first part addresses optimization of protein doses and spacing between SADA
protein administration and payload administration. The second part seeks to identify the optimal and safe levels of the
payload delivery. The third part investigates repeated dosing of up to six cycles of CD38-SADA.
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Overview of malignant lymphoma:
Malignant lymphoma represents a disease entity characterized by malignant transformation of the cells from
lymphoid tissue. Historically, lymphomas have been divided into Hodgkin lymphoma and non-Hodgkin lymphoma, or
NHL. The incidence of NHL in Western countries ranges from 10-12 per 100,000 persons while in Asia and Africa the
incidence is 3-8 per 100,000 persons. In the US, 80,470 new cases of NHL are estimated for 2022. The median age at
diagnosis for most lymphomas is approximately 60-65 years, but NHL can occur at any age, including in children. In
Western countries, malignant lymphoma originates from B cells in about 90% of cases and from T-cells in about 10% of
cases and rarely from natural killer, or NK, cells.
Therapy for lymphoma has predominantly been chemotherapy, often combination therapy. The introduction of
immunotherapy with CD20-targeting monoclonal antibody rituximab for B cell lymphoma was one of the first
immunotherapeutic approaches in cancer, which significantly improved the overall survival, or OS, especially in patients
with diffuse large B cell lymphoma, or DLBCL, and follicular lymphoma, or FL. For T-cell lymphoma there have been
limited treatment advances in the recent past. An immunotherapeutic approach, brentuximab vedotin, has been approved
for a subset of T-cell lymphoma, namely relapsed CD30+ anaplastic large cell lymphoma.
Lymphoma is known to be a radiosensitive tumor type. Curative radiation doses for patients with limited
involvement at diagnosis are discussed to be much lower compared to curative doses for solid malignancies. However,
most patients with NHL have disseminated disease at diagnosis limiting the use of external beam radiation to patients with
NHL and bulky disease or as palliative therapy.
Treatment Protocol
A first-in-human, Phase 1 trial for subjects with relapsed/refractory non-Hodgkin lymphoma. Subjects with
subtypes of B-cell and T-cell origin with CD38 positive tumor cells are eligible for the trial after having received at least
two lines of therapy. We believe many eligible subjects have unmet need. The trial will investigate the safety of the CD38-
SADA:177Lu-DOTA drug complex at different doses of each of the 2 compounds (CD38-SADA and 177Lu-DOTA). An
estimated 60 participants will participate in the trial and we expect that this trial will initially run in the United States. The
IND is open as of December 31, 2023, and we expect to recruit the first patient in 2024.
Primary Objectives
● To identify the optimal safe CD38-SADA dose, dosing interval and 177Lu-DOTA dose which enables
demonstration of tumor imaging (Part A)
● To determine the optimal tolerable activity of the 177Lu-DOTA dose and the CD38-SADA:177Lu-DOTA
Drug Complex dose (Part B)
Manufacturing
Currently, we contract with third-party cGMP vendors for the manufacturing of our product candidates for pre-
clinical studies, clinical trials and commercial supply. We do not currently own or operate any manufacturing facilities to
produce clinical or commercial quantities of our product candidates. We currently have no plans to build our own clinical
or commercial scale manufacturing capabilities. To meet our projected needs for commercial manufacturing third parties
with whom we currently work may need to increase their scale of production or we may need to secure alternate suppliers.
Although we rely on our cGMP manufacturers, we have personnel with substantial manufacturing experience to oversee
our relationships with such manufacturers.
Manufacturing clinical and commercial products is subject to extensive regulations that impose various procedural
and documentation requirements, which govern record keeping, manufacturing processes and controls, personnel, quality
control and quality assurance. Our vendors are required to comply with cGMP regulations, which are regulatory
requirements enforced by the FDA and other regulatory bodies like the national competent authorities of EU Member
States to assure proper design, monitoring and control of manufacturing processes and facilities for human
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pharmaceuticals. We have established an in-house quality assurance, or QA, function with a certified Qualified Person to
perform final release of our product for both clinical and commercial supply.
Our current product candidates are mainly manufactured based on well-established technology known from mAb
products. These manufacturing processes involve the genetic engineering of a parental host cell line to isolate a cell that
produces the target product. Once a cell line is isolated, a cell bank is produced under prescribed and documented
conditions. The cell bank, preserved frozen, is tested, as required by regulations, to demonstrate that the engineered cell
line is free from potentially harmful impurities and contaminants, such as viruses.
The drug substance is an active ingredient that is intended to furnish pharmacological activity or other direct effect
in the diagnosis, cure, mitigation, treatment, or prevention of disease or to affect the structure or any function of the human
body. The manufacturing process for the drug substance begins with the thaw of vials from the cell bank and growth of
these cells in established media until sufficient cells are cultured to inoculate a production bioreactor. The cells in the
production bioreactor are grown in chemical defined media and under controlled and monitored conditions that stimulate
the production of the antibody into the culture media. The production bioreactor is cultured for an established period of
time and is then harvested by filtration to remove the cells from the culture media.
The solution containing the product is purified through several steps to remove known process and product
derived impurities. The technologies employed include ultrafiltration and column and membrane chromatography.
Additional steps are performed to inactivate or remove viruses. The final step of the drug substance process adjusts the
antibody concentration and produces the final formulation to be used for drug product production. The drug substance is
tested to meet pre-established product specific release criteria for purity, potency and safety, and is then periodically tested
to demonstrate stability upon storage as required by regulations. The drug substance is stored at prescribed temperatures,
typically refrigerated or frozen.
The drug product is produced by sterilization filtration of the drug substance solution, followed by aseptic filling
into glass vials and then stoppered. The drug product is subjected to product specific release testing for purity, potency and
safety according to pre-established specifications. Drug product lots are periodically tested to demonstrate stability over the
established storage expiry period. The drug product is stored and shipped under temperature-controlled conditions,
typically refrigerated, to sites designated for clinical trial testing, or eventually to commercial pharmaceutical logistics
providers.
DANYELZA is a recombinant humanized IgG1κ monoclonal antibody against GD2 expressed in Chinese
Hamster Ovary, or CHO, cells. A one mL ampoule from the cell bank is used to establish material for seeding of 1,000 L
fed batch bioreactor in chemical defined media with no animal derived component. After growth of the cells are completed
the un-processed bulk from the bioreactor containing the DANYELZA drug substance undergoes clarification by filtration,
and subsequent multi-step product purification. The DANYELZA drug substance is manufactured by Patheon Biologics
B.V. in Groningen, The Netherlands and the DANYELZA drug product is manufactured at Patheon Manufacturing
Services LLC in Greenville, North Carolina, (both part of the Thermo Fisher Scientific Inc., group of companies)
collectively Patheon/Thermo Fisher. All manufacturing activities are performed in compliance with cGMP regulations and
no excipients of human or animal origin have been used. The DANYELZA drug product is packaged in 10 mL ISO 10R
glass vials and refrigerated.
While we believe that Patheon/Thermo Fisher is capable of producing sufficient quantities of drug product to
support our clinical and commercial supply for DANYELZA, we also believe that there are a number of alternative third-
party manufacturers that have similar capabilities that would be capable of providing sufficient quantities of drug product.
However, should Patheon/Thermo Fisher not be able to provide sufficient quantities of drug product for our planned
clinical trials or commercial sales, we would be required to seek and then qualify another contract manufacturer to provide
this drug product, likely resulting in a delay in such trials and loss of, or delayed, commercial sales.
The GD2-SADA and CD38-SADA are both manufactured at Rentschler Biopharma SE, Laupheim, Germany,
using traditional manufacturing and control principles for monoclonal antibodies. The DOTA chemical is sourced as a
GMP bulk product and is being filled into a sterile intermediate at Patheon/Thermo Fisher in Ferentino, Italy.
Radiolabeling of the DOTA intermediate with Lu-177 is performed at ABX Advanced Biochemical Compounds –
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Biomedizinische Forschungsreagenzien GmbH, Radeberg, Germany, and final released product is delivered directly to
clinical sites.
Commercialization Plan
The sales call points for DANYELZA in the United States are highly concentrated. This enables us to effectively
service our customers and call points with a small commercial organization.
Our management team understands the complexity of rare oncological diseases and we believe we have the
necessary expertise to be a true partner to patients, caregivers, and advocacy and healthcare teams leading to shared
success. As we advance our product pipeline to address larger patient populations, we intend to expand our specialty sales
force and continue the development of our organizational infrastructure to support the network of relevant hospitals, cancer
centers, oncologists and other physicians as well as continue to provide support to patients, care givers and other healthcare
providers. We plan to commercialize any potential future pediatric product candidates in the United States ourselves, and
will continue to evaluate strategic collaborations in select territories in order to maximize the potential of our product and
product candidates.
As additional product candidates advance through our pipeline, our commercial plans may change. The size of the
development programs, size of the target market, size of a commercial infrastructure, and manufacturing needs may all
influence our strategies in the United States, the European Union and other parts of the world.
Commercialization Partnerships
After the approval of DANYELZA by the FDA, we have entered a number of strategic collaborations in the form
of partnerships with select companies to maximize the potential value for the Company. In November 2020, we entered
into an exclusive license and distribution agreement for DANYELZA and omburtamab with Takeda Israel, a wholly owned
subsidiary of Takeda Pharmaceutical Company Limited covering the State of Israel, West Bank and Gaza Strip. In
September 2022, DANYELZA was approved for commercialization in Israel, and the product was launched in January
2024 in Israel. In December 2020, we entered into a distribution agreement for DANYELZA and omburtamab with Swixx
BioPharma AG for the Eastern European territories Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia,
Hungary, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia and Slovenia. Finally, later in December 2020, we
entered into a license agreement for DANYELZA and omburtamab with SciClone for Greater China, including Mainland
China, Taiwan, Hong Kong and Macau. In July 2021, SciClone submitted a BLA for DANYELZA for the treatment of
patients with R/R high-risk NB to the NMPA of China. The BLA was approved in December 2022, and DANYELZA was
launched in June 2023 in China. In May 2021, we entered into an exclusive distribution agreement with Adium Pharma
S.A., or Adium, to be the exclusive distributor in Latin America of DANYELZA and omburtamab. Adium submitted
regulatory filings for DANYELZA in Brazil, Mexico and Columbia in 2022, and received approval for Brazil and Mexico
in 2023. In December 2022, we announced a distribution agreement with WEP Clinical in connection with an early access
program for DANYELZA in Europe.
Competition
The biotechnology and pharmaceutical industries generally, and the cancer drug sector specifically, are
characterized by rapidly advancing technologies, evolving understanding of disease etiology, intense competition and a
strong emphasis on intellectual property. While we believe that our product candidates and our knowledge and experience
provide us with competitive advantages, we face substantial potential competition from many different sources, including
large and specialty pharmaceutical and biotechnology companies, academic research institutions and governmental
agencies and public and private research institutions.
In addition to the current standard of care for patients, commercial and academic clinical trials are being pursued
by a number of parties in the field of immunotherapy. Early results from these trials have fueled continued interest in
immunotherapy, which is being pursued by several biotechnology companies as well as by large pharmaceutical
companies. Many of our current or potential competitors, either alone or with their collaboration partners, have
significantly greater financial resources and expertise in research and development, manufacturing,
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pre-clinical studies, conducting clinical trials, and marketing approved products than we do. Mergers and acquisitions in
the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller
number of our competitors. Smaller or early-stage companies may also prove to be significant competitors, particularly
through collaborative arrangements with large and established companies. These competitors also compete with us in
recruiting and retaining qualified scientific and management personnel and establishing clinical trial sites and patient
registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
With respect to DANYELZA, which targets GD2-positive tumors, United Therapeutics Corporation, or United
Therapeutics, has commercialized Unituxin® (dinutuximab), an antibody against GD2, in the United States, Canada and
Japan. Although United Therapeutics has discontinued its efforts to investigate Unituxin®’s potential activity against adult
cancerous tumors, it has maintained its efforts to develop a humanized version of Unituxin® and plans to develop
Unituxin® within R/R NB. DANYELZA also faces competition from Qarziba® (dinutuximab beta) a similar antibody
product against GD2 developed by Apeiron Biologics AG, or Apeiron. EUSA Pharma (UK) Ltd., or EUSA, has acquired
global commercialization rights to Qarziba® (dinutuximab beta), and it is currently being commercialized in European
Union and was approved by the European Commission to treat high-risk NB and R/R NB. In January 2020, EUSA and
BeiGene Ltd., or BeiGene, announced an exclusive collaboration to commercialize Qarziba® in mainland China and in
August 2021 EUSA and BeiGene announced that the China National Medical Products Administration, or NMPA, had
granted Qarziba® (dinutuximab beta) conditional marketing approval for the treatment of high-risk NB and R/R NB.
EUSA has previously announced plans to file for registration of dinutuximab beta in the United States for the treatment of
R/R NB. EUSA was acquired by Recordati in March 2022. In addition, Renaissance Pharma Ltd in the United Kingdom
announced in August 2023 a development program focused on Hu14.18, a humanized anti-GD2 monoclonal antibody,
licensed from St. Jude Children’s Research Hospital for the treatment of newly diagnosed high-risk neuroblastoma. US
WorldMeds received FDA approval of eflornithine hydrochloride, or DFMO, in December 2023 to reduce the risk of
relapse in pediatric patients with high-risk neuroblastoma who have completed multiagent, multimodality therapy.
The SADA PRIT technology, where bispecific antibody fragments bind to the tumor before a radioactive payload
is injected in a two-step approach faces competition from a range of companies developing comparable approaches,
involving one-step, two-step or three-step models to bind antibody construct to the tumor and radiate the tumor. OncoOne
Research & Development GmbH, or OncoOne, is developing several constructs under their PreTarg-it® technology, which
is a modular platform utilizing bispecific antibodies for delivery of payloads, where the bispecific antibody is first injected
and accumulated on the tumor, while unbound antibodies are decomposed and excreted. Subsequently, a payload is
administered through a second infusion and binds to the bispecific antibody in the tumor.
Major Customers
The Company had product sales to certain customers that accounted for more than 10% of total product revenue,
net for the years ended December 31, 2023 and 2022. McKesson, AmerisourceBergen, WEP and Cardinal Health
accounted for 46%, 22%, 10% and 13%, respectively, of the Company’s product revenue, net for the year ended December
31, 2023. McKesson, AmerisourceBergen, and Cardinal Health accounted for 71%, 17%, and 10%, respectively, of the
Company’s product revenue, net for the year ended December 31, 2022.
Intellectual Property
Patent Portfolio
We strive to protect and enhance the proprietary technology, inventions, and improvements that we believe are
commercially important to our business, including seeking, maintaining, and defending patent rights, whether developed
internally or licensed from our collaborators or other third parties. Our policy is to seek to protect our proprietary position
by, among other methods, filing patent applications in the United States and in jurisdictions outside of the United States
related to our proprietary technology, inventions, improvements, and product candidates that are important to the
development and implementation of our business. We also rely on trade secrets and know-how relating to our proprietary
technology and product candidates, continuing innovation, and in-licensing opportunities to develop, strengthen, and
maintain our proprietary position in the field of immunotherapy. We additionally rely on data
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exclusivity, market exclusivity, and patent term extensions when available, and plan to seek and rely on regulatory
protection afforded through orphan drug designations. Our commercial success will depend in part on our ability to obtain
and maintain patent and other proprietary protection for our technology, inventions, and improvements, whether developed
internally or licensed from our collaborators or other third parties; to preserve the confidentiality of our trade secrets; to
maintain our licenses to use intellectual property owned by third parties; to defend and enforce our proprietary rights,
including our patents; and to operate without infringing on the valid and enforceable patents and other proprietary rights of
third parties.
We have in-licensed numerous patents and patent applications and substantial know-how relating to the
development and commercialization of our immunotherapy product candidates, including related manufacturing processes
and technology. An international patent application has been filed claiming the inventions of investigators at MSK as well
as our personnel. In addition, ten international patent applications have been filed solely in our name.
As of February 1, 2024, our patent portfolio included:
● For our DANYELZA patent portfolio, we have an exclusive license from MSK to MSK’s rights in three
patent families. The first family consists of patents and patent applications with composition of matter claims
covering humanized or chimeric antibodies or fragments thereof comprising specific sequences and capable
of binding to GD2, and includes three U.S. patents, one Australian patent, two New Zealand patents, one
Chinese patent, one Japanese patent, one South Korean patent, one Hong Kong patent, one Indian patent, one
Canadian Patent, one European Patent and one pending patent application in Europe. We expect that any
patents that issue in this first family will expire in June 2031. A core U.S. patent in this family is expected to
expire on June 20, 2031. An application for Patent Term Extension was filed in 2021 for this core U.S.
patent, and if granted it is expected that it will extend the term of the core U.S. patent until February 4, 2034.
An application for Patent Term Extension was filed in 2023 for the Chinese Patent, and if granted, it is
expected that it will extend the term for this Chinese Patent until June 2036. The second family consists of
patents with composition of matter claims covering high affinity anti-GD2 antibodies, and includes one US
patent, one German patent, one French patent, one patent in United Kingdom, one Australian patent, one
Japanese patent, one Russian patent, one Chinese patent, one Hong Kong patent, one Canadian patent, one
South Korean patent Brazilian patent. We expect that any patents that issue in this second family will expire
in March 2034. The third patent family consists of patent applications with method of treatment claims
covering a combination treatment of neuroblastoma using an anti-GD2 antibody in combination with at least
chemotherapeutic agent and at least one hematopoietic growth factor and includes one U.S. patent
application and one Chinese patent application. If granted we expect that any patents granted in this family
would expire in August 2039. In addition to the patent families licensed from MSK, we have one patent
family assigned to Y-mAbs relating to DANYELZA. This patent family consists of patent applications with
method of treatment claims covering a particular anti-GD2 antibody administration regimen designed to
reduce pain experienced by the patient and includes one International Patent application and one Taiwanese
Patent application. We expect that any patents that may issue in this family would expire in December 2042.
● For our omburtamab patent portfolio, we have an exclusive license from MSK to MSK’s rights in two patent
families. The first family consists of patents and patent applications with composition of matter claims
covering antibodies produced by a distinct hybridoma cell line, antibodies comprising specific sequences,
polypeptides comprising specific sequences, and process claims covering a method of inhibiting the growth
of tumor cells, a method for imaging a tumor in a subject and a method for treating a mammalian subject, and
includes three U.S. patents. A core U.S. patent in this family is expected to expire on January 19, 2026. The
second family consists of patents and patent applications with process claims covering a method of
improving the prognosis or prolonging the survival of a subject bearing a tumor, and includes one Chinese
patent, one Indian patent and one Canadian patent. Core patents in Canada, China, and India in this family
are expected to expire on March 24, 2028.
● For our DOTA-PRIT or SADA patent portfolio, we have an exclusive license from MSK and MIT to MSK’s
and MIT’s rights in the field of Radioimmunotherapy for the diagnosis and treatment of cancer.
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The license gives access to five patent families owned by MSK, one patent family owned jointly by MSK
and MIT, and one patent family owned by MIT. The first patent family covers bispecific antibodies capable
of binding A33 and DOTA, and use thereof for the treatment of cancer. This first patent family consists of
granted patents in the United States, the United Kingdom, France, Germany, Spain, Italy, the Netherlands
Hong Kong and Australia and pending patent applications in the United States, China, Canada, Israel and
Japan. We expect that any patents granted in this first family will expire in February 2036. A core U.S. patent
in this family is expected to expire on July 15, 2037. The second family covers specific bispecific antibodies
binding A33 and DOTA, and the use thereof for the treatment of cancer. This second family consists of a
granted patent in the United States and pending applications in Australia, Canada, China, Europe, Hong
Kong, Israel, Japan, India, South Korea, New Zealand, Eurasia and the United States. We expect that any
patents granted in this second family will expire in September 2038. A core U.S. patent in this family is
expected to expire on January 27, 2039. The third family covers bispecific antibodies and the use therefore in
a three-step PRIT procedure comprising the use of a clearing agent. In particular the family discloses
Herceptin conjugated for Pre-targeted Radioimmunotherapy and application as a theranostic product. The
license for this patent family has been limited to pending applications in Europe and the United States. We
expect that any patents granted in this third family will expire in March 2039. The fourth patent family
covers a multimeric antibody for two-step targeting (SADA). This fourth patent family consists of a granted
patent in the United States, and pending patent applications in Australia, Canada, Europe, Hong Kong and
the United States. We expect that any patents granted in this fourth family will expire in May 2038. A core
U.S. patent in this family is expected to expire November 26, 2038. The fifth patent family covers the use of
small molecule haptens for pre-targeted radioimmunotherapy (PRIT) using DOTA and bispecific antibodies.
This fifth patent family consists of granted patents in Australia, Japan and the United States, and pending
patent applications in Canada, China, Europe, Hong Kong, Japan and the United States. We expect that any
patents granted in this fifth family will expire in July 2038. A core U.S. patent in this family is expected to
expire on July 2, 2039. The sixth patent family covers new clearing agents for DOTA-PRIT. The license for
this sixth patent family has been limited to an issued Patent in the United States and a pending application in
Europe. We expect that any patents granted in this family will expire in July 2039. The seventh patent family
owned by MIT, covers bispecific antibodies binding DOTA. This seventh patent family consists of granted
patents in Belgium, France, Germany, Ireland, Italy, Spain, Switzerland, the United Kingdom and the United
States. We expect that European patents in this eighth family expire in March 2030 and that the patent in the
United States expires in July 2030.
● We additionally have an agreement with MSK to license two additional patent families related to the SADA
PRIT technology. The first patent family covers anti-GD2 SADA conjugates and uses thereof, covering use
of alpha radioimmunotherapy and repeated dosing of radiolabeled DOTA-hapten. A pending patent
application exists in Australia, Canada, China, Europe, Japan and the United States. We expect that any
patents granted that may be in this family would expire in May 2041. The second patent family covers new
bispecific antibodies and SADA conjugates able to bind GPA33 and DOTA. Pending patent applications
exist in Australia, Canada, Europe and in the United States. We expect that any patents granted that may be
in this family would expire in November 2041.
● We have one patent family, assigned to us, related to a humanized CD38-binding antibody and the use
thereof for treatment of certain cancers. Pending patent applications exist in the United States, in Europe, in
Australia, In Brazil, In Canada, in China, in Taiwan, in Hong Kong, in India, in Japan, in South Korea and in
New Zealand. We expect that any patents that may issue in this family would expire in June 2041.
● We also have one patent family, assigned to us, relating to SADA-formulations, in particular GD2-SADA
formulations. The family consists of an International Patent Application and one patent application in
Taiwan. We expect that any patents that may issue in this family would expire in December 2042.
● We further have one patent family, assigned to us, relating to scFv binding sites devoid of stabilizing
disulfide bonds, that are particular useful is SADA-conjugates because it has been shown that these scFv
binding sites gives rise to less heterogenicity than usual scFv fragments with stabilizing disulfide bonds.
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The family consists of an International Patent Application and one patent application in Taiwan. We expect
that any patents that may issue in this family would expire in December 2042.
● For our huB7-H3 patent portfolio, we have an exclusive license from MSK to MSK’s rights in one patent
family consisting of a patent and patent applications with composition of matter claims covering antibody
agents that bind specifically to protein 2Ig-B7H3 or 4Ig-B7H3, and includes one patent in the United States,
one patent in Germany, one patent in Spain, one patent in France, one patent in United Kingdom, one patent
in Italy, one patent in Australia, one patent in China, one patent in Eurasia, one patent in Hong Kong , , one
patent in Japan, one patent in India, one patent in South Korea and 3 pending patent applications in other
jurisdictions, including Canada, New Zealand and Brazil. We expect that any patents that may issue in this
family would expire in August 2035. In addition, an international patent application has been filed, with
MSK and us as applicants, claiming a method for treating a central nerve system (CNS) cancer using
huB7H3, as well as 177Lu-DTPA-8H9 conjugates. Request for entry into the national phase has been filed in
the United States, Canada, Europe, Australia, New Zealand, Japan, China, South Korea, India, Brazil,
Eurasian, Russia and Hong Kong. We expect that any patent that may issue in this family would expire in
May 2038. Further, we have one patent family filed by Y-mAbs claiming B7H3 binding antibodies
conjugated with chelators in specific chelator to antibody ratios. The family includes pending patent
applications in the United States, Europe, China, Hong Kong and Taiwan. Any patents that may be issued in
this family are expected to expire in 2041.
● For our huB7-H3 technology we further have one patent family, assigned to us, related to new humanized
B7-H3 binding antibodies having high human germline content and exhibiting strong bonding to B7-H3
antigen. In this family we have pending patent applications in Taiwan, Australia, Brazil, Canada, China,
Europe, Hong Kong, India, Japan, South Korea, New Zealand and the United States. We expect that any
patents that may issue in this family would expire in June 2041.
● Our Multimerization Technology patent portfolio, which inter alia relates to nivatrotamab, includes one
patent family under which we have a partly exclusive license to MSK’s rights in the patent application. The
license is exclusive for MSK’s rights in and to the portions of the patents in this family that claim products,
such as bispecific antibodies that are also claimed by other patent rights licensed from MSK. The license also
provides for non-exclusive rights to the portions of the patents in this family that claim a product that is not
claimed by another patent right licensed from MSK. This family consists of patents and patent applications
with composition of matter claims covering bispecific binding agents comprised of two fusion proteins, and
includes two U.S. patents, one Japanese patent, one Australian patent, one German patent, one French patent
one South Korean patent, one Russian patent, one patent in United Kingdom, one patent in Canada, one
Chinese patent and one patent in Hong Kong and one pending patent application in Brazil. We expect that
any patents that may issue in this family would expire in March 2034. A core U.S. patent in this family is
expected to expire on March 25, 2034.
● Our CD33 antibody patent portfolio, which includes one patent family under which we have an exclusive
license from MSK to MSK’s rights in the patent application. This family consists of one patent in the United
States, and five pending patent applications in other jurisdictions, including Europe, Canada, China, Hong
Kong and Eurasia relating to anti Siglec-3 (CD33) antibodies generated from a specific principal
investigator’s laboratory at MSK. We expect that any patents that issue in this family will expire in April
2038. A core United States patent in this family is expected to expire on November 9, 2038.
● Our GD2-GD3 Vaccine patent portfolio, which inter alia relates to a vaccine for stimulation or enhancing
production of an antibody which recognized a specific ganglioside, expired in 2022.
The term of individual patents depends upon the legal term for patents in the countries in which they are granted.
In most countries, including the United States, the patent term is generally 20 years from the earliest claimed filing date of
a non-provisional patent application in the applicable country. In the United States, a patent’s term may, in certain cases, be
lengthened by patent term adjustment, which compensates a patentee for administrative delays by the United States Patent
and Trademark Office, or USPTO, in examining and granting a patent, or may be shortened if a
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patent is terminally disclaimed over a commonly owned patent or a patent naming a common inventor and having an
earlier expiration date. The Drug Price Competition and Patent Term Restoration Act of 1984, or the Hatch-Waxman Act,
permits a patent term extension of up to five years beyond the expiration date of a U.S. patent as partial compensation for
the length of time the drug is under regulatory review while the patent is in force. 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 applicable to
each regulatory review period 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. We cannot provide any assurance that any patent term extension with
respect to any U.S. patent will be obtained and, even if obtained, what the duration of such extension may be.
Similar provisions are available in the European Union and certain other non-U.S. jurisdictions to extend the term
of a patent that covers an approved drug. In the future, if and when our product candidates receive approval by the FDA or
non-U.S. regulatory authorities, we expect to apply for patent term extensions on issued patents covering those products,
depending upon the length of the clinical trials for each drug and other factors. The expiration dates referred to above are,
unless explicitly expressed, without regard to potential patent term extension or other market exclusivity that may be
available to us. However, we cannot provide any assurance that any such patent term extension of a non-U.S. patent will be
obtained and, even if obtained, the duration of such extension.
As for the immunotherapy products and processes we develop and commercialize, in the normal course of
business, we intend to pursue, when possible, composition, method of use, dosing and formulation patent protection. We
may also pursue patent protection with respect to manufacturing and drug development processes and technology.
Individual patents extend for varying periods of time, depending upon the date of filing of the patent application,
the date of patent issuance, and the legal term of patents in the countries in which they are obtained. Generally, patents
issued for applications filed in the United States are effective for 20 years from the earliest effective filing date. In addition,
in certain instances, a patent term can be extended to recapture a portion of the term effectively lost as a result of the FDA
regulatory review period. The restoration period cannot be longer than five years and the total patent term, including the
restoration period, must not exceed 14 years following FDA approval. The duration of patents outside of the United States
varies in accordance with provisions of applicable local law, but typically is also 20 years from the earliest effective filing
date. Generally, as noted above, our in-licensed issued patents in all jurisdictions will expire on dates ranging from 2021 to
2039. If patents are issued on our pending patent applications, the resulting patents are projected to expire on dates ranging
from 2021 to 2041. However, the actual protection afforded by a patent varies on a product-by-product basis, from country-
to-country, and depends upon many factors, including the type of patent, the scope of its coverage, the availability of
regulatory-related extensions, the availability of legal remedies in a particular country, and the validity and enforceability
of the patent.
Trademarks
We have obtained USPTO trademark registration of the “Y-mAbs” mark, USPTO and EU trademark registration
and registration in other jurisdictions of DANYELZA and certain other trademarks that we intend to use to commercialize
our product candidates, as well as USPTO, EU and UK trademark registration for SADA PRIT technology. We currently
rely on our registered and unregistered trademarks, trade names and service marks, as well as our domain names and logos,
as appropriate, to market our brands and to build and maintain brand recognition. We are seeking to register and will
continue to seek to register and renew, or secure by contract where appropriate, trademarks, trade names and service marks
as they are developed and used, and reserve, register and renew domain names as appropriate.
Trade Secrets
We may also rely, in some circumstances, on trade secrets to protect our technology. However, trade secrets are
difficult to protect. We seek to protect our technology and product candidates, in part, by entering into confidentiality
agreements with those who have access to our confidential information, including our employees, contractors, consultants,
collaborators, and advisors. We also seek to preserve the integrity and confidentiality of our proprietary technology and
processes by maintaining physical security of our premises and physical and electronic security of our
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information technology systems. Although we have confidence in these individuals, organizations, and systems,
agreements or security measures may be breached, and we may not have adequate remedies for any breach. In addition, our
trade secrets may otherwise become known or may be independently discovered by competitors. To the extent that our
employees, contractors, consultants, collaborators, and advisors use intellectual property owned by others in their work for
us, disputes may arise as to the rights in related or resulting know-how and inventions. For this and more comprehensive
risks related to our intellectual property and proprietary technology, inventions, improvements and products, please see the
section on “Risk Factors—Risks Related to Our Intellectual Property.”
MSK Agreements
The MSK License Agreement
On August 20, 2015, we entered into the MSK License, which grants us a worldwide, sub-licensable license to
MSK’s rights in certain patent rights and intellectual property rights related to certain know-how to develop, make and
commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the field of cancer
diagnostics and cancer treatments. The MSK License is exclusive with respect to MSK rights in such patent rights and
tangible materials within such know-how, and nonexclusive with respect to MSK’s rights in such know-how and related
intellectual property rights. The patents and patent applications covered by the MSK License are directed, in part, to the
DANYELZA and omburtamab antibody families, including humanized and chimeric antibodies, as well as MSK’s rights in
BsAbs, compositions, and their respective use for immunotherapy. Upon entering into the MSK License in 2015 and in
exchange for the licenses thereunder, we paid to MSK an upfront payment of $500,000, issued 1,428,500 shares of our
common stock to MSK and agreed to provide certain anti-dilution rights to MSK as further described below. In addition,
we are required to pay to MSK certain royalty and milestone payments.
The MSK License requires us to pay to MSK mid to high single-digit royalties based on annual net sales of
licensed products or the performance of licensed services by us and our affiliates and sublicensees. We are required to pay
annual minimum royalties of $80,000 over the royalty term, which amounts are non-refundable but are creditable against
royalty payments otherwise due thereunder. Total expensed minimum royalty payments under the MSK License were
$1,200,000 in 2016 upon determination that the payment of such minimum royalties was probable and the amount was
estimable. We are also obligated to pay to MSK certain clinical, regulatory and sales-based milestone payments under the
MSK License, which payments become due upon achievement of the related clinical, regulatory or sales-based milestones.
Certain of these clinical and regulatory milestone payments become due at the earlier of completion of the related
milestone activity or the date indicated in the MSK License. Total clinical and regulatory milestones potentially due under
the MSK License are $2,450,000 and $9,000,000, respectively. There are also sales-based milestones that become due
should we achieve certain amounts of sales of licensed products resulting from the license arrangement with MSK, with
total potential sales-based milestones potentially due of $20,000,000. As product candidates progress through clinical
development, regulatory approval and commercialization, certain milestone payments will come due either as a result of
the milestones having been met or the passage of time even if the milestones have not been met. In addition, to the extent
we enter into sublicense arrangements, we are required to pay to MSK a percentage of certain payments that we receive
from sublicensees of the rights licensed to us by MSK, which percentage will be based upon the date we receive such
payments or the achievement of certain clinical milestones. We have entered into sublicenses and distribution agreements
related to DANYELZA and omburtamab under the MSK License with Takeda Israel, Swixx BioPharma AG and SciClone
in 2020, with Adium in 2021 and WEP in 2022.
The terms of the MSK License provide that MSK is entitled to receive 40% of the income generated from the sale
of first PRV, and 33% of any income generated from the sale of any subsequent PRV or the sale of other comparable
incentives provided by any non-U.S. jurisdiction. We sold the PRV received upon FDA approval of DANYELZA to United
Therapeutics for $105 million. Pursuant to the agreement with MSK, we were entitled to retain 60% of the net proceeds
from monetization of the PRV, and the remaining 40% was due to MSK. We received our portion of the net proceeds of
from the sale of the PRV in the amount of $62.0 million when the transaction was consummated in January 2021.
The MSK License will expire, on a country-by-country basis, and on a licensed-product-by-licensed-product or
licensed-service-by-licensed-service basis, on the later of (i) the expiration of the last to expire of the patents and patent
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applications covering such licensed product or service in such country, (ii) the expiration of any market exclusivity period
granted by a regulatory authority for such licensed product or service in such country, or (iii) 15 years from the first
commercial sale of such licensed product or service in such country.
MSK may terminate the MSK License upon prior written notice in the event of our uncured material breach, or
upon prior written notice if such breach is of a payment obligation. MSK may also terminate the MSK License upon
written notice in the event of our bankruptcy or insolvency or our conviction of a felony relating to the licensed products,
or if we challenge the validity or enforceability of any licensed patent right. In addition, we have the right to terminate the
MSK License in its entirety at will upon prior written notice to MSK, but if we have commenced the commercialization of
licensed products and/or licensed services we can only terminate at will if we cease all development and commercialization
of such licensed products and/or licensed services.
Our failure to meet certain conditions under the MSK License could cause the related license to such licensed
product to be canceled and could result in termination of the MSK License by MSK.
The Sponsored Research Agreement
On November 10, 2015, we entered into the Sponsored Research Agreement, or the SRA, with MSK pursuant to
which we committed to provide aggregate research funding to MSK for a term of five years. We amended the SRA on
September 12, 2019, and it will expire in September 2024. Under the SRA as amended, research will be conducted in
accordance with a written plan and budget approved by the parties. MSK has granted us a non-exclusive, non-commercial,
non-transferable, royalty-free license to use any inventions or discoveries developed by MSK within the scope of the
information resulting from the project, for our internal, non-commercial research purposes. We have also been granted both
a first option to negotiate an exclusive or non-exclusive commercial license to MSK’s rights in inventions developed by
MSK and a first option to negotiate an exclusive license to MSK’s rights in inventions jointly developed by the parties. The
SRA may be terminated for convenience by either party upon prior written notice.
The Master Data Service Agreement
On September 20, 2016, we entered into a Master Data Services Agreement, or the MDSA, with MSK pursuant to
which we committed to make certain payments to MSK annually in exchange for certain services, including transfer of
clinical data and databases, regulatory files and other know-how to us by employees at MSK who are specifically assigned
to assist with such services to us. The MDSA will expire upon the completion of activities set forth in each project
description entered into thereunder; however we have the option to extend the term upon written notice to MSK. Either
party may terminate the MDSA upon prior written notice in the event of an uncured material breach.
Master Clinical Trial Agreement
On June 21, 2017, we entered into the Investigator-Sponsored Master Clinical Trial Agreement, or the MCTA, as
later amended on October 11, 2017, with MSK pursuant to which we committed to provide aggregate funding to MSK up
to a certain amount for clinical studies to be conducted at MSK. Each such clinical study will be conducted in accordance
with a written plan and budget and protocol approved by the parties. Under the MCTA, we and MSK have granted each
other a non-exclusive, non-transferable, worldwide, royalty-free license, without right to sublicense, to use any inventions
or discoveries developed by personnel of each such party, that is within the scope of the information resulting from the
relevant study, for the other party’s internal, non-commercial research purposes until such invention is commercially
available. We have also been granted a first option to negotiate an exclusive or non-exclusive commercial license to MSK’s
rights in inventions or discoveries developed by MSK personnel under this MCTA and a first option to negotiate an
exclusive license to MSK’s rights in inventions or discoveries jointly developed by MSK and our personnel under this
MCTA. The MCTA will continue in effect through completion of the studies, and may be terminated by either party upon
prior written notice.
The Core Facility Service Agreement
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On June 27, 2017, we entered into two separate Core Facility Service Agreements, or CFSAs, with MSK pursuant
to which we committed to make certain payments to MSK in exchange for certain laboratory services over the term of the
CFSAs. Either party may terminate either of these CFSAs for any reason, or for no reason, upon prior written notice. In the
event of termination of either of these CFSAs, we will make full payment to MSK for all work performed on, or expenses
related to the project up to the date of termination including all non-cancelable obligations following receipt from MSK of
any completed or in-process deliverables in connection with the project.
The CD33 License Agreement
On November 13, 2017, we entered into the MSK CD33 License, with MSK, which grants us a worldwide, sub-
licensable license to MSK’s rights in certain patent rights and intellectual property rights related to certain know-how to
develop, make and commercialize licensed products and to perform services for all therapeutic and diagnostic uses in the
field of cancer diagnostics in connection with certain CD33 antibodies generated in a specific principal investigator’s
laboratory at MSK and constructs thereof. The MSK CD33 License is exclusive with respect to such patent rights and
tangible materials within such know-how, and nonexclusive with respect to MSK’s rights in such know-how and related
intellectual property rights. As product candidates progress through clinical development, regulatory approval and
commercialization, certain milestone payments will come due either as a result of the milestones having been met or the
passage of time even if the milestones have not been met. Also, we will owe MSK customary royalties on commercial sales
of our approved products, if any. Total potential milestones due under the MSK CD33 License are $550,000, $500,000 and
$7,500,000 for clinical, regulatory and sales based milestones, respectively. In addition, the MSK CD33 License contains
minimum royalty payments that become due beginning in year 10 of $40,000 per year over the royalty term, increasing to
$60,000 once a patent within the licensed rights is issued, subject to increase and creditable against any royalty payments
due based on sales in the future. We are required to pay mid to high single-digit royalties on sales of licensed products.
Additionally, the terms of the MSK CD33 License provide that MSK is entitled to receive 25% of any income generated
from the sale of any PRV or the sale of other comparable incentives provided by any non-U.S. jurisdiction.
The MSK CD33 License will expire, on a country-by-country basis, and on a licensed product-by-licensed-
product or licensed-service-by-licensed-service basis, on the later of (i) the expiration of the last to expire of the patents
and patent applications covering such licensed product or service in such country, (ii) the expiration of any market
exclusivity period granted by a regulatory authority for such licensed product or service in such country, or (iii) 15 years
from the first commercial sale of such licensed product or service in such country.
MSK may terminate the MSK CD33 License upon prior written notice in the event of our uncured material
breach, or upon prior written notice if such breach is of a payment obligation. MSK may also terminate the MSK CD33
License upon written notice in the event of our bankruptcy or insolvency or our conviction of a felony relating to the
licensed products, or if we challenge the validity or enforceability of any licensed patent right. In addition, we have the
right to terminate the MSK CD33 License in its entirety at will upon prior written notice to MSK, but if we have
commenced the commercialization of licensed products and/or licensed services we can only terminate at will if we cease
all development and commercialization of such licensed products and/or licensed services.
The MabVax Sublicense
On December 2, 2019, we entered into the Settlement and Assumption and Assignment, or SAAA, of MSK
License and Y-mAbs Sublicense Agreement, or the MabVax/Y-mAbs Sublicense, between us and MabVax dated June 27,
2018, with MabVax Therapeutics Holdings, Inc. and MabVax Therapeutics, Inc., or together, MabVax, and MSK, which
became effective on December 13, 2019. Pursuant to the MabVax/Y-mAbs Sublicense, MabVax sublicensed to us certain
patent rights and know-how for development and commercialization of products for the prevention or treatment of NB by
means of administering a bi-valent ganglioside vaccine granted to MabVax, pursuant to an exclusive license agreement
dated June 20, 2008 between MabVax and MSK, as amended, or the MabVax/MSK License Agreement.
On March 21, 2019, MabVax filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code. The
essence of the transaction created by the SAAA was for us, in light of the Chapter 11 bankruptcy proceedings affecting
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MabVax, to preserve the MabVax/MSK License Agreement and the rights granted to us under the MabVax/Y-mAbs
Sublicense and for us to create a direct relationship with MSK with respect to the rights covered under the MabVax/Y-
mAbs Sublicense. Pursuant to the SAAA, MabVax agreed to assume the MabVax/Y-mAbs Sublicense and the MabVax/Y-
mAbs License Agreement pursuant to Section 365 of the Bankruptcy Code and concurrently to assign both of these
agreements to MSK. We remain responsible for any potential downstream payment obligations to MSK related to the GD2-
GD3 Vaccine that were specified in the MabVax/MSK License Agreement. This includes the obligation to pay
development milestones totaling $1,400,000 and mid single-digit royalty payments to MSK. In addition, if we obtain FDA
approval for the GD2-GD3 Vaccine, then we are obligated to file with the FDA for a PRV. The SAAA stipulates that, if we
are granted a PRV from the FDA covering a licensed product under the MabVax/Y-mAbs Sublicense and the PRV is
subsequently sold, we will pay directly to MabVax and to MSK, respectively, a total of twenty percent of the proceeds from
the sale thereof. The MabVax/MSK License Agreement will expire with effect for us, on a country-by-country basis, on the
later of the expiration of (i) 10 years from the first commercial sale of the licensed product in such country or (ii) the last-
to-expire valid claim covering such licensed product rights at the time of and in the country of sale.
The SADA License Agreement
On April 15, 2020, we entered into a license agreement, or the SADA License Agreement, with MSK and
Massachusetts Institute of Technology, or MIT, that grants us an exclusive, worldwide, sublicensable license to certain
patent and intellectual property rights developed by MSK and MIT to develop, make, and commercialize licensed products
and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer treatments using
our novel Self-Assembly DisAssembly Pretargeted, or SADA PRIT, technology platform, a concept we also refer to as
Liquid RadiationTM. The patents and patent applications covered by the SADA License Agreement are directed, in part, to
the SADA PRIT technology, as well as a number of SADA PRIT constructs developed by MSK. Upon entering into the
SADA License Agreement in April 2020 and in exchange for the licenses, we paid MSK and MIT a cash upfront payment
and issued an aggregate of 42,900 shares of our common stock to them. During the years ended December 31, 2021 and
2022, we made cash payments in the amount of $1.0 million per year to MSK and MIT under the agreement. During the
year ended December 31, 2023, we made another cash payment under the agreement in the amount of $0.6 million to MSK
relating to the dosing of the first patient in the Phase 1 trial of GD2-SADA.
The SADA License Agreement requires us to pay to MSK and MIT mid to high single-digit royalties based on
annual net sales of licensed products or the performance of licensed services by us and our affiliates and sublicensees. We
are obligated to pay annual minimum royalties of $40,000, increasing to $60,000 once a patent has been issued, over the
royalty term, commencing on the tenth anniversary of the license agreement. These amounts are non-refundable but are
creditable against royalty payments otherwise due under the SADA License Agreement.
Under the SADA License, we are also obligated to pay MSK and MIT certain clinical, regulatory and sales-based
milestone payments. Certain of the clinical and regulatory milestone payments become due at the earlier of completion of
the related milestone activity or the date indicated in the SADA License Agreement. Total clinical and regulatory
milestones potentially due under the SADA License Agreement are $4,730,000 and $18,125,000, respectively. There are
also sales-based milestones, totaling $23,750,000, that become due should the Company achieve certain amounts of sales
of licensed products. In addition, for each of the SADA PRIT constructs generated by MSK and sold for the Company by a
sublicensee, the Company may pay sales milestones in the total amount up to $60,000,000 based on the achievement of
various cumulative net sales made by the sub-licensee. Finally, under the terms of the SADA License, MSK is entitled to
receive 25% of any income generated from the sale of any PRV or the sale of other comparable incentives provided by any
non-U.S. jurisdiction.
Under the SADA License Agreement, we also committed to funding scientific research at MSK for up to
$1,500,000 over the next three years. Accordingly, in October 2020, we entered into a SADA sponsored research
agreement with MSK pursuant to which we agreed to fund $1,500,000 in scientific research at MSK over the next three
years to related to the intellectual property licensed under the SADA License Agreement. The scientific research took place
over a period that commenced in September 2020 and ended in February 2022.
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Government Regulation
The FDA and other regulatory authorities at federal, state, and local levels, as well as in foreign countries,
extensively regulate, among other things, the research, development, testing, manufacture, quality control, import, export,
safety, effectiveness, labeling, packaging, storage, distribution, record keeping, approval, advertising, promotion,
marketing, post-approval monitoring, and post-approval reporting of biologics such as those we are developing. We, along
with third-party contractors, will be required to navigate the various pre-clinical, clinical and commercial approval
requirements of the governing regulatory agencies of the countries in which we wish to conduct studies or seek approval or
licensure of our product candidates. The process of obtaining regulatory approvals and the subsequent compliance with
appropriate federal, state, local, and foreign statutes and regulations require the expenditure of substantial time and
financial resources.
The process required by the FDA before biologic product candidates may be marketed in the United States
generally involves the following:
● completion of pre-clinical laboratory tests and animal studies performed in accordance with the FDA’s GLP
regulation;
● submission to the FDA of an IND, which must become effective before clinical trials may begin and must be
updated annually or when significant changes are made;
● approval by an independent Institutional Review Board, or IRB, or ethics committee at each clinical site
before the trial is begun;
● performance of adequate and well-controlled human clinical trials to establish the safety, purity and potency
of the proposed biologic product candidate for its intended purpose;
● preparation of and submission to the FDA of a BLA after completion of all pivotal clinical trials;
● satisfactory completion of an FDA Advisory Committee review, if applicable;
● a determination by the FDA within 60 days of its receipt of a BLA to file the application for review;
● satisfactory completion of an FDA pre-approval inspection of the manufacturing facility or facilities at which
the proposed product is produced to assess compliance with cGMP and to assure that the facilities, methods
and controls are adequate to preserve the biological product’s continued safety, purity and potency, and of
selected clinical investigations to assess compliance with Good Clinical Practices, or GCPs; and
● FDA review and approval of our BLA to permit commercial marketing of the product for particular
indications for use in the United States, which must be updated annually when significant changes are made.
Prior to beginning the first clinical trial with a product candidate, we must submit an IND to the FDA. An IND is
a request for authorization from the FDA to administer an investigational new drug product to humans. The central focus of
an IND submission is on the general investigational plan and the protocol(s) for clinical studies. The IND also includes
results of animal and in vitro studies assessing the toxicology, pharmacokinetics, pharmacology, and pharmacodynamic
characteristics of the product; chemistry, manufacturing, and controls information; and any available human data or
literature to support the use of the investigational product. An IND must become effective before human clinical trials may
begin. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time
period, raises safety concerns or questions about the proposed clinical trial. In such a case, the IND may be placed on
clinical hold and the IND sponsor and the FDA must resolve any outstanding concerns or
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questions before the clinical trial can begin. Submission of an IND therefore may or may not result in FDA authorization to
begin a clinical trial.
A clinical trial involves the administration of the investigational product to human patients under the supervision
of qualified investigators in accordance with GCPs, which includes the requirement that all research patients provide their
informed consent for their participation in any clinical study. Clinical trials are conducted under protocols detailing, among
other things, the objectives of the study, the parameters to be used in monitoring safety and the effectiveness criteria to be
evaluated. A separate submission to the existing IND must be made for each successive clinical trial conducted during
product development and for any subsequent protocol amendments. Furthermore, an IRB for each site proposing to
conduct the clinical trial must review and approve the plan for any clinical trial and its informed consent form before the
clinical trial begins at that site, and must monitor the study until completed. Regulatory authorities, the IRB or the sponsor
may suspend a clinical trial at any time on various grounds, including a finding that the patients are being exposed to an
unacceptable health risk or that the trial is unlikely to meet its stated objectives. Some studies also include oversight by an
independent group of qualified experts organized by the clinical study sponsor, known as a data safety monitoring board,
which provides authorization for whether or not a study may move forward at designated check points based on access to
certain data from the study and may halt the clinical trial if it determines that there is an unacceptable safety risk for
patients or other grounds, such as no demonstration of efficacy. There are also requirements governing the reporting of
ongoing clinical studies and clinical study results to public registries.
For purposes of BLA approval, human clinical trials are typically conducted in three sequential phases that may
overlap.
● Phase 1—The investigational product is initially introduced into healthy human patients with the target
disease or condition. In oncology, clinical Phase 1 trials are normally conducted in patients, who have been
exposed to and failed/relapsed on available standard of care therapies. These studies are designed to test the
safety, dosage tolerance, absorption, metabolism and distribution of the investigational product in humans,
the side effects associated with increasing doses, and, if possible, to gain early evidence on effectiveness.
● Phase 2—The investigational product is administered to a limited patient population with a specified disease
or condition to evaluate the preliminary efficacy, optimal dosages and dosing schedule and to identify
possible adverse side effects and safety risks. Multiple Phase 2 clinical trials may be conducted to obtain
information prior to beginning larger and more expensive Phase 3 clinical trials.
● Phase 3—The investigational product is administered to an expanded patient population to further evaluate
dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety, generally
at multiple geographically dispersed clinical trial sites. These clinical trials are intended to establish the
overall risk/benefit ratio of the investigational product and to provide an adequate basis for product approval.
● In some cases, the FDA may require, or companies may voluntarily pursue, additional clinical trials after a
product is approved to gain more information about the product. These so-called Phase 4 studies may be
made a condition to approval of our BLA.
Phase 1, Phase 2 and Phase 3 testing may not be completed successfully within a specified period, if at all, and
there can be no assurance that the data collected will support FDA approval or licensure of the product. Concurrent with
clinical trials, companies may complete additional animal studies and develop additional information about the biological
characteristics of the product candidate, and must finalize a process for manufacturing the product in commercial quantities
in accordance with cGMP requirements. The manufacturing process must be capable of consistently producing quality
batches of the product candidate and, among other things, must develop methods for testing the identity, strength, quality
and purity of the final product, or for biologics, the safety, purity and potency. Additionally, appropriate packaging must be
selected and tested and stability studies must be conducted to demonstrate that the product candidate does not undergo
unacceptable deterioration over its shelf life.
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BLA Submission and Review by the FDA
Assuming successful completion of all required testing in accordance with all applicable regulatory requirements,
the results of product development, non-clinical studies and clinical trials are submitted to the FDA as part of a BLA
requesting approval to market the product for one or more indications. The BLA must include all relevant data available
from pertinent pre-clinical and clinical studies, including negative or ambiguous results as well as positive findings,
together with detailed information relating to the product’s chemistry, manufacturing, controls, and proposed labeling,
among other things. Data can come from company-sponsored clinical studies intended to test the safety and effectiveness
of a use of the product, or from a number of alternative sources, including studies initiated by investigators. The
submission of a BLA requires payment of a substantial User Fee to FDA, and the sponsor of an approved BLA is also
subject to annual program fees. These fees are typically increased annually. A waiver of user fees may be obtained under
certain limited circumstances.
Once a BLA has been submitted, the FDA’s goal is to review the application within 10 months after it files the
application, or, if the application relates to an unmet medical need in a serious or life-threatening indication, six months
after the FDA files the application. The review process is often significantly extended by FDA requests for additional
information or clarification. The FDA reviews a BLA to determine, among other things, whether a product is safe, pure and
potent and the facility in which it is manufactured, processed, packed, or held meets standards designed to assure the
product’s continued safety, purity and potency. The FDA may convene an advisory committee to provide clinical insight on
application review questions. Before approving a BLA, the FDA will typically inspect the facility or facilities where the
product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes
and facilities are in compliance with cGMP requirements and adequate to assure consistent production of the product
within required specifications. Additionally, before approving a BLA, the FDA will typically inspect one or more clinical
sites to assure compliance with GCP. If the FDA determines that the application, manufacturing process or manufacturing
facilities are not acceptable, it will outline the deficiencies in the submission and often will request additional testing or
information. Notwithstanding the submission of any requested additional information, the FDA ultimately may decide that
the application does not satisfy the regulatory criteria for approval.
The testing and approval process requires substantial time, effort and financial resources, and each may take
several years to complete. The FDA may not grant approval on a timely basis, or at all, and we may encounter difficulties
or unanticipated costs in our efforts to secure necessary governmental approvals, which could delay or preclude us from
marketing our products. After the FDA evaluates a BLA and conducts inspections of manufacturing facilities where the
product will be produced, the FDA may issue an approval letter, or a Complete Response Letter. An approval letter
authorizes commercial marketing of the product with specific prescribing information for specific indications. A Complete
Response Letter indicates that the review cycle of the application is complete and the application is not ready for approval.
A Complete Response Letter may request additional information or clarification. The FDA may delay or refuse approval of
a BLA if applicable regulatory criteria are not satisfied, require additional testing or information and/or require post-
marketing testing and surveillance to monitor safety or efficacy of a product.
If regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which
such product may be marketed. For example, the FDA may approve the BLA with a Risk Evaluation and Mitigation
Strategy, or REMS, plan to mitigate risks, which could include medication guides, physician communication plans, or
elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The
FDA also may condition approval on, among other things, changes to proposed labeling or the development of adequate
controls and specifications. Once approved, the FDA may withdraw the product approval if compliance with pre- and post-
marketing regulatory standards is not maintained or if problems occur after the product reaches the marketplace. The FDA
may require one or more Phase 4 post-market studies and surveillance to further assess and monitor the product’s safety
and effectiveness after commercialization, and may limit further marketing of the product based on the results of these
post-marketing studies. In addition, new government requirements, including those resulting from new legislation, may be
established, or the FDA’s policies may change, which could delay or prevent regulatory approval of our products under
development.
A sponsor may seek approval of its product candidate under programs designed to accelerate FDA’s review and
approval of new drugs and biological products that meet certain criteria. Specifically, new drugs and biological products
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are eligible for fast-track designation if they are intended to treat a serious or life-threatening condition and demonstrate the
potential to address an unmet medical need for the condition. For a fast-track product, the FDA may consider sections of
the BLA for review on a rolling basis before the complete application is submitted if relevant criteria are met. A fast-track
designated product candidate may also qualify for priority review, under which the FDA sets the target date for FDA action
on the BLA at six months after the FDA files the application. Priority review is granted when there is evidence that the
proposed product would be a significant improvement in the safety or effectiveness of the treatment, diagnosis, or
prevention of a serious condition. If criteria are not met for priority review, the application is subject to the standard FDA
review period of 10 months after FDA files the application. Priority review designation does not change the
scientific/medical standard for approval or the quality of evidence necessary to support approval.
Under the accelerated approval program, the FDA may approve a BLA on the basis of either a surrogate objective
that is reasonably likely to predict clinical benefit, or on a clinical objective 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. Post-marketing studies or completion of ongoing studies after marketing approval are generally required to
verify the biologic’s clinical benefit in relationship to the surrogate objective or ultimate outcome in relationship to the
clinical benefit. In addition, a sponsor may seek FDA designation of its product candidate as a breakthrough therapy if the
product candidate is intended, alone or in combination with one or more other drugs or biologics, to treat a serious or life-
threatening disease or condition and preliminary clinical evidence indicates that the therapy may demonstrate substantial
improvement over existing therapies on one or more clinically significant objectives, such as substantial treatment effects
observed early in clinical development. Sponsors may request the FDA to designate a breakthrough therapy at the time of
or any time after the submission of an IND, but ideally before an end of Phase 2 meeting with FDA. If the FDA designates
a breakthrough therapy, it may take actions appropriate to expedite the development and review of the application, which
may include holding meetings with the sponsor and the review team throughout the development of the therapy; providing
timely advice to, and interactive communication with, the sponsor regarding the development of the drug to ensure that the
development program to gather the non-clinical and clinical data necessary for approval is as efficient as practicable;
involving senior managers and experienced review staff, as appropriate, in a collaborative, cross disciplinary review;
assigning a cross disciplinary project lead for the FDA review team to facilitate an efficient review of the development
program and to serve as a scientific liaison between the review team and the sponsor; and considering alternative clinical
trial designs when scientifically appropriate, which may result in smaller trials or more efficient trials that require less time
to complete and may minimize the number of patients exposed to a potentially less efficacious treatment. Breakthrough
designation also allows the sponsor to file sections of the BLA for review on a rolling basis.
Fast Track designation, priority review and BTD do not change the standards for approval but may expedite the
development or approval process.
Orphan Drugs
Under the Orphan Drug Act, the FDA may grant orphan designation to a drug or biologic intended to treat a rare
disease or condition, defined as a disease or condition with either a patient population of fewer than 200,000 individuals in
the United States, or a patient population greater of than 200,000 individuals in the United States when there is no
reasonable expectation that the cost of developing and making available the drug or biologic in the United States will be
recovered from sales in the United States for that drug or biologic. ODD must be requested before submitting a BLA. After
the FDA grants ODD, the generic identity of the therapeutic agent and its potential orphan use are disclosed publicly by the
FDA.
If a product that has received ODD and subsequently receives the first FDA approval for a particular active
ingredient for the disease for which it has such designation, the product is entitled to orphan product exclusivity, which
means that the FDA may not approve any other applications, including a full BLA, to market the same biologic 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 if FDA finds that the holder of the orphan drug exclusivity has not shown that it can assure
the availability of sufficient quantities of the orphan drug 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
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different drug or biologic for the same disease or condition, or the same drug or biologic for a different disease or
condition. Among the other benefits of ODD are tax credits for certain research and a waiver of the BLA application user
fee.
A designated orphan drug may not receive orphan drug exclusivity if it is approved for a use that is broader than
the indication for which it received ODD. In addition, orphan drug exclusive marketing rights in the United States 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.
Breakthrough Therapy Designation
When a drug, alone or in combination with one or more other drugs, is intended to treat a serious or life-
threatening disease or condition and preliminary clinical evidence indicates that the drug may demonstrate substantial
improvement over existing therapies on one or more clinically significant endpoints, such as substantial treatment effects
observed early in clinical development, it can be granted breakthrough therapy designation. The standard for breakthrough
therapy designation is not the same as the standard for drug approval, as the clinical evidence needed to support
breakthrough designation is of preliminary nature.
Rare Pediatric Disease Designation
The Rare Pediatric Disease Priority Review Voucher Program, or the PRV Program, is intended to incentivize
pharmaceutical companies to develop drugs for rare pediatric diseases. A company that obtains approval of an IND or a
BLA for a designated rare pediatric disease may be eligible for a PRV from the FDA, which may be redeemed to obtain
priority review for a subsequent new drug application or BLA by the owner of such PRV. A PRV is fully transferable and
can be sold to any company, who in turn can redeem the PRV for priority review of a marketing application in six months,
compared to the standard timeframe of approximately ten months. A drug that receives a RPDD before September 30, 2024
continues to be eligible for a PRV if the drug is approved before September 30, 2026. Extension beyond these dates will
require further Congressional action.
Post-Approval Requirements
Any products manufactured or distributed by us pursuant to FDA approvals are subject to pervasive and
continuing regulation by the FDA, including, among other things, requirements relating to record-keeping, reporting of
adverse experiences, periodic reporting, product sampling and distribution, and advertising and promotion of the product.
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 also are continuing, annual program user fee requirements for any marketed
products, as well as new application fees for supplemental applications with clinical data. Biologic manufacturers and their
subcontractors are required to register their establishments with the FDA and certain state agencies, and are subject to
periodic unannounced inspections by the FDA and certain state agencies for compliance with cGMP, which impose certain
procedural and documentation requirements upon us and our third-party manufacturers. Changes to the manufacturing
process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before
being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose
reporting requirements upon us and any third-party manufacturers that we may decide to use. Accordingly, manufacturers
must continue to spend time, money and effort in the area of production and quality control to maintain compliance with
cGMP and other aspects of regulatory compliance. We cannot be certain that we or our present or future suppliers will be
able to comply with the cGMP regulations and other FDA regulatory requirements. If our present or future suppliers are
not able to comply with these requirements, the FDA may, among other things, halt our clinical trials, require us to recall a
product from distribution, or withdraw approval of the BLA.
We rely, and expect to continue to rely, on third parties for the production of clinical and commercial quantities of
our product candidates. Future FDA and state inspections may identify compliance issues at our facilities or at the facilities
of our contract manufacturers that may disrupt production or distribution, or require substantial resources to correct. In
addition, discovery of previously unknown problems with a product or the failure to comply with applicable
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requirements may result in restrictions on a product, manufacturer or holder of an approved BLA, including withdrawal or
recall of the product from the market or other voluntary, FDA-initiated or judicial action that could delay or prohibit further
marketing. The FDA may 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 a product,
including adverse events of unanticipated severity or frequency, or with 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-
market studies or clinical studies 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 the product, complete withdrawal of the product from the
market or product recalls;
● fines, warning letters or holds on post-approval clinical studies;
● refusal of the FDA to approve pending applications or supplements to approved applications, or suspension
or revocation of product license approvals;
● product seizure or detention, or refusal to permit the import or export of products; or
● injunctions or the imposition of civil or criminal penalties.
The FDA closely regulates the marketing, labeling, advertising and promotion of biologics. A company can make
only those claims relating to safety and efficacy, purity and potency that are approved by the FDA and in accordance with
the provisions of the approved label. The FDA and other agencies actively enforce the laws and regulations prohibiting the
promotion of off-label uses. Failure to comply with these requirements can result in, among other things, adverse publicity,
warning letters, corrective advertising and potential civil and criminal penalties. Physicians may prescribe legally available
products for uses that are not described in the product’s labeling and that differ from those tested by us and approved by the
FDA. Such off-label uses are common across medical specialties. Physicians may believe that such off-label uses are the
best treatment for many patients in varied circumstances. The FDA does not regulate the behavior of physicians in their
choice of treatments. The FDA does, however, restrict manufacturer’s communications on the subject of off-label use of
their products.
Other Healthcare Laws and Compliance Requirements
Healthcare providers and third-party payors play a primary role in the recommendation and prescription of drug
products that are granted regulatory approval. Arrangements with providers, consultants, third-party payors and customers
are subject to broadly applicable fraud and abuse and other healthcare laws and regulations that may constrain our business
and/or financial arrangements. Such restrictions under applicable federal and state healthcare laws and regulations, include
the following:
● the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly
and willfully soliciting, offering, receiving or providing remuneration (including any kickback, bribe or
rebate), directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or
the purchase, lease or order of, any good or service, for which payment may be made, in whole or in part,
under a federal healthcare program such as Medicare and Medicaid;
● the federal civil and criminal false claims laws, including the civil False Claims Act, and civil monetary
penalties laws, which prohibit individuals or entities from, among other things, knowingly presenting, or
causing to be presented, to the federal government, claims for payment that are false or fraudulent or making
a false statement to avoid, decrease or conceal an obligation to pay money to the federal government;
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● the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, which created additional
federal criminal laws that prohibit, among other things, knowingly and willingly executing, or attempting to
execute, a scheme or making false statements in connection with the delivery of or payment for health care
benefits, items, or services;
● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act and its
implementing regulations, which also imposes obligations, including mandatory contractual terms, with
respect to safeguarding the privacy, security and transmission of individually identifiable health information
on covered entities and their business associates and covered contractors that perform certain functions or
activities that involve the use or disclosure of protected health information on their behalf;
● the federal transparency requirements known as the federal Physician Payments Sunshine Act, under the
Patient Protection and Affordable Care Act, as amended by the Health Care Education Reconciliation Act, or
collectively the ACA, which requires certain manufacturers of drugs, devices, biologics and medical supplies
for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program, with
specific exceptions, to report annually to the Centers for Medicare & Medicaid Services, or CMS, within the
U.S. Department of Health and Human Services, information related to payments and other transfers of value
to certain physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other
healthcare providers (such as physician assistants and nurse practitioners), and teaching hospitals and
information regarding ownership and investment interests held by such physicians and their immediate
family members; and
● analogous state and foreign laws and regulations, such as state anti-kickback and false claims laws, which
may apply to healthcare items or services that are reimbursed by non-governmental third-party payors,
including private insurers.
Some state laws require pharmaceutical companies to comply with the pharmaceutical industry’s voluntary
compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to
requiring drug manufacturers to report information related to payments to physicians and other health care providers or
marketing expenditures. State and foreign laws also govern the privacy and security of health information in some
circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus
complicating compliance efforts.
Also, the U.S. Foreign Corrupt Practices Act and similar worldwide anti-bribery laws generally prohibit
companies and their intermediaries from making improper payments to foreign officials for the purpose of obtaining or
retaining business. No assurance can be given that our internal control policies and procedures will protect us from reckless
or negligent acts committed by our employees, future distributors, partners, collaborators or agents. Violations of these
laws, or allegations of such violations, could result in significant fines, penalties or prosecution and have a negative impact
on our business, results of operations and reputation.
Coverage and Reimbursement
Sales of pharmaceutical products depend significantly on the availability of third-party coverage and
reimbursement. Third-party payors include government health administrative authorities, managed care providers, private
health insurers and other organizations. Third-party payors are increasingly challenging the price and examining the cost-
effectiveness of medical products and services. In addition, significant uncertainty exists as to the reimbursement status of
newly approved healthcare products. We may need to conduct expensive clinical studies to demonstrate the comparative
cost-effectiveness of our products. The product candidates that we develop may not be considered cost-effective. It is time
consuming and expensive for us to seek coverage and reimbursement from third-party payors. Moreover, a payor’s
decision to provide coverage for a drug product does not imply that an adequate reimbursement rate will be approved.
Reimbursement may not be available or sufficient to allow us to sell our products on a competitive and profitable basis.
Further, coverage policies and third-party payor 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.
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In addition, companion diagnostic tests require coverage and reimbursement separate and apart from the coverage and
reimbursement for their companion pharmaceutical or biological products. Similar challenges to obtaining coverage and
reimbursement, applicable to pharmaceutical or biological products, will apply to companion diagnostics.
Clinical Trials in the EU
In the European Union, clinical trials are governed by the Clinical Trials Regulation (EU) No 536/2014, or CTR,
which entered into application on January 31, 2022 repealing and replacing the former Clinical Trials Directive 2001/20, or
CTD.
The CTR is intended to harmonize and streamline clinical trial authorizations, simplify adverse-event reporting
procedures, improve the supervision of clinical trials and increase transparency. Specifically, the Regulation, which is
directly applicable in all EU Member States, introduces a streamlined application procedure through a single-entry point,
the "EU portal", 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. A harmonized procedure for the
assessment of applications for clinical trials has been introduced and is divided into two parts. Part I assessment is led by
the competent authorities of a reference Member State selected by the trial sponsor and relates to clinical trial aspects that
are considered to be scientifically harmonized across EU Member States. This assessment is then submitted to the
competent authorities of all concerned Member States in which the trial is to be conducted for their review. Part II is
assessed separately by the competent authorities and Ethics Committees in each concerned EU Member State. Individual
EU Member States retain the power to authorize the conduct of clinical trials on their territory.
The extent to which on-going clinical trials will be governed by the CTR will depend on the duration of the
individual clinical trial. For clinical trials in relation to which an application for approval was made on the basis of the
CTD before January 31, 2023, the CTD will continue to apply on a transitional basis until January 31, 2025. By that date,
all ongoing trials will become subject to the provisions of the CTR. The CTR will apply to clinical trials from an earlier
date if the related clinical trial application was made on the basis of the CTR or if the clinical trial has already transitioned
to the CTR framework before January 31, 2025.
In all cases, clinical trials must be conducted in accordance with GCP and the applicable regulatory requirements
and the ethical principles that have their origin in the Declaration of Helsinki. Medicines used in clinical trials must be
manufactured in accordance with the guidelines on cGMP and in a GMP licensed facility, which can be subject to GMP
inspections.
Review and Approval of Medicinal Products in the EU
In the European Union, medicinal products are subject to extensive regulatory requirements. As in the United
States, medicinal products can be marketed only if a marketing authorization from the competent regulatory authorities has
been obtained.
In the European Economic Area, or EEA, which consists of the 27 Member States of the European Union, as well
as Norway, Iceland and Liechtenstein, medicinal products can only be commercialized after a related marketing
authorization has been granted. A company may submit a marketing authorization application, or MAA, either under a
centralized procedure administered by the European Medicines Agency, or EMA, or one of the procedures administered by
the competent authorities of EU Member States (decentralized procedure, national procedure or mutual recognition
procedure).
The centralized procedure provides for the grant of a single MA by the European Commission that is valid
throughout the EEA. Pursuant to Regulation (EC) No 726/2004, the centralized procedure is compulsory for specific
products, including for (i) medicinal products derived from biotechnological processes, (ii) products designated as orphan
medicinal products, (iii) advanced therapy medicinal products, or ATMPs, and (iv) products with a new active substance
indicated for the treatment of HIV/AIDS, cancer, neurodegenerative diseases, diabetes, auto-immune and other immune
dysfunctions and viral diseases. For products with a new active substance indicated for the treatment of other diseases and
products that are highly innovative or for which a centralized process is in the interest of patients,
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authorization through the centralized procedure is optional on related approval. Under the centralized procedure, the
EMA’s Committee for Medicinal Products for Human Use, or CHMP, conducts the initial assessment of a product. The
CHMP is also responsible for several post-authorization and maintenance activities, such as the assessment of
modifications or extensions to an existing MA. The maximum timeframe for the evaluation of an MAA under the
centralized procedure is 210 days, excluding clock stops when additional information or written or oral explanation is to be
provided by the applicant in response to questions of the CHMP.
Accelerated assessment may be granted by the CHMP in exceptional cases, when a medicinal product targeting an
unmet medical need is expected to be of major interest from the point of view of public health and, in particular, from the
viewpoint of therapeutic innovation. If the CHMP accepts a request for accelerated assessment, the time limit of 210 days
will be reduced to 150 days (excluding clock stops). The CHMP can, however, revert to the standard time limit for the
centralized procedure if it considers that it is no longer appropriate to conduct an accelerated assessment.
Unlike the centralized authorization procedure, the decentralized MA procedure requires a separate application to,
and leads to separate approval by, the competent authorities of each EU Member State in which the product is to be
marketed. This application is identical to the application that would be submitted to the EMA for authorization through the
centralized procedure. The reference EU Member State prepares a draft assessment and drafts of the related materials
within 120 days after receipt of a valid application. The resulting assessment report is submitted to the concerned EU
Member States who, within 90 days of receipt, must decide whether to approve the assessment report and related materials.
If a concerned EU Member State cannot approve the assessment report and related materials due to concerns relating to a
potential serious risk to public health, disputed elements may be referred to the Heads of Medicines Agencies’
Coordination Group for Mutual Recognition and Decentralised Procedures – Human, or CMDh, for review. The
subsequent decision of the European Commission is binding on all EU Member States.
The mutual recognition procedure allows companies that have a medicinal product already authorized in one EU
Member State to apply for this authorization to be recognized by the competent authorities in other EU Member States.
Like the decentralized procedure, the mutual recognition procedure is based on the acceptance by the competent authorities
of the EU Member States of the MA of a medicinal product by the competent authorities of other EU Member States. The
holder of a national MA may submit an application to the competent authority of an EU Member State requesting that this
authority recognize the MA delivered by the competent authority of another EU Member State.
In principle, a marketing authorization has an initial validity of five years. The marketing authorization may be
renewed after five years on the basis of a re-evaluation of the risk-benefit balance by the EMA or by the competent
authority of the EEA country in which the original marketing authorization was granted. To support the application, the
marketing authorization holder must provide the EMA or the competent authority with a consolidated version of the
Electronic Common Technical Document, or eCTD, providing up to date data concerning the quality, safety and efficacy of
the product, including all variations introduced since the marketing authorization was granted, at least nine months before
the marketing authorization ceases to be valid. The EC or the competent authorities of the EEA countries may decide, on
justified grounds relating to pharmacovigilance, to proceed with one further five-year renewal period for the marketing
authorization. Once subsequently definitively renewed, the marketing authorization shall be valid for an unlimited period.
Any authorization which is not followed by the actual placing of the medicinal product on the EU market (in case of
centralized procedure) or on the market of the authorizing EEA country within three years after authorization ceases to be
valid (the so-called sunset clause).
Innovative products that target an unmet medical need and are expected to be of major public health interest may
be eligible for a number of expedited development and review programs, such as the Priority Medicines, or PRIME,
scheme, which provides incentives similar to the breakthrough therapy designation in the U.S. PRIME is a voluntary
scheme aimed at enhancing the EMA’s support for the development of medicinal products that target unmet medical needs.
Eligible products must target conditions for which there is an unmet medical need (there is no satisfactory method of
diagnosis, prevention or treatment in the EU or, if there is, the new medicinal product will bring a major therapeutic
advantage) and they must demonstrate the potential to address the unmet medical need by introducing new methods of
therapy or improving existing ones. Benefits accrue to sponsors of product candidates with PRIME designation, including
but not limited to, early and proactive regulatory dialogue with the EMA, frequent discussions on clinical trial
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designs and other development program elements, and potentially accelerated MAA assessment once a dossier has been
submitted.
In the EU, a “conditional” MA may be granted in cases where all the required safety and efficacy data are not yet
available. The European Commission may grant a conditional MA for a medicinal product if it is demonstrated that all of
the following criteria are met: (i) the benefit-risk balance of the medicinal product is positive; (ii) it is likely that the
applicant will be able to provide comprehensive data post-authorization; (iii) the medicinal product fulfils an unmet
medical need; and (iv) the benefit of the immediate availability to patients of the medicinal product is greater than the risk
inherent in the fact that additional data are still required. The conditional MA is subject to conditions to be fulfilled for
generating the missing data or ensuring increased safety measures. It is valid for one year and must be renewed annually
until all related conditions have been fulfilled. Once any pending studies are provided, the conditional MA can be
converted into a traditional MA. However, if the conditions are not fulfilled within the timeframe set by the EMA and
approved by the European Commission, the MA will cease to be renewed.
An MA may also be granted “under exceptional circumstances” where the applicant can show that it is unable to
provide comprehensive data on efficacy and safety under normal conditions of use even after the product has been
authorized and subject to specific procedures being introduced. These circumstances may arise in particular when the
intended indications are very rare and, in the state of scientific knowledge at that time, it is not possible to provide
comprehensive information, or when generating data may be contrary to generally accepted ethical principles. Like a
conditional MA, an MA granted in exceptional circumstances is reserved to medicinal products intended to be authorized
for treatment of rare diseases or unmet medical needs for which the applicant does not hold a complete data set that is
required for the grant of a standard MA. However, unlike the conditional MA, an applicant for authorization in exceptional
circumstances is not subsequently required to provide the missing data. Although the MA “under exceptional
circumstances” is granted definitively, the risk-benefit balance of the medicinal product is reviewed annually, and the MA
will be withdrawn if the risk-benefit ratio is no longer favorable.
Data and Market Exclusivity in the EU
The EU provides opportunities for data and market exclusivity related to MAs. Upon receiving an MA, innovative
medicinal products are generally entitled to receive eight years of data exclusivity and 10 years of market exclusivity. Data
exclusivity, if granted, prevents regulatory authorities in the EU from referencing the innovator’s data to assess a generic
application or biosimilar application for eight years from the date of authorization of the innovative product, after which a
generic or biosimilar MAA can be submitted, and the innovator’s data may be referenced. The market exclusivity period
prevents a successful generic or biosimilar applicant from commercializing its product in the EU until 10 years have
elapsed from the initial MA of the reference product in the EU. The overall ten-year period may, occasionally, be extended
for a further year to a maximum of 11 years if, during the first eight years of those ten years, the MA 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. However, there is no
guarantee that a product will be considered by the EU’s regulatory authorities to be a new chemical/biological entity, and
products may not qualify for data exclusivity.
In the EU, there is a special regime for biosimilars, or biological medicinal products that are similar to a reference
medicinal product but that do not meet the definition of a generic medicinal product. For such products, the results of
appropriate preclinical or clinical trials must be provided in support of an application for MA. Guidelines from the EMA
detail the type of quantity of supplementary data to be provided for different types of biological product.
Pediatric Development in the EU
In the EU, Regulation (EC) No 1901/2006 provides that all MAAs for new medicinal products must include the
results of trials conducted in the pediatric population, in compliance with a pediatric investigation plan, or PIP, agreed with
the EMA’s Pediatric Committee, or PDCO. The PIP sets out the timing and measures proposed to generate data to support a
pediatric indication of the medicinal product for which marketing authorization is being sought. The PDCO may grant a
deferral of the obligation to implement some or all of the measures provided in the PIP until there are sufficient data to
demonstrate the efficacy and safety of the product in adults. Furthermore, the obligation to provide
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pediatric clinical trial data can be waived by the PDCO when these data are 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. Once the marketing authorization is obtained in all EU Member States and study results are included in
the product information, even when negative, the product is eligible for a six-month extension to the Supplementary
Protection Certificate or SPC if any is in effect at the time of authorization or, in the case of orphan medicinal products, a
two-year extension of orphan market exclusivity.
Orphan Designation and Exclusivity in the EU
Regulation (EC) No. 141/2000, as implemented by Regulation (EC) No. 847/2000 provides that a medicinal
product can be designated as an orphan medicinal product by the European Commission if its sponsor can establish that :
(1) the product is intended for the diagnosis, prevention or treatment of life-threatening or chronically debilitating
conditions; (2) either (a) such conditions affect not more than 5 in 10,000 persons in the EU when the application is made,
or (b) the product without the benefits derived from orphan status, would not generate sufficient return in the EU to justify
the necessary investment in developing the medicinal product; and (3) there exists no satisfactory authorized method of
diagnosis, prevention, or treatment of the condition that has been authorized in the EU, or even if such method exists, the
product will be of significant benefit to those affected by that condition.
Regulation (EC) No 847/2000 includes further provisions for implementation of the criteria for designation of a
medicinal product as an orphan medicinal product. An application for the designation of a medicinal product as an orphan
medicinal product must be submitted at any stage of development of the medicinal product but before filing of an MAA.
An MA for an orphan medicinal product may only include indications designated as orphan. For non-orphan indications
treated with the same active pharmaceutical ingredient, a separate marketing authorization has to be sought.
Orphan medicinal product designation entitles an applicant to incentives such fee reductions or fee waivers,
protocol assistance, and access to the centralized marketing authorization procedure. Upon grant of a marketing
authorization, orphan medicinal products are entitled to a ten-year period of market exclusivity for the approved
therapeutic indication, which means that the EMA cannot accept another marketing authorization application, nor can the
European Commission grant a marketing authorization, or accept an application to extend a marketing authorization for a
similar product for the same indication for a period of ten years. The period of market exclusivity is extended by two years
for orphan medicinal products that have also complied with an agreed Pediatric Investigation Plan, or PIP. No extension to
any supplementary protection certificate can be granted on the basis of pediatric studies for orphan indications. Orphan
medicinal product designation does not convey any advantage in, or shorten the duration of, the regulatory review and
approval process.
The period of market exclusivity may, however, be reduced to six years if, at the end of the fifth year, it is
established that the product no longer meets the criteria on the basis of which it received orphan medicinal product
destination, including where it can be demonstrated on the basis of available evidence that the original orphan medicinal
product is sufficiently profitable not to justify maintenance of market exclusivity or where the prevalence of the condition
has increased above the threshold. Additionally, an MA may be granted to a similar medicinal product with the same
orphan indication during the 10 year period if: (i) if the applicant consents to a second original orphan medicinal product
application, (ii) if the manufacturer of the original orphan medicinal product is unable to supply sufficient quantities; or
(iii) if the second applicant can establish that its product, although similar, is safer, more effective or otherwise clinically
superior to the original orphan medicinal product. A company may voluntarily remove a product from the register of
orphan products.
Post-Approval Requirements in the EU
Where an MA is granted in relation to a medicinal product in the EU, the holder of the MA is required to comply
with a range of regulatory requirements applicable to the manufacturing, marketing, promotion and sale of medicinal
products. Similar to the United States, both MA holders and manufacturers of medicinal products are subject to
comprehensive regulatory oversight by the EMA, the European Commission and/or the competent regulatory authorities of
the individual EU Member States. The holder of an MA must establish and maintain a pharmacovigilance
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system and appoint an individual qualified person for pharmacovigilance who is responsible for oversight of that system.
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 MA. 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.
In the EU, the advertising and promotion of medicinal products are subject to both EU and EU Member States’
laws governing promotion of medicinal products, interactions with physicians and other healthcare professionals,
misleading and comparative advertising and unfair commercial practices. General requirements for advertising and
promotion of medicinal products, such as direct-to-consumer advertising of prescription medicinal products are established
in EU law. However, the details are governed by regulations in individual EU Member States and can differ from one
country to another. For example, applicable laws require that promotional materials and advertising in relation to medicinal
products comply with the product’s Summary of Product Characteristics, or SmPC, which may require approval by the
competent national authorities in connection with an MA. The SmPC is the document that provides information to
physicians concerning the safe and effective use of the product. Promotional activity that does not comply with the SmPC
is considered off-label and is prohibited in the EU.
Pricing, Coverage and Reimbursement
In the EU, pricing and reimbursement schemes vary widely from country to country. Some EU Member States
may approve a specific price for a product, or they may instead adopt a system of direct or indirect controls on the
profitability of the company placing the product on the market. Other EU Member States allow companies to fix their own
prices for products but monitor and control prescription volumes and issue guidance to physicians to limit prescriptions.
In addition, some EU Member States may require the completion of additional studies that compare the cost-
effectiveness of a particular medicinal product candidate to currently available therapies. This Health Technology
Assessment, or HTA, process is the procedure according to which the assessment of the public health impact, therapeutic
impact and the economic and societal impact of use of a given medicinal product in the national healthcare systems of the
individual country is conducted. The outcome of HTA regarding specific medicinal products will often influence the
pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU
Member States. On December 15, 2021, the Health Technology Regulation, or HTA Regulation, was adopted. The HTA
Regulation is intended to boost cooperation among EU member states in assessing health technologies, including new
medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in these areas. When
it enters into application in 2025, the HTA Regulation will be intended to harmonize the clinical benefit assessment of HTA
across the European Union.
In light of the fact that the United Kingdom has left the EU, Regulation No 2021/2282 on HTA will not apply in
the United Kingdom. However, the UK Medicines and Healthcare products Regulation Agency (“MHRA”) is working with
UK HTA bodies and other national organizations, such as the Scottish Medicines Consortium (“SMC”), the National
Institute for Health and Care Excellence (“NICE”), and the All-Wales Medicines Strategy Group, to introduce new
pathways supporting innovative approaches to the safe, timely and efficient development of medicinal products.
Brexit
The United Kingdom’s, or UK, withdrawal from the EU on January 31, 2020, commonly referred to as Brexit,
has changed the regulatory relationship between the UK and the EU. The Medicines and Healthcare products
Regulatory Agency, or MHRA, is now the UK’s standalone regulator for medicinal products and medical devices. Great
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Britain (England, Scotland and Wales) is now a third country to the EU. Northern Ireland will, with regard to EU
regulations, continue to follow the EU regulatory rules for now.
The UK regulatory framework in relation to clinical trials is governed by the Medicines for Human Use (Clinical
Trials) Regulations 2004, as amended, which is derived from the CTD, as implemented into UK national law through
secondary legislation. On January 17, 2022, the MHRA launched an eight-week consultation on reframing the UK
legislation for clinical trials, and which aimed to streamline clinical trials approvals, enable innovation, enhance clinical
trials transparency, enable greater risk proportionality, and promote patient and public involvement in clinical trials. The
UK Government published its response to the consultation on March 21, 2023 confirming that it would bring forward
changes to the legislation. These resulting legislative amendments will determine how closely the UK regulations will align
with the CTR. In October 2023, the MHRA announced a new Notification Scheme for clinical trials which enables a more
streamlined and risk-proportionate approach to initial clinical trial applications for Phase 4 and low-risk Phase 3 clinical
trial applications.
Marketing authorizations in the UK are governed by the Human Medicines Regulations (SI 2012/1916), as
amended. Since January 1, 2021, an applicant for the EU centralized procedure marketing authorization can no longer be
established in the UK. As a result, since this date, companies established in the UK cannot use the EU centralized
procedure and instead must follow one of the UK national authorization procedures or one of the remaining post-Brexit
international cooperation procedures to obtain a marketing authorization to market products in the UK. All existing EU
marketing authorizations for centrally authorized products were automatically converted or grandfathered into UK
marketing authorization, effective in Great Britain only, free of charge on January 1, 2021, unless the marketing
authorization holder opted-out of this possibility. Northern Ireland currently remains within the scope of EU authorizations
in relation to centrally authorized medicinal products. Accordingly, until the Windsor Framework is implemented in
Northern Ireland on January 1, 2025, products falling within the scope of the EU centralized procedure can only be
authorized through UK national authorization procedures in Great Britain.
The MHRA has also introduced changes to national marketing authorization procedures. This includes
introduction of procedures to prioritize access to new medicines that will benefit patients, including a 150-day assessment
route, a rolling review procedure and the International Recognition Procedures which entered into application on January 1,
2024. Since January 1, 2024, the MHRA may rely on the International Recognition Procedure, or IRP, when reviewing
certain types of marketing authorization applications. This procedure is available for applicants for marketing authorization
who have already received an authorization for the same product from a reference regulator. These include the FDA, the
EMA, and national competent authorities of individual EEA countries. A positive opinion from the EMA and CHMP, or a
positive end of procedure outcome from the mutual recognition or decentralized procedures are considered to be
authorizations for the purposes of the IRP.
There is no pre-marketing authorization orphan designation for medicinal products in the UK. Instead, the MHRA
reviews applications for orphan designation in parallel to the corresponding marketing authorization application. The
criteria are essentially the same as those in the EU, but have been tailored for the market. This includes the criterion that
prevalence of the condition in Great Britain, rather than the EU, must not be more than five in 10,000. Upon the grant of a
marketing authorization with orphan status, the medicinal product will benefit from up to 10 years of market exclusivity
from similar products in the approved orphan indication. The start of this market exclusivity period will be set from the
date of first approval of the product in Great Britain.
Healthcare Reform
A primary trend in the United States healthcare industry and elsewhere is cost containment. There have been a
number of federal and state proposals during the last few years regarding the pricing of pharmaceutical and
biopharmaceutical products, limiting coverage and reimbursement for drugs and other medical products, government
control and other changes to the healthcare system in the United States.
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In March 2010, the U.S. Congress enacted the ACA, which, among other things, includes changes to the coverage
and payment for drug products under government health care programs. Among the provisions of the ACA of importance
to our potential product candidates are:
● an annual, nondeductible fee on any entity that manufactures or imports specified branded prescription drugs
and biologic agents, apportioned among these entities according to their market share in certain government
healthcare programs;
● expansion of eligibility criteria for Medicaid programs by, among other things, allowing states to offer
Medicaid coverage to certain individuals with income at or below 133% of the federal poverty level, thereby
potentially increasing a manufacturer’s Medicaid rebate liability; and
● a new Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct
comparative clinical effectiveness research, along with funding for such research.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In
August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2
trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic
reduction to several government programs. This includes aggregate reductions of Medicare payments to providers up to
two percent (2%) per fiscal year, which went into effect in April 2013 and will remain in effect until 2032 unless additional
Congressional action is taken.
Since its enactment, there have been numerous legal challenges and Congressional actions to repeal and replace
provisions of the ACA. We expect that the ACA, as currently enacted or as it may be amended in the future, and other
healthcare reform measures that may be adopted in the future could have a material adverse effect on our industry generally
and on our ability to maintain or increase sales of our existing products that we successfully commercialize or to
successfully commercialize our product candidates, if approved. For example, on August 16, 2022, President Biden signed
the Inflation Reduction Act of 2022, or IRA, into law, which among other things, extends enhanced subsidies for
individuals purchasing health insurance coverage in ACA marketplaces through plan year 2025. The IRA also eliminates
the “donut hole” under the Medicare Part D program beginning in 2025 by significantly lowering the beneficiary maximum
out-of-pocket cost and creating a new manufacturer discount program. In addition to the ACA, there will continue to be
proposals by legislators at both the federal and state levels, regulators and third-party payors to keep healthcare costs down
while expanding individual healthcare benefits.
Further, the IRA, among other things, (i) directs the U.S. Department of Health and Human Services, or HHS, to
negotiate the price of certain high-expenditure, single-source drugs and biologics covered under Medicare, and subject
drug manufacturers to civil monetary penalties and a potential excise tax by offering a price that is not equal to or less than
the negotiated “maximum fair price” for such drugs and biologics under the law, and (ii) imposes rebates with respect to
certain drugs and biologics covered under Medicare Part B or Medicare Part D to penalize price increases that outpace
inflation. The IRA permits HHS to implement many of these provisions through guidance, as opposed to regulation, for the
initial years. These provisions take effect progressively starting in fiscal year 2023. On August 29, 2023, HHS announced
the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price negotiation
program is currently subject to legal challenges. It is currently unclear how the IRA will be implemented but is likely to
have a significant impact on the pharmaceutical industry. Further in response to the Biden administration’s October 2022
executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the CMS
Innovation Center which will be evaluated on their ability to lower the cost of drugs, promote accessibility, and improve
quality of care. It is unclear whether the models will be utilized in any health reform measures in the future. On December
7, 2023, the Biden administration announced an initiative to control the price of prescription drugs through the use of
march-in rights under the Bayh-Dole Act. On December 8, 2023, the National Institute of Standards and Technology
published for comment a Draft Interagency Guidance Framework for Considering the Exercise of March-In Rights which
for the first time includes the price of a product as one factor an agency can use when deciding to exercise march-in rights.
While march-in rights have not previously been exercised, it is uncertain if that will continue under the new framework.
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At the state level, legislatures have increasingly passed legislation and implemented regulations designed to
control pharmaceutical and biological product pricing, including price or patient reimbursement constraints, discounts,
restrictions on certain product access and marketing cost disclosure and transparency measures, and, in some cases,
designed to encourage importation from other countries and bulk purchasing.
Human Capital
We believe the success of the company depends on our ability to continue to attract, retain and motivate qualified
employees. We seek to meet this objective by offering competitive compensation and benefits packages in our expanding
organization, with opportunities for our employees to thrive, grow and develop in their careers. We hold our employees to
high ethical performance standards and our compensation plans include, as applicable, equity and cash compensation
components designed to enable us to offer competitive base pay and attractive incentive schemes.
As of December 31, 2023, we had 100 full time employees. Of these employees, 63 were employed in research
and development roles, 18 were employed in commercial roles and 19 were employed within general and administration.
Women represented approximately 55% of our workforce and men represented approximately 45%.
The health and safety of our employees is of utmost importance to us. We offer comprehensive benefits to protect
the health of our employees and their families.
The members of our management team are employed by both our company and Y-mAbs Therapeutics A/S, our
wholly owned Danish subsidiary. None of our employees are represented by labor unions or covered by collective
bargaining agreements. We consider our relationship with our employees to be good.
Corporate Information
We were incorporated in Delaware on April 30, 2015. Our principal executive offices are located at 230 Park
Avenue, Suite 3350, New York, New York 10169, and our telephone number is (646) 885-8505. Our website address is
www.ymabs.com.
We make available, free of charge on our website, our Annual Report on Form 10-K, Quarterly Reports on Form
10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished with the SEC pursuant to Section
13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, as soon as reasonably practicable after we
electronically file such material with, or furnish it to, the Securities and Exchange Commission, or SEC. The information
contained on, or accessible through, our website is not incorporated by reference into this Annual Report on Form 10-K,
and you should not consider any information contained in, or that can be accessed through, our website as part of this
Annual Report on Form 10-K or in deciding whether to purchase our common stock.
We use our website https://ymabs.com/ as a channel of distribution of material company information. For
example, financial and other material information regarding our company is routinely posted on and accessible on our
website. Accordingly, investors should monitor this channel, in addition to following our press releases, SEC filings and
public conference calls and webcasts. The contents of our website are not, however, a part of this Annual Report on Form
10-K and are not incorporated by reference herein.
Our Code of Conduct applies to all of our employees, directors and officers, including our principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, and
those of our subsidiary. The Code of Conduct is available on our website at https://ir.ymabs.com/ under the section entitled
“For Investors” under “Corporate Governance.” We intend to satisfy the disclosure requirements under Item 5.05 of the
SEC Form 8-K regarding an amendment to, or waiver from, a provision of our Code of Conduct by posting such
information on our website at the website address and location specified above.
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ITEM 1A.
RISK FACTORS.
Our business is subject to numerous risks. You should carefully consider the risks and uncertainties described
below together with all of the other information contained in this Annual Report on Form 10-K, including our consolidated
financial statements and the related notes, and in our other filings with the SEC. Additional risks and uncertainties that we
are unaware of, or that we currently believe are not material, may also become important factors that affect us. If any of
the following risks occur, our business, financial condition, results of operations and future growth prospects could be
materially and adversely affected. In such event, the trading price of our common stock could decline and you might lose
all or part of your investment.
Risks Related to Our Financial Condition and Need for Additional Capital
We have a limited operating history and have incurred significant losses since inception. Our only product approved for
sale is DANYELZA, and we have never generated any substantial revenue from product sales. We expect to incur
significant losses for the foreseeable future. We may never achieve or maintain profitability, which may cause the
market value of our common stock to decline significantly.
We are a commercial-stage biopharmaceutical company with a limited operating history. Since our inception in
2015, we have incurred significant losses each year. As of December 31, 2023 our accumulated deficit was
approximately $457.5 million. We have financed our operations principally through private placements, the initial public
offering of our common stock in 2018 as well as subsequent public offerings of our common stock in November 2019
and February 2021, the proceeds from the sales of DANYELZA and the sale of the PRV granted to us upon FDA
approval of DANYELZA.
To date, we have devoted substantially all our efforts to research and development, and more recently,
commercialization of DANYELZA, which is our only approved product to date and development of omburtamab and
SADA PRIT technology. On November 25, 2020, DANYELZA was approved by the FDA for the treatment, in
combination with GM-CSF, of pediatric patients one year of age and older and adult patients with relapsed/refractory, or
R/R, high-risk neuroblastoma, or NB, in the bone or bone marrow who have demonstrated a partial response, minor
response, or stable disease to prior therapy.
Although in May 2022 our biologic license application, or BLA, for omburtamab was accepted for priority review
by the FDA, in November 2022 the FDA issued a complete response letter, or CRL, for the BLA for omburtamab. The
letter indicated that the FDA completed the review of the application and determined that it is unable to approve the BLA
in its current form. This was consistent with the outcome of the ODAC Meeting held in October 2022. In the CRL, and in
our Type A meeting held subsequent to receipt of the CRL, the FDA made recommendations for us to consider in terms of
trial design to demonstrate substantial evidence of effectiveness and a favorable benefit-risk profile.
As part of our strategic restructuring plan announced in January 2023, we deprioritized the omburtamab program
for all indications and product candidates. We are currently considering the future for our omburtamab development
program, and we received an 18-month extension for BLA of omburtamab, which expires on May 30, 2025. We can
provide no assurance that the development of omburtamab will continue or that omburtamab will ultimately receive FDA
approval.
We are using our proprietary Self-Assemly DisAssembly Pretargeted, or SADA PRIT, technology platform, a
concept we also refer to as Liquid RadiationTM, to advance a series of antibody constructs, using a two-step pre-targeting
approach. The bispecific antibody fragments bind to the tumor before a radioactive payload is subsequently injected. GD2-
SADA for potential use in GD2-positive solid tumors is our first SADA PRIT construct, and we had our first clinical
patients dosed in April 2023 in our Phase 1, dose-escalation, single-arm, open-label, non-randomized, multicenter trial, for
the treatment of certain solid tumor cancers, including small cell lung cancer, sarcoma, and malignant melanoma. The IND
for our first hematological target, the CD38-SADA construct for the treatment of patients with Relapsed or Refractory
Non-Hodgkin Lymphoma was cleared in October 2023, and we expect to dose the first patient in 2024. We are still in early
stages of development of SADA PRIT technology platform. We may not be
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successful in our efforts to use the SADA PRIT technology to build a pipeline of product candidates. Our investment in
developing SADA PRIT technology may contribute to the risk that we may never achieve profitability.
Our other product candidates are in the early stages of clinical development or pre-clinical research. As a result,
we expect that it will be a number of years, if ever, before we have any of these other product candidates approved and
ready for commercialization.
We expect to continue to incur significant expenses and operating losses for the foreseeable future. The net losses
we incur may fluctuate significantly from quarter to quarter. Our only approved product for sale is DANYELZA, which
received FDA accelerated approval on November 25, 2020. We began limited sales and shipments of DANYELZA in
February 2021 and the revenue generated from product sales does not fully fund our operating expenses. We do not
anticipate generating revenue that will fully fund our operating expenses for a period of time, if ever. No assurance can be
given that we will ever receive regulatory approval for any of our product candidates other than DANYELZA. Our ability
to generate revenue and achieve profitability depends significantly on our success in many factors, including:
● the successful commercialization of DANYELZA and our product candidates for which we may obtain
regulatory approvals and marketing authorizations, either directly or with a collaborator or distributor;
● completing research regarding, and non-clinical and clinical development of, our product candidates;
● obtaining and maintaining regulatory approvals, marketing authorizations and coverage and reimbursements
from payors for DANYELZA and product candidates for which we complete clinical studies;
● developing and maintaining a sustainable and scalable manufacturing process for DANYELZA and our other
product candidates, including establishing and maintaining commercially viable supply relationships with
third parties including, Patheon/Thermo Fisher and EMD/Merck, among others, or establishing our own
manufacturing capabilities and infrastructure;
● obtaining market acceptance of DANYELZA and our product candidates as viable treatment options;
● addressing any competing products, product candidates, related technologies and/or market developments;
● identifying, assessing, acquiring and/or developing new product candidates;
● negotiating favorable terms in any collaboration, licensing, distribution or other arrangements into which we
may enter;
● maintaining, protecting, and expanding our portfolio of intellectual property rights, including patents, trade
secrets, and know-how;
● attracting, hiring, and retaining qualified personnel; and
● adequately financing our operations at acceptable terms.
We anticipate incurring research, development, clinical trial, manufacturing and marketing costs associated with
commercializing even approved products. For example, we continue to run clinical studies on our currently marketed
product DANYELZA to fulfill the regulatory requirement from the accelerated approval of the product by FDA. The
accelerated approval of DANYELZA is subject to certain post-marketing requirements and commitments, including a
confirmatory post-marketing trial of clinical benefit, that must be completed in order to convert the BLA to full approval
and prevent withdrawal of the license by FDA. The confirmatory post-marketing clinical trial required by the FDA to
verify and to further characterize the clinical benefit is our ongoing Study 201, which is designed to enroll a
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minimum of 80 evaluable patients and report overall rate of response, or ORR, duration of response, or DOR, progression
free survival, or PFS, and overall survival, or OS. The ORR is the primary endpoint for the study, DOR is the secondary
endpoint and PFS and OS are secondary endpoints in long-term follow-up. We anticipate completing the study no later than
by March 31, 2027.
Our expenses could increase beyond expectations if we are required by the FDA or other regulatory authorities,
domestic or foreign, to change our manufacturing processes or assays, or to perform clinical, non-clinical, or other types of
studies in addition to those that we currently anticipate. If we are successful in obtaining regulatory approvals to market
more of our product candidates, our revenue will be dependent, in part, upon the size of the markets in the territories for
which we gain regulatory approval, the accepted price for any such product, the ability to obtain reimbursement at any
price, and whether we own the commercial rights for that territory. If the number of our addressable patients is not as
significant as we estimate, the indication approved by regulatory authorities is narrower than we expect, or the reasonably
expected populations for treatment are narrowed by competition, physician choice or treatment guidelines, we may not
generate significant revenue from sales of such products, even if approved. If we are not able to generate sufficient revenue
from the sale of DANYELZA or any other approved products, we may never become profitable.
Our limited operating history may make it difficult for you to evaluate the success of our business to date and to assess
our future viability.
We were incorporated and began our operations on April 30, 2015. Our operations to date have been limited to
organizing and staffing our company, business planning, raising capital, commercializing DANYELZA, conducting clinical
trials of DANYELZA and conducting pre-clinical studies and clinical trials of our other product candidates, and identifying
additional potential product candidates. Typically, it takes about six to 10 years to develop a new drug from the time it is in
Phase 1 clinical trials to when it is approved for treating patients, but in many cases it may take longer. Consequently, any
predictions you make 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 multiple pharmaceutical products. In
addition, as a business with a limited operating history, we may encounter unforeseen expenses, difficulties, complications,
delays and other known and unknown factors as we continue to develop and commercialize DANYELZA and our other
product candidates.
Our payment obligations to MSK and MIT may be a drain on our cash resources, or may cause us to incur debt
obligations or issue additional securities to satisfy such payment obligations, which may adversely affect our financial
position and results of operations.
Under the MSK License, we have committed to funding scientific research as well as conducting certain clinical
trial activities at MSK. As licensed product candidates progress through clinical development and commercialization,
certain milestone payments will come due, and we will owe MSK customary royalties on commercial sales of our
approved products, if any. Milestone payments become due upon achievement of the related clinical, regulatory or sales-
based milestone set forth in the MSK license agreements and all milestones are accrued for when they are probable and
estimable. Certain of the clinical and regulatory milestone payments become due at the earlier of completion of the related
milestone activity or the date indicated in the MSK license agreements, whether or not the milestone activity has been
achieved. Total clinical and regulatory milestones potentially due under the MSK License are $2.5 million and $9.0
million, respectively. There are also sales-based milestones that become due should we achieve certain amounts of sales of
licensed products with total sales-based milestones potentially due of $20.0 million.
Under the MSK CD33 License, we are obligated to make potential payments of $0.6 million, $0.5 million and
$7.5 million for clinical, regulatory and sales-based milestones, respectively.
In April 2020, we entered into the SADA License Agreement which requires us to pay to MSK and MIT mid to
high single digit royalties based on annual net sales of licensed products or the performance of licensed services by us and
our affiliates and sublicensees. We are obligated to pay annual minimum royalties of $40,000, increasing to $60,000 once a
patent has been issued, over the royalty term, commencing on the tenth anniversary of the SADA License. These amounts
are non-refundable but are creditable against royalty payments otherwise due under the SADA License. We are
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also obligated to pay to MSK and MIT certain clinical, regulatory and sales based milestone payments under the SADA
License Agreement. Certain of the clinical and regulatory milestone payments become due at the earlier of completion of
the related milestone activity or the date indicated in the SADA License Agreement. Total clinical and regulatory milestone
payments potentially due under the SADA License Agreement are $4.7 million and $18.1 million, respectively.
Additionally, we are also obligated to make sales based milestones payments totaling $23.8 million, that become due
should we achieve certain amounts of sales of licensed products under the SADA License. In addition, for each of the
SADA PRIT constructs generated by MSK and sold on our behalf by one of our sublicenses, we may pay sales based
milestone payments in the total amount of $60.0 million based on the achievement of various levels of cumulative net sales
by the sublicensee. Under the SADA License Agreement, we also committed to fund scientific research at MSK under a
Sponsored Research Agreement for $1.5 million. The scientific research took place over a period that commenced in
September 2020 and ended in February 2022.
In addition, we have committed to acquire certain personnel and laboratory services at MSK under a Master Data
Services Agreement, or MDSA, and two separate Core Facility Service Agreements, or CFSAs. We have also entered into
an Investigator-Sponsored Master Clinical Trial Agreement, or the MCTA, with MSK under which we are providing drug
product and funding for certain clinical trials at MSK under separate executed appendices. Additionally, we have entered
into a Sponsored Research Agreement, or the SRA, with MSK pursuant to which we paid MSK to conduct certain research
projects over a period of five years related to the intellectual property licensed under the MSK License. The SRA was
amended on September 13, 2019, and will expire five years from the date of the amendment. We also remain responsible
for any potential downstream payment obligations to MSK related to the GD2-GD3 Vaccine. This includes our obligation
to make development and regulatory milestone payments, if achieved, totaling $1.4 million, annual minimum royalties of
$10,000, increasing to $25,000 from approval of the first new drug application, or NDA, or BLA for a licensed product
over the royalty term, and mid-single digit royalty payments to MSK on sales.
These payments could be significant and in order to satisfy our obligations to MSK and MIT, we may be required
to use our existing cash, incur debt obligations or issue additional equity securities, any of which may materially and
adversely affect our financial position and results of operations.
We will need substantial additional funding until at least such time as we can generate substantial revenue from product
sales. If we fail to obtain such additional funding, we may be forced to delay, reduce or eliminate our research and drug
development programs or current or future commercialization efforts and our license and other agreements may be
terminated.
Developing pharmaceutical products, including conducting pre-clinical studies and clinical trials and
commercialization of any approved products, is a very time-consuming, expensive and uncertain process that takes years to
complete. We expect our expenses to increase in connection with our ongoing activities, particularly as we grow our sales
and marketing team to support sale of DANYELZA and conduct clinical trials of, and seek marketing approval for our
other product candidates. We expect to incur commercialization expenses, which may be significant, related to product
sales, marketing, manufacturing and distribution of DANYELZA. Accordingly, until at least such time as we can generate
substantial additional revenues from sales of DANYELZA or our product candidates, if approved, we will need to obtain
substantial additional funding in connection with our continuing operations. If we are unable to raise sufficient amounts of
additional capital when needed or on attractive terms, we may be forced to delay, reduce or eliminate our research and drug
development programs or our future commercialization efforts.
Changing circumstances may cause us to increase our spending significantly faster than we currently anticipate,
and we may need to spend more money than currently expected because of circumstances beyond our control. We will
require additional capital for further development and commercialization of our product candidates and may need to raise
additional funds earlier if we choose to expand more rapidly than we presently anticipate.
In addition, we cannot be certain that additional funding will be available on acceptable terms when needed, or at
all. Our ability to raise additional capital may be adversely impacted by worsening global economic conditions, with
disruptions to, and volatility in, the credit and financial markets in the U.S. and worldwide resulting from the effects of
inflationary pressures, health crises, the military conflict between Ukraine and Russia, the state of war between Israel and
Hamas and the threat of a greater conflict, current and potential future bank failures, and otherwise. If these
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conditions persist and deepen, we could experience an inability to access additional capital or our liquidity could otherwise
be impacted, which could in the future negatively affect our capacity for certain corporate development transactions or our
ability to make other important, opportunistic investments. We have no firmly committed source of additional capital and 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 our product candidates or other research and
development initiatives. Our licenses and other agreements may also be terminated if we are unable to meet the payment
obligations under such agreements. We could be required to seek collaborators for DANYELZA or our product candidates
at an earlier stage than otherwise would be desirable or on terms that are less favorable than might otherwise be available
or relinquish or license on unfavorable terms our rights to our product candidates in markets where we otherwise would
seek to pursue development or commercialization ourselves. Any of the above 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 stockholders, restrict our operations or require us to relinquish
rights to DANYELZA or our product candidates on terms unfavorable to us.
We expect our expenses to increase in connection with our planned operations. Until such time, if ever, as we can
generate substantial additional revenues from the sale of DANYELZA and our product candidates, if approved, we expect
to finance our cash needs through a combination of cash on hand, securities offerings, debt financings, collaborations,
strategic alliances and/or licensing arrangements. To the extent that we raise additional capital through the sale of equity or
convertible securities, ownership interests will be diluted, and the terms of these securities could include liquidation or
other preferences and anti-dilution protections that could adversely affect the rights of common stockholders. In addition,
debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive
covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or
acquisitions, limiting our ability to conduct licensing transactions, creating liens, redeeming stock or declaring dividends,
that could adversely impact our ability to conduct our business. In addition, securing financing could require a substantial
amount of time and attention from our management and may divert a disproportionate amount of their attention away from
day to day activities, which may adversely affect our management’s ability to oversee the commercialization of
DANYELZA or other products candidates, if approved, or the development of our product candidates.
If we raise additional funds through collaborations, strategic alliances or licensing arrangements with third parties,
we may have to relinquish valuable rights related to our intellectual property, future revenue streams or any of our future
product candidates or grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds
when needed, we may be required to delay, reduce and/or eliminate our product development or current or future
commercialization efforts or grant rights to develop and market products or product candidates that we would otherwise
prefer to develop and market ourselves.
We may expand our resources to pursue a particular product or product candidate or indication and fail to capitalize on
other products or product candidates or indications that may be more profitable or for which there is a greater
likelihood of success.
Historically, we have focused our efforts and managerial resources on specific products and product candidates
and on specific indications such as DANYELZA for the treatment of R/R high-risk NB in bone and/or bone marrow and
omburtamab for CNS or LM from NB, and more, recently, SADA for solid tumors and Non-Hodgkin Lymphoma. As a
result, we may forgo or delay pursuit of opportunities with other products or product candidates or for other indications that
may prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on
viable commercial products or profitable market opportunities. Failure to properly assess potential product candidates for
indications could result in focusing on product candidates for indications with lower market potential, which could harm
our business and financial condition. Our spending on current and future research and development programs and product
candidates for specific indications may not yield any commercially viable product. If we do not accurately evaluate the
commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product
candidate through partnering, licensing or other royalty arrangements in cases in which it would have been more
advantageous for us to retain sole development and commercialization rights to such product candidate or
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product. For example, in November 2022 the FDA issued a CRL for our BLA for omburtamab. The letter indicated that the
FDA completed the review of the application and determined that it is unable to approve the BLA in its current form. This
was consistent with the outcome of the ODAC Meeting held in October 2022. In its CRL for omburtamab, and in our Type
A meeting held subsequent to receipt of the CRL, the FDA made recommendations for us to consider in terms of trial
design to demonstrate substantial evidence of effectiveness and a favorable benefit-risk profile. As part of our strategic
restructuring plan announced in January 2023, we deprioritized the omburtamab program for all indications and product
candidates. We are currently considering the future for our omburtamab development program and we can provide no
assurance that the development of omburtamab will continue or that omburtamab will ultimately receive FDA approval.
We depend on a limited number of customers for a high percentage of our revenue. If we cannot maintain our current
relationships with customers, fail to sustain recurring sources of revenue with our existing customers, or if we fail to
enter into new relationships, our future financial condition and results of operations will be adversely affected.
Moreover, the financial difficulties or insolvency of one or more of our major customers or their lack of willingness and
ability to distribute our approved product, DANYELZA, could adversely affect our financial position and results of
operations.
We had product sales to certain customers that accounted for more than 10% of total product revenue, net for the
years ended December 31, 2023 and 2022. McKesson, AmerisourceBergen, WEP and Cardinal Health accounted for 46%,
22%, 10% and 13%, respectively, of the Company’s product revenue, net for the year ended December 31, 2023.
McKesson, AmerisourceBergen, and Cardinal Health accounted for 70.8%, 17.4%, and 10.1%, respectively, of the
Company’s product revenue, net for the year ended December 31, 2022. Our future success depends on our ability to
maintain these relationships, to increase our penetration among these existing customers and to establish new relationships.
We engage in conversations with other companies and institutions regarding potential commercial opportunities on an
ongoing basis, which can be time consuming. There is no assurance that any of these conversations will result in a
commercial agreement, or if an agreement is reached, that the resulting relationship will be successful. In addition, if our
customers order our approved product, DANYELZA, but fail to pay on time or at all, our liquidity, financial condition,
results of operations, cash flows and prospects could be materially and adversely affected.
Moreover, our product sales are made through arrangements primarily with three national specialty distributors in
the United States of America. As of December 31, 2023, the accounts receivable balances from such distributors totaled
66% of the Company’s outstanding accounts receivable. A default by any of these customers on their amounts owed to us
could have a material adverse effect on our financial position. Future sales and our ability to collect accounts receivable
depend, in part, on the financial strength of our customers and our distributors’ willingness and ability to successfully
market our approved product, DANYELZA. We estimate an allowance for doubtful accounts based on our assessment of
specific identifiable customer accounts considered at risk or uncollectible, as well as an analysis of current receivables
aging and expected future write-offs and this allowance adversely impacts our results of operations. In the event customers
experience greater than anticipated financial difficulties, insolvency, or difficulty marketing DANYELZA, we expect our
financial position and results of operations to be further adversely impacted by our failure to collect accounts receivable in
excess of the amount due, net of the estimated allowances.
Risks related to product development and commercialization
Drug development is a lengthy and expensive process, with an uncertain outcome. If clinical trials of our product
candidates fail to demonstrate safety and efficacy to the satisfaction of regulatory authorities or do not otherwise
produce positive results, we may incur additional costs, experience delays in completing, or ultimately be unable to
complete, the development of our product candidates or be unable to obtain marketing approval. We may encounter
substantial delays in our clinical trials, or may not be able to conduct our trials on the timelines we expect.
Before obtaining marketing approval from regulatory authorities for the sale of our product candidates, we must
complete pre-clinical development and then conduct extensive clinical trials to demonstrate the safety and efficacy of our
product candidates. No assurance can be given that any clinical studies will be conducted as planned or completed on
schedule, if at all. In addition, we cannot be sure that we will be able to submit investigational new drug applications,
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or INDs, for any of our product candidates in the future and we cannot be sure that submission of an IND will result in the
FDA allowing clinical trials to begin. Moreover, even if these clinical studies begin, issues may arise that could suspend or
terminate such clinical trials. Clinical testing is expensive, difficult to design and implement, can take many years to
complete and is uncertain as to outcome. Failure of one or more clinical trials can occur at any stage of testing.
The outcome of pre-clinical studies and early-stage clinical trials may not be predictive of the success of later
clinical trials, and interim results of a clinical trial, such as the results of our ongoing clinical trials of our lead product
candidates, do not necessarily predict final results. Moreover, pre-clinical and clinical data are often susceptible to varying
interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in
pre-clinical studies and clinical trials have nonetheless failed to obtain marketing approval of their drugs. The nature of the
patient populations that we study in our clinical trials means that the treatment effect of our product candidates has to be
demonstrated despite being the second or third-line of treatment, and in some cases, despite concomitant treatment with
radiation or chemotherapy. Some of our target indications may also be difficult to assess via current imaging technology
and other testing methods, which may lead to in-conclusory or equivocal data regarding treatment effect. Furthermore,
because our study populations are small, statistical analyses may not fully adjust for these and other potential bias in the
data. As was the case for omburtamab, any or all of these factors may mean that we are unable to demonstrate substantial
evidence of the effectiveness of or product candidates to the satisfaction of the FDA or comparable foreign regulatory
authorities.
Our only approved product, DANYELZA, our product candidates and related technologies are novel approaches to
cancer treatment that present significant challenges, and our ability to generate product revenue is dependent on the
success of DANYELZA or one or more of our product candidates, which might require additional clinical testing before
we can seek regulatory approval and begin commercial sales.
DANYELZA and our product candidates and related technologies represent novel approaches to cancer treatment
generally. Developing and commercializing these products therefore subjects us to a number of challenges. On November
25, 2020, DANYELZA received regulatory approval by the FDA in the United States for the treatment in combination with
GM-CSF of high-risk R/R NB. The FDA has issued a post-marketing commitment to provide data on PFS, supporting the
efficacy of the product. We are currently performing clinical studies, such as Study 201, aimed to fulfill the requirements.
There can be no assurance that these studies will generate data sufficient to support the efficacy of the product.
Although the FDA accepted our BLA for omburtamab for priority review, in November 2022 the FDA issued a
CRL for our BLA for omburtamab. The letter indicated that the FDA completed the review of the application and
determined that it is unable to approve the BLA in its current form. In the CRL, and in our Type A meeting held subsequent
to receipt of the CRL, the FDA made recommendations for us to consider in terms of trial design to demonstrate substantial
evidence of effectiveness and a favorable benefit-risk profile. As part of our strategic restructuring plan announced in
January 2023, we deprioritized the omburtamab program for all indications and product candidates. We are currently
considering the future for our omburtamab development program and we received an 18-month extension for the BLA,
which expires on May 30, 2025. there is no assurance that we will continue to develop omburtamab or receive approval of
our BLA for omburtamab.
The SADA PRIT technology is still in early stages of clinical development or pre-clinical research. We may never
be able to develop a marketable product other than DANYELZA. Our ability to generate product revenue is highly
dependent on our ability to successfully commercialize DANYELZA and to obtain additional regulatory approvals of and
successfully commercialize additional product candidates. This will require additional clinical and non-clinical
development, regulatory review and approval in each jurisdiction in which we intend to market them, substantial
investment, access to sufficient commercial manufacturing capacity, and significant marketing efforts. We cannot be certain
that any of our other product candidates will be successful in clinical studies and they may not receive regulatory approval
even if they are successful in clinical studies.
The success of our product candidates in development will depend on several factors, including the following:
● successful and timely completion of our ongoing clinical trials;
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● initiation and successful patient enrollment and completion of additional clinical trials on a timely basis;
● safety, tolerability and efficacy profiles that are satisfactory to the FDA or any comparable foreign regulatory
authority for marketing approval;
● timely receipt of marketing and reimbursement approvals for our lead product candidates from applicable
regulatory authorities;
● the performance of our future collaborators, if any;
● the extent of any required post-marketing approval commitments to applicable regulatory authorities;
● establishment of supply arrangements with third-party raw materials and drug product suppliers and
manufacturers;
● establishment of scaled production arrangements with third-party manufacturers to obtain finished products
that are appropriately packaged for sale;
● obtaining and maintaining patent protection, trade secret protection and regulatory exclusivity, both in the
United States and internationally;
● protection of our rights in our intellectual property portfolio, including our licensed intellectual property;
● successful launch of commercial sales following any marketing approval including the hiring of a direct
salesforce and creation of marketing campaigns;
● a continued acceptable safety profile following any marketing approval;
● commercial acceptance by physicians and patients, the medical community and third-party payors; and
● our ability to compete with other therapies.
We do not have complete control over many of these factors, including certain aspects of clinical development and
the regulatory submission process, potential threats to our intellectual property rights and the manufacturing, marketing,
distribution and sales efforts of any future collaborator. Further, competitors who are developing product candidates with
technology similar to ours may experience problems with their product candidates that could identify problems in the
technology that would potentially harm our business.
Many of our product candidates are based on similar technologies. Therefore, if one product candidate encounters
safety or efficacy problems, developmental delays, regulatory issues, or other problems, our other development plans and
business could be significantly harmed.
The SADA PRIT Technology is still in early stages of clinical development or pre-clinical research and may not result
in approvable or marketable products, which exposes us to unforeseen risks and makes it difficult for us to predict the
time and cost of product development and potential for regulatory approval, and we may not be successful in our efforts
to use the SADA PRIT Technology to build a pipeline of product candidates.
We are seeking to identify and develop a broad pipeline of product candidates using the SADA PRIT Technology.
We have only recently begun dosing patients in our Phase 1 trial of GD2-SADA. The scientific research that forms the
basis of our efforts to develop product candidates with the SADA PRIT Technology is still ongoing. We are not aware of
any FDA-approved therapeutics utilizing a similar technology. Further, the scientific evidence to support the feasibility of
developing therapeutic treatments based on the SADA PRIT Technology is both preliminary and limited. As a result, we
are exposed to a number of unforeseen risks, and it is difficult to predict the types of
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challenges and risks that we may encounter during development of our product candidates using the SADA PRIT
Technology. For example, before the first dosing in our Phase 1 trial of GD1-SADA, we had not tested any of the product
candidates being developed using the SADA platform in humans, and most of our current data is limited to animal models
and pre-clinical cell lines, the results of which may not translate into humans. Further, relevant animal models and assays
may not accurately predict the safety and efficacy of our product candidates based on the SADA Technology in humans,
and we may encounter significant challenges creating appropriate models and assays for demonstrating the safety and
purity of our product candidates. In addition, the SADA PRIT Technology has potential safety risks related to, but not
limited to, the radiation stemming from the delivery of radioactive payloads. As a result, it is possible that safety events or
concerns could negatively affect the development of our product candidates developed using the SADA PRIT Technology,
including adversely affecting patient enrollment among the patient populations that we intend to treat.
Given the novelty of the SADA PRIT Technology, we intend to work closely with the FDA and comparable
foreign regulatory authorities to perform the requisite scientific analyses and evaluation of our methods to obtain regulatory
approval for our product candidates; however, due to a lack of comparable experiences, the regulatory pathway with the
FDA and comparable regulatory authorities may be more complex and time-consuming relative to other more well-known
therapeutics. Even if we obtain human data to support our product candidates developed using the SADA PRIT
Technology, the FDA or comparable foreign regulatory agencies may lack experience in evaluating the safety and efficacy
of our product candidates developed using the SADA PRIT Technology, which could result in a longer than expected
regulatory review process, increase our expected development costs, and delay or prevent commercialization of our
product candidates. The validation process takes time and resources, may require independent third-party analyses, and
may not be accepted or approved by the FDA and comparable foreign regulatory authorities. We cannot be certain that our
approach will lead to the development of approvable or marketable products developed using the SADA PRIT Technology,
alone or in combination with other therapies.
Additionally, an element of our strategy is to use and expand the SADA PRIT Technology to build a pipeline of
product candidates and progress those product candidates through clinical development for the treatment of a variety of
different cancers. Although our research and development efforts to date have been focused on identifying a pipeline of
product candidates directed at cancers, we may not be able to develop product candidates that are safe and effective. Even
if we are successful in building a pipeline of product candidates developed using the SADA PRIT Technology, the potential
product candidates that we identify may not be suitable for clinical development, including as a result of being shown to
have harmful side effects or other characteristics that indicate that they are unlikely to be approvable or marketable
products that will receive marketing approval and achieve market acceptance. If we do not continue to successfully
develop, get approval for and begin to commercialize any product candidates developed using the SADA PRIT
Technology, we will face difficulty in obtaining product revenue therefrom in future periods, which could result in
significant harm to our financial position and adversely affect our share price.
Russia’s invasion of Ukraine and ancillary developments have had and may continue to have an adverse effect on
our business.
On February 24, 2022, Russia launched a wide-ranging attack on Ukraine. The resulting conflict and retaliatory
measures by the global community have created global security concerns, including the possibility of expanded or global
conflict, which have had and are likely to continue to have, short-term and more likely longer-term adverse impacts on
Russia, Ukraine and Europe and around the globe. Sanctions issued by the U.S. and other countries against Russia in
response to its attack on Ukraine and related counter-sanctions issued by Russia have made it very difficult for us to
operate in Russia. In light of the conditions in the region, we terminated our clinical trials of DANYELZA in Russia and
suspended our regulatory activities to obtain marketing authorization for DANYELZA in Russia. We have been able to
make DANYELZA available in Russia on a compassionate (unapproved) use basis for a limited number of patients.
Although we are considering expanding the compassionate use of DANYELZA in Russia through our partnership with
Swixx BioPharma AG, the sanctions have negatively impacted our plans to commercialize and sell DANYELZA in Russia
and may therefore adversely affect our business. At this time, we cannot guarantee that our clinical or regulatory activities
will recommence or that we will be able to expand our collaboration with Swixx BioPharma AG. In addition, the conflict
between Russia and Ukraine and related sanctions has had significant ramifications on global financial markets, including
volatility in the U.S. and global financial markets experienced, which has led to disruptions to trade,
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commerce, pricing stability, credit availability, supply-chain continuity and reduced access to liquidity globally, and has
caused and may continue to cause volatility in the price of our common stock, which may adversely impact our ability to
raise capital on favorable terms or at all.
The full economic and social impact of the sanctions imposed on Russia and possible future punitive measures
that may be implemented, as well as the counter measures imposed by Russia, in addition to the ongoing military conflict
between Ukraine and Russia remains uncertain; however, both the conflict and related sanctions have resulted and could
continue to result in disruptions to trade, commerce, pricing stability, credit availability, supply-chain continuity and
reduced access to liquidity on acceptable terms, in both Europe and globally, and has introduced significant uncertainty into
global markets. As a result, our business and results of operations may be adversely affected by the ongoing conflict
between Ukraine and Russia and related sanctions, particularly to the extent it escalates to involve additional countries,
further economic sanctions or wider military conflict.
The commercial success of DANYELZA and of any future approved products, will depend upon the degree of market
acceptance by physicians, patients, third-party payors, and others in the medical community.
The commercial success of DANYELZA, and of any future approved products, will depend in part on market
acceptance by physicians, patients, third-party payors, and others in the medical community. For example, current cancer
treatments like surgery, chemotherapy or radiation therapy are well-established in the medical community, and doctors may
continue to rely on these treatments. If DANYELZA or any future approved products do not achieve an adequate level of
acceptance, we may not generate significant revenues from sales of drugs and we may not become profitable. The degree
of market acceptance of DANYELZA, and of any future product, if approved for commercial sale, will depend on a
number of factors, including:
● the efficacy and safety of the product and the prevalence and severity of any side effects;
● developing processes for the safe administration of our products, including long-term follow-up for all
patients who receive the product;
● the potential advantages of the product compared to competitive therapies;
● whether the product is designated under physician treatment guidelines as a first, second or third-line
therapy;
● our ability, or the ability of any potential future collaborators, to offer the product for sale at competitive
prices;
● the product’s convenience and ease of administration compared to alternative treatments and any requirement
for in-patient versus out-patient administration;
● the willingness of the target patient population to try, and of physicians to prescribe, the product;
● limitations or warnings, including distribution or use restrictions contained in the product’s approved
labeling;
● the strength of sales, marketing and distribution support;
● changes in the standard of care for the targeted indications for the product;
● the willingness of the target patient populations to try new therapies and enroll in ongoing clinical trials, and
of physicians to prescribe these therapies;
● relative convenience and ease of administration;
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● availability and amount of coverage and reimbursement from government payors, managed care plans and
other third-party payors; and
● the timing of competitive product introductions and other actions by competitors in the marketplace.
We have limited experience operating as a commercial company and the marketing and sale of DANYELZA or any
future approved products may be unsuccessful or less successful than anticipated. We may not be successful in
commercializing DANYELZA or any future approved product unless we are able to maintain and expand our sales and
marketing capabilities or enter into agreements with third parties to sell and market such approved products.
While we have commercially launched DANYELZA in the United States and in several other countries, we have
limited experience as a commercial company and there is limited information about our ability to successfully overcome
many of the risks and uncertainties encountered by companies commercializing drugs in the biopharmaceutical industry.
We began small shipments of DANYELZA in February 2021. Other than our commercialization partnerships for
DANYELZA and omburtamab covering certain territories outside the United States, we are not currently a party to any
strategic collaboration that provides us with access to a collaborator’s resources in selling or marketing drugs.
To achieve commercial success for any future approved products we must successfully maintain and expand our
sales and marketing organization or outsource these functions to strategic collaborators and other third parties. We have
built our own focused, specialized sales and marketing organization in the United States. We continue to explore
selectively establishing partnerships in markets outside the United States to support the commercialization of our product
candidates for which we obtain marketing approval and that can be commercialized with such capabilities.
Risks are involved both with further establishing our own direct sales and marketing capabilities and with entering
into arrangements with third parties to perform these services. For example, recruiting and training even a small sales force
can be expensive and time-consuming and could delay any commercial launch of a product candidate, if approved. If the
commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed,
does not occur for any reason, or authorization is lost, we would have prematurely or unnecessarily incurred these
commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our
sales and marketing personnel.
Factors that may inhibit our efforts to commercialize our drugs on our own after obtaining any marketing approval
include:
● our inability to recruit and retain adequate numbers of effective sales and marketing personnel, and continue
to develop and expand our sales and marketing efforts;
● our inability to raise financing necessary to maintain and grow our commercialization infrastructure;
● the inability of sales personnel to obtain access to physicians or our failure to educate physicians on the
benefits of prescribing DANYELZA or any future approved products;
● the lack of complementary drugs to be offered by our sales personnel, which may put us at a competitive
disadvantage relative to companies with more extensive offerings, and the lack of accurately forecast demand
for our products and scale manufacturing to meet that demand;
● unforeseen costs and expenses associated with creating an independent sales and marketing organization;
● our inability to obtain sufficient coverage and reimbursement from third-party payors and governmental
agencies;
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● our inability to establish and maintain our relationships with healthcare providers who will be treating the
patients who may receive our products and any future products;
● our inability to maintain or to gain regulatory authorization for the development and commercialization of
our product candidates;
● our inability to develop and maintain successful strategic alliances; and
● our inability to develop and maintain successful strategic alliances.
If we are unsuccessful in accomplishing these objectives, we may not be able to successfully develop product
candidates, commercialize DANYELZA or any future approved products, raise capital, expand our business, or continue
our operations. In addition, our revenues from the sale of drugs or the profitability of these revenues to us are likely to be
lower from arrangements that we enter into with third parties to perform sales and marketing services (such as with
SciClone Pharmaceuticals International Ltd, Takeda Israel, Swixx Biopharma AG, Adium Pharma S.A. and WEP Clinical
Ltd.) than if we were ourselves to market and sell any drugs that we develop. We have limited control over such third
parties, and any of them may fail to devote the necessary resources and attention to sell and market our drugs effectively. In
addition, we may not be successful in entering additional arrangements with third parties to sell and market our product
candidates or may be unable to do so on terms that are favorable to us. If we do not maintain and expand our sales and
marketing capabilities successfully, either on our own or in collaboration with third parties, we might not be successful in
commercializing DANYELZA or any of our product candidates for which we receive marketing approval, if any. In the
event that we are unable to effectively deploy our sales organization or distribution strategy on a timely and efficient basis,
if at all, the commercialization of DANYELZA or our product candidates, if approved, could be delayed which would
negatively impact our ability to generate product revenues.
We face significant competition from other biotechnology and pharmaceutical companies, and our operating results will
suffer if we fail to compete effectively.
The biotechnology and pharmaceutical industries generally, and the cancer drug sector specifically, are
characterized by rapidly advancing technologies, evolving understanding of disease etiology, intense competition and a
strong emphasis on intellectual property. While we believe that our product candidates and our knowledge and experience
provide us with competitive advantages, we face substantial potential competition from many different sources, including
large and specialty pharmaceutical and biotechnology companies, academic research institutions and governmental
agencies and public and private research institutions. Many of our competitors have substantially greater financial,
technical and other resources, such as larger research and development staff and experienced manufacturing organizations
as well as established marketing and sales forces. Our competitors, either alone or with collaborative 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 DANYELZA, or our other product candidates, or may develop proprietary
technologies or secure patent protection that we may need for the commercialization of DANYELZA and the development
of our product candidates and related technologies.
In addition to the current standard of care for patients, commercial and academic clinical trials are being pursued
by a number of parties in the field of immunotherapy. Early results from these trials have fueled continued interest in
immunotherapy, which is being pursued by several biotechnology companies as well as by large pharmaceutical
companies. Many of our current or potential competitors, either alone or with their collaboration partners, have
significantly greater financial resources and expertise in research and development, manufacturing, pre clinical studies,
conducting clinical trials, and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical
and biotechnology industries may result in even more resources being concentrated among a smaller number of our
competitors. Smaller or early stage companies may also prove to be significant competitors, particularly through
collaborative arrangements with large and established companies. These competitors also compete with us in recruiting and
retaining qualified scientific and management personnel and establishing clinical trial sites and patient registration for
clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
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With respect to DANYELZA, which targets GD2-positive tumors, United Therapeutics Corporation, or United
Therapeutics, has commercialized Unituxin® (dinutuximab), an antibody against GD2, in the United States, Canada and
Japan. Although United Therapeutics has discontinued its efforts to investigate Unituxin®’s potential activity against adult
cancerous tumors, it has maintained its efforts to develop a humanized version of Unituxin® and plans to develop
Unituxin® within R/R NB. DANYELZA also faces competition from Qarziba® (dinutuximab beta) a similar antibody
product against GD2 developed by Apeiron Biologics AG, or Apeiron. EUSA Pharma (UK) Ltd., or EUSA, has acquired
global commercialization rights to Qarziba® (dinutuximab beta), and it is currently being commercialized in European
Union and was approved by the European Commission to treat high-risk NB and R/R NB. In January 2020, EUSA and
BeiGene Ltd., or BeiGene, announced an exclusive collaboration to commercialize Qarziba® in mainland China and in
August 2021 EUSA and BeiGene announced that the China National Medical Products Administration, or NMPA, had
granted Qarziba® (dinutuximab beta) conditional marketing approval for the treatment of high-risk NB and R/R NB.
EUSA has previously announced plans to file for registration of dinutuximab beta in the United States for the treatment of
R/R NB. EUSA was acquired by Recordati in March 2022. In addition, Renaissance Pharma Ltd in the United Kingdom
announced in August 2023 a development program focused on Hu14.18, a humanized anti-GD2 monoclonal antibody,
licensed from St. Jude Children’s Research Hospital for the treatment of newly diagnosed high-risk neuroblastoma. US
WorldMeds has also received FDA approval of eflornithine hydrochloride, or DFMO, to reduce the risk of relapse in
pediatric patients with high-risk neuroblastoma who have completed multiagent, multimodality therapy.
The SADA PRIT technology, where bispecific antibody fragments bind to the tumor before a radioactive payload
is injected in a two-step approach faces competition from a range of companies developing comparable approaches,
involving one-step, two-step or three-step models to bind antibody construct to the tumor and radiate the tumor. OncoOne
Research & Development GmbH, or OncoOne, is developing several constructs under their PreTarg-it® technology, which
is a modular platform utilizing bispecific antibodies for delivery of payloads, where the bispecific antibody is first injected
and accumulated on the tumor, while unbound antibodies are decomposed and excreted. Subsequently, a payload is
administered through a second infusion and binds to the bispecific antibody in the tumor.
Additionally, the availability and price of our competitors’ products could limit the demand and the price we are
able to charge for our DANYELZA or for any other future products, if approved. We may not be able to implement our
business plan if the acceptance of DANYELZA or for any other future products, if approved, is inhibited by price
competition or the reluctance of physicians to switch from existing methods of treatment to our products, or if physicians
switch to other new drug or biologic products or choose to reserve our products for use in limited circumstances.
Additionally, a competitor could obtain orphan product exclusivity from the FDA with respect to such competitor’s
product. If such competitor product is determined to be the same product as one of our product candidates, that may
prevent us from obtaining approval from the FDA for such product candidate for the same indication for seven years,
except in limited circumstances.
The market opportunities for DANYELZA and our other product candidates, if approved, may be limited to those
patients who are ineligible for or have failed prior treatments and may be small. Also, the market opportunity for
DANYELZA and our product candidates, if approved, may be smaller than we expect.
Our current target patient populations are based on our beliefs and estimates regarding the incidence or prevalence
of certain types of cancers that may be addressable by DANYELZA, and our other product candidates, which are derived
from a variety of sources, including scientific literature, surveys of clinics, patient foundations, and market research. The
total addressable market opportunity for DANYELZA and any other products we may produce, if approved, will ultimately
depend upon, among other things, the diagnosis criteria included in the final label for the relevant product, acceptance by
the medical community and patient access, drug pricing, and reimbursement. The number of patients in our targeted
commercial markets and elsewhere may turn out to be lower than expected, possibly materially, patients may not be
otherwise amenable to treatment with our drug, or new patients may become increasingly difficult to identify or gain access
to, all of which would adversely affect our results of operations and our business.
Our current target patient populations are small as we have so far focused our clinical development efforts on rare
pediatric cancers. By way of example, only approximately 700 children are diagnosed with NB in the United States each
year. Even if we obtain significant market share for DANYELZA, or our other product candidates, if approved,
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because the initial target populations we are seeking to treat are small, we may never achieve profitability without
obtaining regulatory approval for additional and broader indications, including use of DANYELZA or our product
candidates, if approved, for front-line and third-line therapy.
DANYELZA is approved only as second-line treatment for patients with R/R high-risk NB in bone and/or bone
marrow. Even if we would seek approval as front-line or third-line therapy for DANYELZA or another product candidate
there is no guarantee that any will be approved. In addition, we may have to conduct additional clinical trials prior to
gaining approval for front-line or third-line therapy.
The indications we seek to treat have low prevalence and it may be difficult to identify and enroll patients with these
diseases. If we encounter difficulties enrolling patients in 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 relevant trial until its conclusion. We have experienced
and may continue to experience difficulties in patient enrollment in our clinical trials for a variety of reasons, including:
● the size and nature of the patient populations;
● the patient eligibility criteria defined in the protocol;
● the size of the study population required for analysis of the trial’s primary endpoints;
● the proximity of patients to trial sites;
● the design of the trial;
● our ability to recruit clinical trial investigators with the appropriate competencies and experience;
● competing clinical trials for similar therapies or other new therapeutics not involving our product candidates
and or related technologies;
● clinicians’ and patients’ perceptions as to the potential advantages and side effects of the product candidate
being studied in relation to other available therapies, including any new drugs or treatments that may be
approved for the indications we are investigating;
● our ability to obtain and maintain patient consents; and
● the risk that patients enrolled in clinical trials will not complete a clinical trial.
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 enroll in a trial being conducted by one
of our competitors. 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 at such clinical trial sites.
Moreover, because our product candidates represent a departure from more commonly used methods for cancer treatment,
potential patients and their doctors may be inclined to use conventional therapies, such as chemotherapy and radiation,
rather than enroll patients in any of our clinical trials.
Even if we are able to enroll a sufficient number of patients in our clinical trials, delays in patient enrollment may
result in increased costs or may affect the timing or outcome of the planned clinical trials, which could prevent completion
of these trials and adversely affect our ability to advance the development of our product candidates, submit regulatory
filings, obtain marketing approvals and delay the commercial launch of our product candidates, if approved.
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DANYELZA or any current or future product candidates, including those based on the SADA PRIT Technology, may
cause serious adverse events, or SAEs, undesirable side effects or have other properties that could halt their clinical
development, prevent, delay, or cause the withdrawal, variation or suspension of their regulatory approval, limit their
commercial potential, or result in significant negative consequences, including death of patients or cause regulatory
authorities to require labeling statements, such as boxed warnings. Even after approval, if we, or others, later discover
that the drug is less effective than previously believed or causes undesirable side effects that were not previously
identified, our ability, or that of any potential future collaborators, to market the drug could be compromised.
As with most biological drug products, use of DANYELZA or any current or future product candidates, including
those based on the SADA PRIT Technology, could be associated with undesirable side effects or adverse events which can
vary in severity from minor reactions to death and in frequency from infrequent to prevalent. Undesirable side effects or
unacceptable toxicities caused by our products or product candidates could cause us or regulatory authorities to withdraw
marketing approval or to interrupt, delay, or halt clinical trials.
Treatment-related undesirable side effects or adverse events could also affect patient recruitment or the ability of
enrolled subjects to complete the trial, or could result in potential product liability claims. In addition, these side effects
may not be appropriately or timely recognized or managed by the treating medical staff, particularly outside of the research
institutions that collaborate with us. We educate and train medical personnel using our products and product candidates, to
understand their side effect profiles both for our approved product DANYELZA and our current clinical trials. We
anticipate this also to be the case for our future products, if approved, and clinical trials. Inadequate training in recognizing
or managing the potential side effects of our products or product candidates could result in adverse effects to patients,
including death. Any of these occurrences may materially and adversely harm our business, financial condition and
prospects.
Undesirable side effects caused by DANYELZA or any other product or product candidate could limit the
commercial profile of such product or product candidate or result in significant negative consequences such as a more
restrictive label or other limitations or restrictions.
In clinical studies, DANYELZA has been shown to cause serious infusion reactions including anaphylaxis,
cardiac arrest, bronchospasm, stridor, and hypotension. The most common adverse events were mainly mild and moderate
and included infusion-related reaction, pain, tachycardia, vomiting, cough, nausea, diarrhea, decreased appetite,
hypertension, fatigue, erythema multiforme, peripheral neuropathy, urticaria, pyrexia, headache, edema, anxiety, localized
edema and irritability. DANYELZA has been approved with a boxed warning for serious infusion reactions and
neurotoxicity.
Clinical trials of our product candidates must be conducted in carefully defined subsets of patients who have
agreed to enter into clinical trials. Consequently, it is possible that our clinical trials, or those of any potential future
collaborator, may indicate an apparent positive effect of a product candidate that is greater than the actual positive effect, if
any, or alternatively fail to identify undesirable side effects. If a product candidate receives marketing approval and we, or
others, discover that the drug is less effective than previously believed or causes undesirable side effects that were not
previously identified, including during any long-term follow-up observation period recommended or required for patients
who receive treatment using our products, a number of potentially significant negative consequences could result,
including:
● regulatory authorities may withdraw, suspend or vary approvals of such product or seize the product;
● we, or any future collaborators, may be required to recall the product, change the way such product is
administered to patients or conduct additional clinical trials;
● additional restrictions may be imposed on the marketing of, or the manufacturing processes for, the particular
product;
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● regulatory authorities may narrow the indications for use of, or withdraw the approval for such product based
on the outcome of post-marketing testing and safety or efficacy of the product, as the FDA did in its approval
of DANYELZA for the treatment of R/R high-risk NB rather than NB that was not R/R;
● we, or any future collaborators, may be required to create a Risk Evaluation and Mitigation Strategy, or
REMS, or comparable foreign strategies, which could include a medication guide outlining the risks of such
side effects for distribution to patients, a communication plan for healthcare providers, and/or other elements
to assure safe use;
● we, or any future collaborators, may be subject to fines, injunctions or the imposition of civil or criminal
penalties;
● we, or any future collaborators, could be sued and held liable for harm caused to patients;
● the drug may become less competitive; and
● our reputation may suffer.
Any of the foregoing could prevent us from achieving or maintaining market acceptance of DANYELZA or a
particular product candidate, if approved in the United States. or achieving additional approvals, and could significantly
harm our business, results of operations, and prospects, and could adversely impact our financial condition, results of
operations, ability to raise additional financing or the market price of our common stock.
The outcome of pre-clinical studies and early clinical trials may not be predictive of the success of later clinical trials,
interim results of a clinical trial do not necessarily predict final results, and the results of our clinical trials may not
satisfy the requirements of the FDA or comparable foreign regulatory authorities, and if an adverse safety issue,
clinical hold or other adverse finding occurs in one or more of our clinical trials of our lead product candidates, such
event could adversely affect our other clinical trials of our lead product candidates.
Success in pre-clinical studies and early-stage clinical trials does not mean that future larger registration clinical
trials will be successful because product candidates in later-stage clinical trials may fail to demonstrate sufficient safety and
efficacy to the satisfaction of the FDA and non-U.S. regulatory authorities despite having progressed through pre-clinical
studies and early-stage clinical trials. Product candidates that have shown promising results in pre-clinical studies and
early-stage clinical trials may still suffer significant setbacks in subsequent clinical trials. Additionally, the outcome of pre-
clinical studies and early-stage clinical trials may not be predictive of the success of larger, later-stage clinical trials.
From time to time, we may publish or report interim or preliminary data from our clinical trials. Interim or
preliminary data from clinical trials that we may conduct may not be indicative of the final results of the trial and 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. Interim or preliminary data also remain subject to audit and verification procedures
that may result in the final data being materially different from the interim or preliminary data. As a result, interim or
preliminary data should be viewed with caution until the final data are available. In addition, the design of a clinical trial
can determine whether its results will support approval of a drug and flaws in the design of a clinical trial may not become
apparent until the clinical trial is well advanced. We may be unable to design and conduct a clinical trial to support
marketing approval. Further, if our product candidates are found to be unsafe or lack efficacy, we will not be able to obtain
marketing approval for them and our business would be harmed. A number of companies in the pharmaceutical industry,
including those with greater resources and experience than us, have suffered significant setbacks in advanced clinical trials,
even after obtaining promising results in pre-clinical studies and earlier clinical trials.
In some instances, there can be significant variability in safety and efficacy results between different clinical trials
of the same product candidate due to numerous factors, including changes in trial protocols, differences in size and
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type of the patient populations, differences in and adherence to the dosing regimen and other trial protocols and the rate of
dropout among clinical trial participants.
We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate efficacy and
safety sufficient to obtain marketing approval to market our product candidates. We have multiple clinical trials currently
ongoing or planned. In the event that an adverse safety issue, clinical hold or other adverse finding occurs in one or more of
our clinical trials of the same product candidate, such event could adversely affect our other clinical trials of our other
product candidates. We have received clinical holds on our IND applications for certain of our product candidates in the
past and there is no assurance that we will not be subject to additional clinical holds in the future, which may ultimately
delay or otherwise adversely affect the clinical development of our product candidates. We submitted a BLA to the FDA
for radiolabeled 131I-omburtamab for CNS LM from NB in August 2020, and received a Refusal to File letter from the
FDA in October 2020. The reason for the FDA’s decision to issue the Refusal to File letter was that upon preliminary
review, the FDA determined that certain parts of the Chemistry, Manufacturing and Control, or CMC, Module and the
Clinical Module of the BLA required further detail. We completed the resubmission of the BLA for omburtamab in March
2022. Survival and safety data from our pivotal Phase 2 clinical trial 03-133 formed the primary basis for our resubmission
of the BLA for omburtamab, and we compared this data with data from an external cohort comprising data from the
Central German Childhood Cancer Registry, or CGCCR, database. Furthermore, we believe interim efficacy, safety and
pharmacokinetic data from our pivotal Phase 2 clinical trial 101 supported the BLA resubmission. In May 2022, the FDA
indicated that our BLA had been accepted for priority review. The FDA convened an Advisory Committee, which met on
October 28, 2022, and voted 16 to 0 that we had not provided sufficient evidence to conclude that omburtamab improves
overall survival among the target patient population . In November 2022, the FDA issued a CRL for our BLA for
omburtamab indicating that the FDA determined that it was unable to approve the BLA in its current form since it did not
provide substantial evidence of effectiveness of omburtamab for the proposed indication.
We do not know whether any clinical trials we may conduct will demonstrate consistent or adequate efficacy and safety
sufficient to obtain marketing approval to market our product candidates.
Before obtaining marketing approvals for the commercial sale of any product candidate for a target indication, we
must demonstrate with substantial evidence gathered in pre-clinical studies and well-controlled clinical studies, and, with
respect to approval in the United States, to the satisfaction of the FDA, that the product candidate is safe and effective for
use for that target indication. There is no assurance that the FDA or non-U.S. regulatory authorities will consider our
present or future clinical trials to be sufficient to serve as the basis for approval of any of our product candidates for any
indication. The FDA and non-U.S. regulatory authorities retain broad discretion in evaluating the results of our clinical
trials and in determining whether the results demonstrate that a product candidate is safe and effective.
In the November 2022 CRL for our BLA for omburtamab, the FDA determined that it was unable to approve the
BLA in its current form since it did not provide substantial evidence of effectiveness of omburtamab for the proposed
indication. Further, the FDA stated that comparisons of overall survival between our Study 101 and the external control
could not be used to estimate the treatment effect of omburtamab on survival and support claims of effectiveness.
Additionally, the FDA held that response rate data from our study 101 were not reliable to verify the anti-tumor activity of
omburtamab. This was consistent with the outcome of the ODAC Meeting held in October 2022. In its CRL for
omburtamab, and in our Type A meeting held subsequent to receipt of the CRL, the FDA made recommendations for us to
consider in terms of trial design to demonstrate substantial evidence of effectiveness and a favorable benefit-risk profile. If
we are required and we determine to conduct additional clinical trials of a product candidate, including if we determine to
resume development of omburtamab, we will need substantial additional funds and there is no assurance that the results of
any such additional clinical trials will be sufficient for approval.
Further, our product candidates may not be approved even if they achieve their primary endpoints in Phase 3
clinical trials or other pivotal trials. The FDA or non-U.S. regulatory authorities may disagree with our trial design and our
interpretation of data from pre-clinical studies and clinical trials or conclude that we do not have adequate manufacturing
controls or quality systems. For example, as was the case for our BLA for omburtamab, analysis of the clinical data may
rely on external control comparator populations to demonstrate efficacy, rather than blinded, placebo-
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controlled comparator populations. Data from our clinical trials may therefore be subject to heightened scrutiny regarding
potential sources of bias such as treatment-center selection bias or differences in treatment patterns between countries and
over time. Furthermore, because our clinical trials typically enroll a small number of patients, statistical analyses may only
partially adjust to account for such potential bias. For example, FDA identified key review issues with our BLA for
omburtamab, stating that the external control population for our omburtamab BLA is not fit-for-purpose as a comparator
and limits the ability to reliably attribute survival differences to omburtamab treatment, that the BLA application does not
include reliable response rate data to provide supportive evidence of the treatment effect of omburtamab, and that
differences in survival cannot be reliably attributed to omburtamab and provide a large degree of uncertainty regarding
whether the observed differences in overall survival between patients treated with omburtamab and external control
populations are due to omburtamab or whether they are due to differences in other anticancer treatment, supportive care
regimens, unknown differences between the two populations, or a combination of these factors.
In addition, any of these regulatory authorities may change requirements for the approval of a product candidate
even after reviewing and providing comments or advice on a protocol for a pivotal clinical trial that has the potential to
result in approval by the FDA or another regulatory authority. Any of these regulatory authorities may also approve a
product candidate for fewer or more limited indications than we request or may grant approval contingent on the
performance of costly post-marketing clinical trials. The FDA or other non-U.S. regulatory authorities may not approve the
labeling claims that we believe would be necessary or desirable for the successful commercialization of our product
candidates.
Research and development of biopharmaceutical products is inherently risky. We may not be successful in our efforts to
create a pipeline of product candidates and develop commercially successful products. If we fail to develop additional
product candidates, our commercial opportunity will be limited.
Other than DANYELZA, the product candidates and related technologies we have licensed have not yet led, and
may never lead, to approved products. Our only approved product DANYELZA was only approved in late 2020 by the
FDA and launched in the United States in early 2021. Further, DANYELZA was only approved by the Israeli Ministry of
Health in Israel, in August 2022, by the NMPA in China in December 2022, by Anvisa in Brazil in April 2023, and by
COFEPRIS in Mexico in September 2023. Hence its commercial potential cannot be judged with accuracy at this point in
time. Even if we are successful in continuing to build our pipeline, obtaining regulatory approvals and commercializing our
other product candidates will require substantial additional funding and are prone to the risks of failure inherent in medical
product development. Investment in biopharmaceutical product development involves significant risk that any potential
product candidate will fail to demonstrate adequate efficacy or an acceptable safety profile, gain regulatory approval,
and/or become commercially viable. We cannot provide any assurance that we will be able to successfully obtain
marketing approval for omburtamab or advance any of our other product candidates through the development process. Our
research programs may initially show promise in identifying potential product candidates, yet fail to yield product
candidates for clinical development or commercialization for many reasons, including the following:
● we may not be successful in identifying additional product candidates;
● we may not be able to assemble sufficient resources to acquire or discover additional product candidates;
● our product candidates may not succeed in pre-clinical or clinical testing;
● a product candidate may on further study be shown to have harmful side effects or other characteristics that
indicate it is unlikely to be effective or otherwise does not meet applicable regulatory criteria;
● competitors may develop alternatives that render our product candidates obsolete or less attractive;
● product candidates we develop may nevertheless be covered by third parties’ patents or other exclusive
rights;
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● the market for a product candidate may change so that the continued development of that product candidate
is no longer reasonable;
● a product candidate may not be capable of being produced in commercial quantities at an acceptable cost, or
at all; and
● a product candidate may not be accepted as safe and effective by patients, the medical community or third-
party payors, as applicable.
If any of these events occur, we may be forced to abandon our development efforts for a program or programs, or
we may not be able to identify, discover, develop, or commercialize additional product candidates, which would have a
material adverse effect on our business and could potentially cause us to cease operations. As for DANYELZA, no
assurance can be given that it will be successfully commercialized, widely accepted in any marketplace or more effective
than other commercially available alternatives.
We are dependent on our ability to maintain and continue to leverage our relationship with MSK. We have entered into
several agreements with MSK that are important to our business. We may also form or seek other collaborations or
strategic alliances or enter into additional licensing arrangements in the future but may not realize the benefits of such
collaborations or strategic alliances. If we are unable to enter into future collaborations, or if such collaborations are
not successful, our business could be adversely affected.
We currently have in place several agreements with MSK, including the MSK License, the CD33 License, the
MabVax/MSK License Agreement and the SADA License Agreement, which are important to us, and we may form or seek
strategic alliances, create joint ventures or collaborations, or enter into additional licensing arrangements with third parties
that we believe will complement or augment our development and commercialization efforts with respect to our product
candidates and any future product candidates that we may develop. In addition, we anticipate that MSK, because it is a
hospital where patients are treated, may become a major source for the distribution and administration of DANYELZA.
Any disruption of our relationship with MSK could have a material adverse effect on our business, results of operations
and financial condition. In addition, any of these relationships may require us to incur other charges, increase our near and
long-term expenditures, issue securities that dilute our existing stockholders, or disrupt our management and business.
In addition, we face significant competition in seeking appropriate strategic partners and the negotiation of
strategic collaborations is time consuming and complex. We may not be successful in our efforts to establish a strategic
partnership, other than the one we have with MSK, or other alternative arrangements for our product candidates because
potential strategic partners may deem our product candidates to be at too early a stage of development for collaborative
effort, because third parties may not view our product candidates as having the requisite potential to demonstrate safety and
efficacy or because the commercial potential of our product candidates is too difficult to predict.
Further, arrangements with third parties, such as our arrangement with MSK or other current or potential future
collaborations that we may enter, are subject to numerous risks, including the following:
● such third parties may have significant discretion in determining the efforts and resources that they will apply
to a collaboration;
● such third parties may not pursue development and commercialization of our products or product candidates
or may elect not to continue or renew development or commercialization programs based on clinical trial
results, changes in their strategic focus due to the acquisition of competitive products, availability of funding,
or other external factors, such as a business combination that diverts resources or creates competing
priorities;
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● such third parties may delay clinical trials, provide insufficient funding for a clinical trial, stop a clinical trial,
abandon a product candidate, repeat or conduct new clinical trials, or require a new formulation of a product
candidate for clinical testing;
● such third parties could independently develop, or develop with others, products that compete directly or
indirectly with our products or product candidates;
● product candidates discovered through such arrangements or any potential future collaborations with us may
be viewed by such third parties as competitive with their own product candidates or products, which may
cause such third parties to cease to devote resources to the commercialization of our products or product
candidates;
● such third parties with marketing and distribution rights to one or more products may not commit sufficient
resources to their marketing and distribution;
● such third parties may not properly maintain or defend our intellectual property rights or may use our
intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that
could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential
liability;
● disputes may arise between us and such third-party or any current or potential future collaborator that cause
the delay or termination of the research, development or commercialization of our products or product
candidates, or that result in costly litigation or arbitration that diverts management attention and resources;
● such third parties may infringe the intellectual property rights of others, which may expose us to litigation
and potential liability;
● such arrangements or any current or potential future collaborations may be terminated and, if terminated,
may result in a need for additional capital to pursue further development or commercialization of the
applicable product or product candidate; and
● such third parties may own or co-own intellectual property covering our products that results from our
collaborating with them, and in such cases, we would not have the exclusive right to commercialize such
intellectual property.
As a result, if we are unable to maintain current arrangements or collaborations or enter into and maintain future
arrangements and collaborations, or if such arrangements or collaborations are not successful, our business could be
adversely affected. If we enter into certain arrangements or collaboration agreements and strategic partnerships or license
our products or businesses, we may not be able to realize the benefit of such transactions if we are unable to successfully
integrate them with our existing operations and company culture, which could delay our timelines or otherwise adversely
affect our business. We also cannot be certain that, following a strategic transaction or license, we will achieve the revenue
or specific net income that justifies such transaction. Any delays in entering into new collaborations or strategic partnership
agreements related to our products or product candidates could delay the development and commercialization of our
products or product candidates in certain territories for certain indications, which would harm our business prospects,
financial condition, and results of operations.
If we or third parties, such as contract research organizations, or CROs, or contract manufacturing organizations, or
CMOs, use hazardous and biological materials in a manner that causes injury or violates applicable law, we may be
liable for damages.
Our research and development activities may involve the controlled use of potentially hazardous substances,
including chemical and biological materials, by us or third parties, such as CROs and CMOs. We have used Lutetium-177,
Iodine-131 and Iodine-124 label and conjugated antibody treatments. Our uses involve the inherent risk of exposure
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from beta ray emissions, which can alter or harm healthy cells in the body. We, our CROs, our CMOs and other third
parties are subject to federal, state, and local laws and regulations in the United States and foreign countries governing the
use, manufacture, storage, handling, and disposal of medical and hazardous materials. Although we believe that our and
such third-parties’ procedures for using, handling, storing, and disposing of these materials comply with legally prescribed
standards, we cannot completely eliminate the risk of contamination or injury resulting from medical or hazardous
materials. As a result of any such contamination or injury, we may incur liability or local, city, state, or federal authorities
may curtail the use of these materials and interrupt our business operations. In the event of an accident, we could be held
liable for damages or penalized with fines, and the liability could exceed our resources. Compliance with applicable
environmental laws and regulations is expensive, and current or future environmental regulations may impair our research,
development and production efforts, which could harm our business, prospects, financial condition, or results of operations.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to
injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage
against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be
asserted against us in connection with our storage or disposal of hazardous and flammable materials, including chemicals
and biological materials. We do not have insurance coverage for pollution cleanup and removal. Currently the costs of
complying with applicable federal, state, local and foreign environmental regulations are not significant, and consist
primarily of waste disposal expenses. However, compliance could become expensive, and current or future environmental
laws or regulations may impair our research, development, production and commercialization efforts. Furthermore, failure
to comply with these laws and regulations may result in substantial fines, penalties or other sanctions.
Risks related to our dependence on third parties
We rely on third parties to conduct our clinical trials. If these third parties do not successfully carry out their
contractual duties or meet expected deadlines or comply with regulatory requirements, we may not be able to obtain
regulatory approval of or commercialize our product candidates.
We rely on third parties to conduct our clinical trials under agreements with MSK, universities, medical
institutions, CROs, strategic partners, and others. Nevertheless, we are responsible for ensuring that each of our studies is
conducted in accordance with the applicable protocol and legal, regulatory, 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
current good clinical practices, or GCPs, which are regulations and guidelines enforced by the FDA and comparable
foreign regulatory authorities for product candidates in clinical development. Regulatory authorities enforce these GCPs
through periodic inspections of trial sponsors, principal investigators, and trial sites. If we or any of these third parties fail
to comply with applicable GCP regulations, the clinical data generated in our clinical trials may be deemed unreliable and
the FDA or comparable foreign regulatory authorities may require us to perform additional non-clinical 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 the GCP regulations. In addition, our clinical trials must be conducted
with biologic product produced under cGMP regulations and will require a large number of test patients. Our failure or any
failure by these third parties to comply with these regulations or to recruit a sufficient number of patients may require us to
repeat clinical trials, which would delay the regulatory approval process. Moreover, our business may be implicated if any
of these third parties violates federal, foreign or state fraud and abuse or false claims laws and regulations or healthcare
privacy and security laws.
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 clinical data they obtain is compromised due to
the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our clinical trials may be
extended, delayed, varied or terminated and we may not be able to complete development of, obtain regulatory approval of
or successfully commercialize our product candidates. We may also rely on investigator-reported interim data in making
business decisions. Independent review of the data could fail to confirm the investigator-reported interim data, which may
lead to revisions in disclosed clinical trial results in the future. Any such revisions that reveal more negative data than
previously disclosed investigator-reported interim data could have an adverse impact on our business prospects
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and the trading price of our common stock. Such revisions could also reduce investor confidence in investigator-reported
interim data that we disclose in the future.
If any of our relationships with these third-party CROs terminate, we may not be able to enter into arrangements
with alternative CROs or do so on commercially reasonable terms. Switching or adding additional CROs involves
additional cost and delays and requires management time and focus. Though we intend to carefully manage our
relationships with our CROs, there can be no assurance that we will not encounter similar challenges in the future or that
these challenges will not have a material adverse impact on our business, financial condition and prospects.
We rely on third parties to manufacture DANYELZA for commercial supply and our product candidates, including our
antibody constructs based on the SADA PRIT Technology, for our ongoing and planned pre-clinical studies and clinical
studies. Our business could be harmed if third parties fail to provide us with sufficient quantities of DANYELZA or our
other product candidates, including our antibody constructs based on the SADA PRIT Technology, or fail to do so at
acceptable quantities, quality levels or prices or fail to maintain adequate compliance with CMC guidelines of the FDA
and comparable foreign regulatory authorities. Our third-party manufacturers have in the past and may in the future
experience manufacturing difficulties, and any such difficulties could harm our business.
We do not currently own any facility that may be used for commercial or clinical-scale manufacturing and
processing, and we rely on outside vendors to manufacture DANYELZA for commercial supply and for supplies and
processing of our product candidates, including our antibody constructs based on the SADA PRIT Technology, for pre-
clinical studies and clinical trials. Our other product candidates have only been manufactured or processed on a limited
basis and we and our CMO may not be able to continue manufacturing any of our other product candidates. The
manufacturing process that we have developed may be more difficult or expensive than other approaches currently in use.
We may make changes as we work to optimize the manufacturing process, and we cannot be sure that even minor changes
in the process will not result in significantly different substances that may not be as safe and effective as any substances
deployed by our third-party research institution collaborators.
To date, we have obtained the active pharmaceutical ingredient, or API, of DANYELZA from a limited number of
third-party manufacturers. We have engaged a separate third-party manufacturer to conduct fill-and-finish and labeling
services, as well as for the storage and distribution of DANYELZA to clinical sites and for commercial use. We do not
have a long-term supply agreement with any of these third-party API manufacturers, and we purchase our required drug
supplies on a purchase order basis.
We rely also on CMOs and third-party collaborators for the manufacture of DANYELZA for commercial supply,
and we expect that this will be the manufacturing arrangement for any of our other potential products, if approved. If we
are unable to establish agreements with CMOs on acceptable terms, or at all, our business and results of operations may be
materially adversely affected.
If we determine to resume development of omburtamab, we expect to continue to be highly dependent on our
current CMO, EMD/Merck, for the production of omburtamab since this manufacturing process uses a hybridoma cell line
in a relatively small scale (200 liters) cGMP manufacturing process. Many manufacturers refuse to allow hybridoma cell
lines to be used in their facilities due to the risk of contamination. In addition, the relatively small scale of the cGMP
system required for manufacture of omburtamab may increase the risk that we are unable to establish an alternative
manufacturing arrangement on commercially reasonable terms because the small scale may lead to less commercially
attractive terms for us.
We are subject to the following additional risks with respect to the third-party manufacture of our antibody-based
cancer treatments:
● If we need to qualify any new manufacturer of DANYELZA or other product candidates, the respective BLA
submissions will need to be amended, and ultimately the FDA must approve any new manufacturer. Any such
approval would require new testing, which may include comparability analyses between the biologic
substance manufactured for use in prior clinical trials and the biologic substance manufactured by
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such potential new manufacturer. Any such potential new manufacturer would further need to pass cGMP
compliance inspections by the FDA or comparable foreign regulatory authorities.
● If we need to qualify any new manufacturer, such third party would have to be educated in, or develop
substantially equivalent processes for, production of our product and/or product candidates.
● Any of our third-party manufacturers might be unable to timely manufacture our product and/or product
candidates or to produce the quantity and quality required to meet our clinical and commercial needs.
● Any of our third-party manufacturers may not be able to execute our manufacturing procedures and other
logistical support requirements appropriately.
● Any of our third-party manufacturers may not perform as agreed, according to our schedule or specifications,
or at all. Any such third-party manufacturer may not devote sufficient resources to our product candidates,
may give greater priority to the supply of other products over our product candidates, or may not remain in
the contract manufacturing business for the time required to supply our clinical trials or commercial needs.
● We are exposed to the risk of cross-contamination from other drug substances if more than one product is
manufactured at a third-party manufacturer’s production facilities.
● Our third-party manufacturers are subject to ongoing periodic unannounced inspection by the FDA,
corresponding state agencies and comparable foreign regulatory authorities to ensure strict compliance with
cGMPs and other government regulations and corresponding foreign standards. We have limited control over
third-party manufacturers’ compliance with these and or any other applicable regulations and standards, and
any of our third-party manufacturers could fail to comply with applicable government regulations.
● We may not own, or may have to share, the intellectual property rights to any improvements made by our
third-party manufacturers in the manufacturing process for our products.
● Any of our third-party manufacturers could breach, terminate or choose not to renew their agreement with us
at a time that is costly or inconvenient for us.
● The raw materials and components used to manufacture and process DANYELZA and our product
candidates, particularly those for which we have no other source or supplier, may not be available or may not
be suitable or acceptable for use due to material or component defects.
● Any of our third-party manufacturers could potentially mislabel commercial or clinical supplies, which may
result in the wrong dose amounts being supplied or active drug or placebo not being properly identified;
● Any of our third-party manufacturers could misappropriate our proprietary information, including our trade
secrets and know-how, which could lead to weaker intellectual property protection for our portfolio or
potentially increased competition if a competitor were to obtain such proprietary information.
● Our clinical trials may be interrupted if third-party suppliers fail to deliver clinical supplies on time, or we
may experience lost sales if drug supplies are not distributed to commercial vendors in a timely manner, in
each case because of inclement weather, natural or man-made disasters, or other circumstances beyond our
control.
● Any of our third-party manufacturers may have unacceptable or inconsistent product quality success rates and
yields and may have inadequate quality control systems.
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Each of these risks could delay or prevent the completion of our clinical trials, could delay any additional BLA
submissions or the approval of any of our product candidates by the FDA, or comparable foreign submission and approvals
by the competent regulatory authorities, result in higher costs or adversely impact commercialization of our product
candidates. Any shortage in the supply of such raw materials used in the manufacture of our product candidates could delay
or prevent the completion of our clinical trials or the approval of any of our product candidates by the FDA, or comparable
foreign regulatory authorities, result in higher costs or adversely impact commercialization of our product candidates. For
example, in the past, we experienced a shortage in the supply of Iodine-131, one of the components of 131I-omburtamab
product candidate, from our single-source supplier.
In addition, we have and will continue to rely on third parties to perform certain specification tests on our product
candidates prior to delivery to patients. If these tests are not appropriately done and test data are not reliable, patients could
be put at risk of serious harm and the FDA, or comparable foreign regulatory authorities could place significant restrictions
on us until deficiencies are remedied.
The facilities used by our CMOs to manufacture DANYELZA and our product candidates, including our antibody
constructs based on the SADA PRIT Technology, must be approved by the FDA pursuant to inspections conducted after
submittal of a BLA to the FDA. Comparable requirements are applicable outside the United States. We do not have
complete control over all aspects of the manufacturing process of, and are dependent on, our contract manufacturing
partners for compliance with cGMP regulations for manufacturing both active drug substances and finished drug products.
DANYELZA and any product candidates that we may develop may compete with product candidates of other companies
for access to manufacturing facilities. There is a limited number of manufacturers that operate under cGMP regulations and
that might be capable of manufacturing for us. Our failure, or the failure of our third-party manufacturers, to comply with
applicable regulations could result in sanctions being imposed on us, including fines, injunctions, civil penalties, delays,
suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or drugs, operating
restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our commercial
product and clinical product candidates and harm our business and results of operations.
Any performance failure on the part of our existing or future manufacturers could adversely affect our
commercialization of approved products, such as DANYELZA, and delay clinical development or marketing approval of
other product candidates. For example, we have had to scrap batches of DANYELZA due to our third-party manufacturer’s
discontinuation of the batch manufacture. As a result, during the years ended December 31, 2023 and 2022, the Company
recorded charges to write-off inventory of $0.8 million and $1.2 million, respectively. We do not currently have
arrangements in place for redundant supply of DANYELZA or other product candidates, and we currently use only a single
third-party manufacturer for fill-and-finish services for DANYELZA and other product candidates. If any of our current
CMOs cannot perform as agreed, we may be required to replace such manufacturer and we may incur added costs and
delays in identifying and qualifying any such replacement.
We are, and will continue to be, reliant in significant part on outside scientists and their third-party research institutions
for research and development and early clinical testing of our product candidates. These scientists and institutions may
have other commitments or conflicts of interest, which could limit our access to their expertise and adversely affect the
timing of the IND filings and our ability to conduct future planned clinical trials.
We currently have limited internal research and development capabilities. We conduct independent clinical trials
and perform pre-clinical research but we also rely on third-party research institutions for both clinical trial and pre-clinical
research.
Currently, MSK is conducting a clinical trial to address relapsed osteosarcoma using DANYELZA. Under the
terms of the MCTA, we are obligated to pay for costs associated with this clinical trial.
We have agreed to fund certain research and development costs under both the MSK License, the MSK CD33
License and the SADA License Agreement. However, the research we have agreed to fund constitutes only a small portion
of the overall research of MSK. Other research being conducted by MSK may receive higher priority than research on the
programs we may fund.
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The outside scientists who conduct the clinical testing of DANYELZA and our other current product candidates,
and who conduct the research and development upon which our product candidate pipeline depends, are not our
employees; rather they serve as either independent contractors or the primary investigators under research and other
agreements that we have entered into with MSK. Such scientists and collaborators may have other commitments that limit
their availability to us. Although our scientific advisors generally agree not to do competing work, if an actual or potential
conflict of interest between their work for us and their work for MSK or another entity arises, we may lose their services.
These factors could adversely affect the timing of our IND filings and our ability to conduct future planned clinical trials. It
is also possible that some of our valuable proprietary knowledge may become publicly known through these scientific
advisors if they breach their confidentiality agreements with us, which would cause competitive harm to, and have a
material adverse effect on, our business.
Our existing agreements with MSK may be subject to termination by MSK upon the occurrence of certain
circumstances including in the event of our insolvency or bankruptcy, if we are convicted of a felony relating to the
manufacture, use, or sale of products licensed from MSK or if we fail to pay amounts owed to MSK under the agreements
or other types of breach by us of our obligations under the agreements that remain uncured. If MSK terminates the MSK
License, the MSK CD33 License, the SADA License Agreement or its other agreements with us, commercialization of any
approved product, such as DANYELZA, or the research and development of the relevant product candidates would be
suspended, and we would not be able to research, develop, and license our existing and future product candidates as
currently contemplated. We may be required to devote additional resources to the development of our product candidates or
seek a new collaboration partner, and the terms of any additional collaborations or other arrangements that we establish
may not be favorable to us. Switching or adding third parties to conduct our clinical trial would involve substantial costs
and delays and require extensive management time and focus, which can materially impact our ability to meet our desired
clinical development timelines.
DANYELZA and our product candidates, including those based on the SADA PRIT Technology, are biologics and the
manufacture of DANYELZA and our product candidates, including those based on the SADA PRIT Technology, is
complex. We, or any of our third-party manufacturers, may encounter difficulties in production, particularly with
respect to process development or scaling-up of our manufacturing capabilities. For some reagents, equipment, and
materials, we rely or may rely on sole source vendors or a limited number of vendors. Such difficulties may result in an
inadequate supply of our product candidates for clinical trials or our products for patients, if approved, could be delayed
or stopped, or we may be unable to maintain a commercially viable cost structure.
DANYELZA and our product candidates, including those based on the SADA PRIT Technology, are biologics
and the process of manufacturing them is complex, highly regulated and subject to multiple risks. As a result of the
complexities, the cost to manufacture biologics is generally higher than traditional small molecule chemical compounds,
and the manufacturing process for biologics is less reliable and is more difficult to reproduce. In addition, manufacture of
DANYELZA and our product candidates, including those based on the SADA PRIT Technology, requires many reagents,
which are substances used in our manufacturing processes to bring about chemical or biological reactions, and other
specialty materials and equipment, some of which are manufactured or supplied by small companies with limited resources
and experience to support commercial biologics production. Our manufacturing process may be susceptible to product loss
or failure due to interruptions in the manufacturing process variability in product characteristics, quality control,
contamination, equipment or reagent failure, improper installation or operation of equipment, product testing, vendor or
operator error, availability of qualified personnel, logistics and shipping delays as well as compliance with strictly enforced
federal, state and foreign regulations. Even minor deviations from normal manufacturing processes could result in reduced
production yields, product defects, and other supply disruptions. If microbial, viral, or other contaminants are discovered in
our product candidates or in the manufacturing facilities in which our product candidates are made, such manufacturing
facilities may need to be closed for an extended period of time to investigate and remedy the contamination. No assurance
can be given that any stability failures or other issues relating to the manufacture of DANYELZA or our product
candidates, including those based on the SADA PRIT Technology, will not occur in the future.
Further, as a product candidate progresses from pre-clinical studies to late-stage clinical trials towards approval
and commercialization, it is common that various aspects of the development program, such as manufacturing methods, are
altered along the way in an effort to optimize processes and results. Such changes carry the risk that they will not
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achieve these intended objectives, and any of such changes could cause the product candidate to perform differently and
affect the results of planned clinical trials or other future clinical trials. Moreover, as we develop and/or scale-up our
manufacturing processes, we expect that we will need to obtain rights to and supplies of certain materials and equipment to
be used as part of those processes. We may not be able to obtain rights to such materials on commercially reasonable terms,
or at all.
In addition, the manufacturing process for any products that we may develop is subject to FDA and other foreign
regulatory approval process, and we will need to contract with manufacturers who can meet all applicable FDA, EU and
other foreign regulatory requirements on an ongoing basis. If we, or our CMOs, are unable to reliably produce products to
specifications acceptable to the FDA, EMA and European Commission or other foreign regulatory authorities, we may not
obtain or maintain the approvals we need to commercialize such products. Even if we obtain regulatory approval for any of
our product candidates, there is no assurance that either we or our CMOs will be able to manufacture the approved product
to specifications acceptable to the FDA, EMA and European Commission or other foreign regulatory authorities, to
produce it in sufficient quantities to meet the requirements for the potential launch of the product, or to meet potential
future demand. Any of these challenges could delay completion of clinical trials, require bridging clinical trials or the
repetition of one or more clinical trials, increase clinical trial costs, delay approval of our product candidate, impair
commercialization efforts, increase our cost of goods, and have an adverse effect on our business, financial condition,
results of operations and growth prospects. Although we are working to develop commercially viable processes, our
manufacturing capabilities could be affected by cost overruns, unexpected delays, equipment failures, labor shortages,
natural disasters, power failures and numerous other factors that could prevent us from realizing the intended benefits of
our manufacturing strategy and have a material adverse effect on our business. We may ultimately be unable to, among
other things, develop a manufacturing process and distribution network that will, reduce the cost of goods for our product
candidates to levels that will allow for an attractive return on investment if and when those product candidates are
commercialized.
We have entered into strategic collaborations for the development, marketing and commercialization of DANYELZA
and omburtamab in certain jurisdictions and may do so in the future for all or some of our product candidates. If those
collaborations are not successful, or if we are unable to establish additional collaborations, we may have to alter or
delay our development and commercialization plans.
In November 2020, we entered into an exclusive license and distribution agreement for DANYELZA and
omburtamab with Takeda Israel, a wholly-owned subsidiary of Takeda Pharmaceutical Company Limited covering the
State of Israel, West Bank and Gaza Strip. The ongoing and rapidly evolving conflict between Israel and Hamas may have
a material adverse impact on Takeda Israel’s ability to sell our products and/or collect receivables from customers in the
State of Israel as well as on Takeda Israel’s ability to pursue the development, marketing and/or commercialization of
DANYELZA in the State of Israel, West Bank and Gaza Strip, which may ultimately have an adverse impact on the
amount of royalties we receive pursuant to the Takeda Licensing Agreement. In December 2020, we entered into a
distribution agreement for DANYELZA and omburtamab with Swixx BioPharma AG for the Eastern European territories
Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia,
Serbia, Slovakia and Slovenia. Sanctions issued by the U.S. and other countries against Russia in response to its attack on
Ukraine and related counter-sanctions issued by Russia have made it very difficult for us to operate in Russia and may have
a material adverse impact on our ability to sell our products and/or collect receivables from customers in Russia. In
December 2020, we entered into a license agreement for DANYELZA and omburtamab with SciClone Pharmaceuticals
International Ltd., or SciClone, for Greater China, including Mainland China, Taiwan, Hong Kong and Macau. In May
2021, we entered into an exclusive distribution agreement with Adium Pharma S.A., or Adium, for Latin America. Finally,
in December 2022, we entered into a distribution agreement with WEP Clinical Ltd. in connection with an early access
program for DANYELZA in Europe. We may enter into further strategic collaborations for the development, marketing
and commercialization of all or some of our product candidates. Our current and future potential collaborators include large
and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies.
We face significant competition in seeking appropriate collaborators. Whether we reach a definitive agreement for any
further collaborations 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.
We have and will for any future collaborations likely have limited control over the amount and timing of resources that our
collaborators dedicate to the development,
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marketing and/or commercialization of our product candidates. Our ability to generate revenues from these arrangements
will depend on our current and future potential collaborators’ abilities to successfully perform the functions assigned to
them in these arrangements. In addition, our current collaborators have and any future collaborators may have, the right to
abandon research or development projects and terminate applicable agreements, including funding obligations, prior to or
upon the expiration of the agreed upon terms.
Our current and any future potential collaborations involving our product candidates pose risks to us, including
the following:
● collaborators have significant discretion in determining the efforts and resources that they will apply to these
collaborations;
● collaborators may not perform their obligations as expected;
● collaborators may not pursue development, marketing and/or commercialization of our product candidates or
may elect not to continue or renew development, marketing or commercialization programs based on clinical
trial results, changes in the collaborator’s strategic focus or available funding or external factors such as an
acquisition that diverts resources or creates 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, drugs that compete directly or
indirectly with our drugs or product candidates;
● a collaborator with marketing and distribution rights to one or more drugs may not commit sufficient
resources to the marketing and distribution of such drug or drugs;
● disagreements with collaborators, including disagreements over proprietary rights, contract interpretation or
the preferred course of development, might cause delays or termination of the research, development or
commercialization of 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 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;
● we may lose certain valuable rights under circumstances identified in any collaboration arrangement that we
enter into, such as if we undergo a change of control;
● we may be restricted under then-existing collaboration agreements from entering into future agreements on
certain terms with potential collaborators;
● collaborations may be terminated and, if terminated, may result in a need for additional capital to pursue
further development, marketing and/or commercialization of the applicable product candidates;
● collaborators may learn about our discoveries, data, proprietary information, trade secrets, or compounds and
use this knowledge to compete with us in the future; and
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● the number and type of our collaborations could adversely affect our attractiveness to potential future
collaborators or acquirers.
Our current and any future collaboration agreements, if any, may not lead to development or commercialization of
product candidates in the most efficient manner, or at all.
We may not be able to negotiate additional collaborations on a timely basis, on acceptable terms, or at all, if and
when we seek to enter into collaborations. If we are unable to do so, 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 increase our expenditures and undertake
development or commercialization activities at our own expense. If we elect to increase our expenditures to fund
development or commercialization activities on our own, we may need to obtain additional capital, which may not be
available to us on acceptable terms, or at all. If we do not have sufficient funds, we may not be able to further develop our
product candidates or bring them to market and generate revenue from sales of drugs.
Risks related to government regulation; market approval and other legal compliance matters
Even if we complete the necessary non-clinical studies and clinical trials, the FDA and comparable foreign regulatory
authority approval processes are lengthy, time-consuming, and inherently unpredictable, and we or any of our potential
future collaborators may experience significant delays in the clinical development and regulatory approval, if any, for
the commercialization of our product candidates. To date, we have only obtained regulatory approval to market
DANYELZA in the United States, Europe, China, Israel, Brazil and Mexico for R/R high-risk NB in bone and/or bone
marrow. We cannot predict when or if, and in which other territories, we, or any of our potential future collaborators,
will obtain marketing approval to commercialize DANYELZA or any of our product candidates.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing, and distribution of
drug products, including biologics, are subject to extensive regulation by the FDA and other regulatory authorities in the
United States and foreign countries. Even if we complete the necessary pre-clinical studies and clinical trials, we will not
be permitted to market any biological drug product in the United States or in foreign countries, until we receive a Biologics
License from the FDA or foreign equivalent in other countries. Although we have received a Biologics License for
DANYELZA for R/R high-risk NB in bone and/or bone marrow, we intend to discuss with the FDA submission of
additional BLAs for approval of DANYELZA to treat additional indications that currently lack an FDA-approved
treatment option.
The FDA standard for regular approval of a BLA generally requires two well-controlled Phase 3 studies or one
large and robust, well-controlled Phase 3 study in the patient population being studied that provides substantial evidence
that a biologic is safe, pure and potent. Phase 3 clinical studies typically involve hundreds of patients, have significant costs
and take years to complete. However, product candidates studied for their safety and effectiveness in treating serious or
life-threatening illnesses and that provide meaningful therapeutic benefit over existing treatments may be eligible for
accelerated approval and may be approved on the basis of adequate and well-controlled clinical trials establishing that the
product candidate has an effect on a surrogate endpoint that is reasonably likely to predict clinical benefit, or on a clinical
endpoint that can be measured earlier than irreversible morbidity or mortality, that is reasonably likely to predict an effect
on irreversible morbidity or mortality or other clinical benefit, taking into account the severity, rarity or prevalence of the
condition and the availability or lack of alternative treatments. As is the case with DANYELZA in the United States, as a
condition of accelerated approval, the FDA may require a sponsor to perform post-marketing studies to verify and describe
the predicted effect on irreversible morbidity or mortality or other clinical endpoint, and the drug or biologic may be
subject to withdrawal procedures by the FDA that are more accelerated than those available for regular approvals. The
FDA may ultimately require one or multiple Phase 3 clinical trials prior to approval of any product candidates for which
we seek accelerated approval.
We have some, but only limited, experience in completing a submission of a BLA to the FDA, or similar approval
submissions to comparable foreign authorities. Our BLA for DANYELZA was approved, but we received a CRL for our
BLA for omburtamab. A BLA must include extensive pre-clinical and clinical data and supporting information to establish
that the product candidate is safe, pure, and potent for each desired indication. The BLA must
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also include significant information regarding the chemistry, manufacturing, and controls for the product, and the
manufacturing facilities must complete a successful pre-license inspection. We expect the novel nature of our product
candidates and the small size of our target patient populations, to create further challenges in obtaining regulatory approval
from the FDA and other regulatory authorities. For example, for product candidates targeting ultra-rare diseases, such as
CNS/LM from NB, where the very small patient population makes it difficult or impossible to conduct two traditional,
adequate and well-controlled studies, the FDA or comparable foreign regulatory authorities may need to exercise flexibility
in approving therapies for such diseases. Even flexibility from the FDA may not be sufficient to obtain approval. For
instance, in its CRL for omburtamab, and in our Type A meeting held subsequent to receipt of the CRL, the FDA made
recommendations for us to consider in terms of adequate and well-controlled trial design to demonstrate substantial
evidence of effectiveness and a favorable benefit-risk profile.
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, and the use of control groups to support licensure. For example, in connection with our
BLA for omburtamab, the FDA convened an Advisory Committee that met in October 2022, which voted 16 to 0 that the
BLA did not provide sufficient evidence to conclude that omburtamab improves overall survival among the target patient
population. The opinion of this and any other Advisory Committee, although not binding, may have a significant impact on
our ability to obtain licensure our product candidates based on the completed clinical trials, such as was the case for
omburtamab. Accordingly, the regulatory approval pathway for our product candidates may be uncertain, complex,
expensive, and lengthy, and approval may not be obtained.
The process of obtaining marketing approvals, both in the United States, the European Union and elsewhere, is a
lengthy, expensive and uncertain process. It may take many years, if approval is obtained at all, and can vary substantially
based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Securing
marketing approval requires the submission of extensive pre-clinical and clinical data and supporting information to
regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing
marketing approval also requires the submission of information about the product manufacturing process to, and inspection
of manufacturing facilities by, the regulatory authorities. The FDA, EMA and the European Commission or other
regulatory authorities have substantial discretion and may determine that our product candidates are not safe and effective,
only moderately effective or have undesirable or unintended side effects, toxicities or other characteristics that preclude our
obtaining marketing approval or prevent or limit commercial use.
Any marketing approval we ultimately obtain may be limited or subject to restrictions or post-approval
commitments that render the approved product not commercially viable.
In addition, clinical trials can be delayed or terminated for a variety of reasons, including delays or failures related
to:
● obtaining regulatory approval to begin a 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 trial sites;
● obtaining approval at each clinical trial site by an Institutional Review Board or IRB or positive opinions
from Ethics Committees;
● recruiting suitable patients to participate in a trial in a timely manner;
● having patients complete a trial or return for post-treatment follow-up;
● clinical trial sites deviating from trial protocol, not complying with GCPs, or dropping out of a trial;
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● addressing any patient safety concerns that arise during the course of a trial;
● addressing any conflicts with new or existing laws or regulations;
● adding new clinical trial sites;
● manufacturing qualified materials under cGMPs for use in clinical trials;
● impact of pandemics or other public-health emergencies;
● impact of the Russian invasion of Ukraine;
● impact of the state of war between Israel and Hamas, and the related risk of a larger conflict; or
● inspection of clinical trial sites and manufacturing facilities by regulatory authorities.
Patient enrollment is a significant factor in the timing of clinical trials and is affected by many factors. See the risk
factor above “—If we encounter difficulties enrolling patients in our clinical trials, our clinical development activities
could be delayed or otherwise adversely affected.” for additional information on risks related to patient enrollment. Further,
a clinical trial may be suspended or terminated by us, the IRBs or Ethics Committees for the institutions in which such
trials are being conducted, the Data Monitoring Committee for such trial, or the FDA or other regulatory authorities 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 trial site by the FDA or other 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 potential future
product revenue will be delayed. In addition, any delays in completing our 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.
Our third-party research institution collaborators may also experience similar difficulties in completing ongoing
clinical trials and conducting future clinical trials of product candidates. 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.
Our product candidates could fail to receive marketing approval for many reasons, including the following:
● the FDA, EMA, European Commission or comparable foreign regulatory authorities may disagree with the
design or implementation of our clinical trials;
● we may be unable to demonstrate to the satisfaction of the FDA, EMA, European Commission or comparable
foreign regulatory authorities that a product candidate is safe and effective for its proposed indication;
● the results of clinical trials may not meet the level of statistical significance required by the FDA, EMA,
European Commission or comparable foreign regulatory authorities for approval;
● we may be unable to demonstrate that a product candidate’s clinical and other benefits outweigh its safety
risks;
● the FDA, EMA, European Commission or comparable foreign regulatory authorities may disagree with our
interpretation of data from pre-clinical studies or clinical trials;
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● the data collected from clinical trials of our product candidates may not be sufficient to support the
submission of a BLA or other submission or to obtain marketing approval in the United States, the EU or
elsewhere;
● the FDA, European Commission, national competent authorities of EEA countries 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;
● the FDA, or comparable foreign regulatory authorities may fail to approve any companion diagnostics, or the
legal manufacturer may fail to CE mark companion diagnostics, which is an acronym for the French
“Conformite Europeenne” that certifies that a product has met EU health, safety, and environmental
requirement, that may be required in connection with approval of our therapeutic product candidates; and
● the approval policies or regulations of the FDA, European Commission or comparable foreign regulatory
authorities may significantly change in a manner rendering our clinical data insufficient for approval.
This lengthy approval process as well as the unpredictability of clinical trial results resulted in our failure to obtain
marketing approval to market omburtamab. The same factors may also result in a failure for us to obtain marketing
approval to market any of our other product candidates, which would further significantly harm our business, results of
operations and prospects. In addition, changes in marketing approval policies during the development period, changes in or
the enactment or promulgation of additional statutes, regulations or guidance or changes in regulatory review for each
submitted drug application may cause delays in the approval or rejection of an application. Regulatory authorities have
substantial discretion in the approval process and may refuse to accept any application or may decide that our data are
insufficient for approval and require additional pre-clinical studies, clinical trials, toxicology or other in vivo or in vitro
data to support the initiation of other studies and testing. In addition, varying interpretations of the data obtained from pre-
clinical studies and clinical trials could delay, limit or prevent marketing approval of a product candidate. Any marketing
approval we, or any collaborators we may have in the future, ultimately obtain may be limited or subject to restrictions or
post approval commitments that render the approved drug not commercially viable.
Any delay in obtaining or failure to obtain required approvals could materially adversely affect our ability or that
of any collaborators we may have to generate revenue from the particular product candidate, which likely would result in
significant harm to our financial position and adversely impact our stock price.
The EMA, the European Commission or comparable foreign regulatory authorities, may disagree with our regulatory
plans, including our plans to seek conditional marketing authorization, and we may fail to obtain regulatory approval of
DANYELZA from the European Commission, or our other product candidates, which would prevent DANYELZA, or
our other product candidates from being marketed abroad. Any approval we are granted for our product candidates in
the United States, such as the approval of DANYELZA, would not assure approval of our product candidates in foreign
jurisdictions.
In order to market and sell our drugs in the European Union and many other jurisdictions, we, and any
collaborators we may have in the future, must obtain separate marketing approvals and comply with numerous and varying
regulatory requirements.
On April 27, 2021 we submitted a MAA, to the EMA for omburtamab for the treatment of pediatric patients with
CNS/LM from NB. In December 2022, the EMA’s CHMP, adopted a negative opinion recommending a refusal of the
MAA. CHMP determined that it was not possible to conclude on the effectiveness of omburtamab as the main study did
not have a randomized comparator. We are assessing the implications of the negative opinion and our plans for the
omburtamab program.
The approval procedure varies among countries and can involve additional testing. The time required to obtain
approval may differ substantially from that required to obtain FDA approval. The marketing approval process outside of
the United States generally includes all of the risks associated with obtaining FDA approval. In addition, in many countries
outside of the United States, it is required that the drug be approved for reimbursement before the drug can be
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approved for sale in that country. We, and any collaborators we may have in the future, may not obtain approvals from
regulatory authorities outside of the United States on a timely basis, if at all. Approval by the FDA, such as the approval of
DANYELZA, does not ensure approval by regulatory authorities in other countries or jurisdictions, and approval by one
regulatory authority outside of the United States does not ensure approval by regulatory authorities in other countries or
jurisdictions or by the FDA.
As part of its marketing authorization process, the European Commission may grant a “conditional” marketing
authorization in cases where all the required safety and efficacy data are not yet available. The European Commission may
grant a conditional marketing authorization for a medicinal product if it is demonstrated that all of the following criteria are
met:
● the risk-benefit balance of the medicinal product is positive;
● it is likely that the applicant will be in a position to provide the comprehensive clinical data;
● the medicinal product fulfills an unmet medical need; and
● the benefit to public health of the immediate availability on the market of the medicinal product concerned
outweighs the risk inherent in the fact that additional data are still required.
The conditional marketing authorization is subject to conditions to be fulfilled for generating the missing data or
ensuring increased safety measures. It is valid for one year and must be renewed annually until all related conditions have
been fulfilled. Once any pending studies are provided, the conditional marketing authorization can be converted into a
traditional marketing authorization. However, if the conditions are not fulfilled within the timeframe set by the EMA and
approved by the European Commission, the marketing authorization will cease to be renewed.
Although we may seek a conditional marketing authorization for one or more of our product candidates by the
European Commission, the EMA or the European Commission may ultimately not agree that the requirements for such
conditional marketing authorization have been satisfied.
Our clinical trial results may also not support approval, whether accelerated approval, conditional marketing
authorizations, or regular approval. The results of pre-clinical and clinical studies may not be predictive of the results of
later-stage clinical trials, and product candidates in later stages of clinical trials may fail to show the desired safety and
efficacy despite having progressed through pre-clinical studies and initial clinical trials.
Failure to obtain regulatory approval to market any of our product candidates outside of the US would
significantly harm our business, results of operations, and prospects.
We may seek Breakthrough Therapy Designation, or BTD, for one or more of our product candidates. We may not
receive such designation, and even if we do, such designation may not lead to a faster development or regulatory review
or approval process.
BTD is intended to expedite the development and review of products that treat serious or life-threatening diseases
when preliminary clinical evidence indicates that the drug may demonstrate substantial improvement over existing
therapies on one or more clinically significant endpoints, such as substantial treatment effects observed early in clinical
development. The designation of a product candidate as a breakthrough therapy provides potential benefits that include
more frequent meetings with the FDA to discuss the development plan for the product candidate and ensure collection of
appropriate data needed to support approval; more frequent written correspondence from the FDA about such things as the
design of the proposed clinical trials and use of biomarkers; intensive guidance on an efficient drug development program,
beginning as early as Phase 1; organizational commitment involving senior managers; and eligibility for rolling review and
priority review.
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In June 2017, 131I-omburtamab received BTD for the treatment of pediatric patients with R/R NB who have
CNS/LM from NB. We may seek BTD for some or all of our other product candidates, but we may never receive another
BTD, or, if received, such designation for a product candidate may not result in a faster development or regulatory review
or approval process compared to drugs considered for approval under conventional FDA procedures. BTD does not change
the standards for product approval nor assure ultimate approval by the FDA.
Designation as a breakthrough therapy is within the discretion of the FDA. Accordingly, even if we believe that
one of our product candidates meets the criteria for designation as a breakthrough therapy, the FDA may disagree and
instead determine not to make such designation. In addition, even if one or more of our product candidates qualify as
breakthrough therapies, the FDA may later decide that the product candidate no longer meets the conditions for
qualification or decide that the time period for FDA review or approval will not be shortened.
Our product candidates may not be able to obtain or maintain Orphan Drug Designation, or ODD, or Rare Pediatric
Disease Designation, or RPDD.
Regulatory authorities in some jurisdictions, including the United States and the European Union, may designate
drugs for relatively small patient populations as orphan drugs. Under the Orphan Drug Act, the FDA may designate a
product as an orphan drug if it is a drug intended to treat a rare disease or condition, which is generally defined as an
indication with 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 will
be recovered from sales in the United States. In August 2016, the FDA granted ODD to 131I-omburtamab for the treatment
of NB. In 2013, the FDA granted ODD to DANYELZA for the treatment of NB. In November 2018, the European
Commission granted orphan medicinal product designation, or OMPD, for naxitamab for the treatment of NB. In February
2017, the European Commission granted orphan medicinal product designation to omburtamab for the treatment of NB.
In the United States, ODD entitles a party to financial incentives such as opportunities for grant funding towards
clinical trial costs, tax advantages and user-fee waivers. In addition, if a product that has ODD subsequently receives the
first FDA approval for the disease for which it has such designation, the product may be entitled to orphan drug exclusivity.
Orphan drug exclusivity in the United States provides that the FDA may not approve any other applications, including a
full BLA, to market the same drug for the same indication for seven years, except in limited circumstances. The
corresponding exclusivity period is 10 years in Europe, and can be reduced to six years if a drug no longer meets the
criteria for ODD or if the drug is sufficiently profitable so that market exclusivity is no longer justified.
The Rare Pediatric Disease Priority Review Voucher Program, or PRV Program, is intended to incentivize
pharmaceutical sponsors to develop drugs for rare pediatric diseases. A sponsor who obtains approval of a BLA for a rare
pediatric disease may be eligible for a PRV, under this program, which may be redeemed by the owner of such PRV to
obtain priority review for a marketing application. A PRV is fully transferrable and can be sold to any sponsor, who in turn
can redeem the PRV for priority review of a marketing application in six months, compared to the standard timeframe of
approximately 10 months.
A drug that receives RPDD before September 30, 2024, will continue to be eligible for a PRV if the drug is
approved by the FDA before September 30, 2026. If development of omburtamab continues and the BLA for omburtamab
is not approved prior to September 30, 2026, regardless of whether it meets the criteria for a rare pediatric disease PRV, it
will not be eligible for a PRV.
Even if we obtain ODD or RPDD for any of our product candidates in the future, we may not be able to maintain
such status or enjoy the anticipated associated benefits. We may not be the first to obtain marketing approval of any
product candidate that has ODD 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 we are unable to assure sufficient quantities of the product to meet the needs
of patients with the rare disease or condition. Further, even if we, or any future collaborators, obtain orphan drug
exclusivity for a product candidate, that exclusivity may not effectively protect the product from
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competition because different drugs with different active moieties may be approved for the same condition. Even after an
orphan drug is approved, the FDA can subsequently approve the same drug with the same active moiety for the same
condition if the FDA concludes that the later drug is clinically superior in that it is shown to be safer, more effective or
makes a major contribution to patient care or the manufacturer of the product with orphan exclusivity is unable to maintain
sufficient product quantity. ODD neither shortens the development time or regulatory review time of a drug nor gives the
drug any advantage in the regulatory review or approval process.
Even if we, or any collaborators we may have in the future, obtain marketing approvals for our product candidates, the
terms of approvals and ongoing regulation of our drugs could require substantial expenditure of resources and may
limit how we, or they, manufacture and market our drugs, which could materially impair our ability to generate
revenue.
Once marketing approval has been granted, as it was for DANYELZA in the United States, an approved drug and
its manufacturer and marketer are subject to ongoing review and extensive regulation. The accelerated approval of
DANYELZA is subject to certain post-marketing requirements and commitments, including a confirmatory post-marketing
trial of clinical benefit, that must be completed in order to convert the BLA to full approval and prevent withdrawal of the
license by FDA. The confirmatory post-marketing clinical trial required by the FDA to verify and to further characterize
the clinical benefit is our ongoing Study 201, which will enroll a minimum of 80 evaluable patients and report overall rate
of response, or ORR, duration of response, or DOR, progression free survival, or PFS, and overall survival, or OS. The
ORR is the primary endpoint for the study, DOR is the secondary endpoint and PFS and OS are secondary endpoints in
long-term follow-up. We anticipate completing the study no later than by March 31, 2027. Other post-marketing
requirements associated with the approval of DANYELZA include submissions of safety and other post-marketing
information and reports, registration and listing requirements, requirements relating to manufacturing, quality control,
quality assurance and corresponding maintenance of records and documents, requirements regarding the distribution of
samples to physicians and recordkeeping. We, and any collaborators we may have in the future, must also comply with
requirements concerning advertising and promotion for any of our product candidates for which we or they obtain
marketing approval. Promotional communications with respect to prescription drugs are subject to a variety of legal and
regulatory restrictions and must be consistent with the information in the drug’s approved labeling. Thus, we, and any
collaborators we may have in the future, may not be able to promote any drugs we develop for indications or uses for
which they are not approved.
The FDA and comparable foreign regulatory authorities may also impose requirements for costly post-marketing
studies or clinical trials and surveillance to monitor the safety or efficacy of a drug. For example, the approval may be
subject to limitations on the indicated uses for which the drug may be marketed or to the conditions of approval, including
the requirement to implement a Risk Evaluation and Mitigation Strategy, or comparable foreign strategies, which could
include requirements for a restricted distribution system. Manufacturers of approved drugs and those manufacturers’
facilities are also required to comply with extensive FDA and comparable foreign regulatory requirements, including
ensuring that quality control and manufacturing procedures conform to cGMPs, which include requirements relating to
quality control and quality assurance as well as the corresponding maintenance of records and documentation and reporting
requirements. We, our contract manufacturers, our future collaborators and their contract manufacturers could be subject to
periodic unannounced inspections by the FDA and comparable foreign regulatory authorities to monitor and ensure
compliance with cGMPs. Accordingly, assuming we, or our potential future collaborators, receive marketing approval for
one or more of our product candidates, we, and our potential future collaborators, and our and their contract manufacturers
will continue to expend time, money and effort in all areas of regulatory compliance, including manufacturing, production,
product surveillance and quality control.
If we, and our future potential collaborators, are not able to comply with post-approval regulatory requirements,
we, and our potential future collaborators, could have the marketing approvals for our drugs withdrawn by regulatory
authorities and our, or our potential future collaborators’, ability to market any future drugs could be limited, which could
adversely affect our ability to achieve or sustain profitability. Further, the cost of compliance with post-approval
regulations may have a negative effect on our operating results and financial condition.
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DANYELZA and any of our product candidates for which we, or our potential future collaborators, obtain marketing
approval in the future will be subject to substantial penalties if we, or they, fail to comply with regulatory requirements
or if we, or they, experience unanticipated problems with our drugs following approval.
DANYELZA and any of our product candidates for which we, or our potential future collaborators, obtain
marketing approval in the future, will be subject to continual review by the FDA and other regulatory authorities.
The FDA and other agencies, including the Department of Justice, or the DOJ, as well as comparable foreign
regulatory authorities closely regulate and monitor the post-approval marketing and promotion of drugs to ensure that they
are manufactured, marketed and distributed only for the approved indications and in accordance with the provisions of the
approved labeling. The FDA and comparable foreign regulatory authorities impose stringent restrictions on manufacturers’
communications regarding off-label use and if we, or our potential future collaborators, do not market any of our product
candidates for which we, or they, receive marketing approval for only their approved indications, we, or they, may be
subject to warnings or enforcement action for off-label marketing. Violation of the Federal Food, Drug and Cosmetic Act,
or FDCA, and other statutes, including the False Claims Act, 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.
In addition, later discovery of previously unknown adverse events or other problems with our drugs or their
manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results,
including:
● litigation involving patients taking our drug;
● restrictions on such drugs, manufacturers or manufacturing processes;
● restrictions on the labeling or marketing of a drug;
● restrictions on drug distribution or use;
● requirements to conduct post-marketing studies or clinical trials;
● warning letters or untitled letters;
● withdrawal of the drugs from the market;
● refusal to approve pending applications or supplements to approved applications that we submit;
● recall of drugs;
● fines, restitution or disgorgement of profits or revenues;
● suspension, variation or withdrawal of marketing approvals;
● damage to relationships with any potential collaborators;
● restrictions on coverage by third-party payors;
● unfavorable press coverage and damage to our reputation;
● refusal to permit the import or export of drugs;
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● drug seizure; or
● injunctions or the imposition of civil or criminal penalties.
Current and future legislation, or changes in existing FDA and other government regulations and policies, may
increase the difficulty and cost for us and our potential future collaborators to maintain or obtain potential marketing
approval of and commercialize our product candidates and affect the prices we, or they, may obtain.
In the United States and some foreign jurisdictions, there have been and continue to be 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, or the ability of our potential
future collaborators, to profitably sell any drugs for which we, or they, 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 our potential future collaborators, may receive for any
approved drugs. 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 for DANYELZA, and we may not achieve or sustain profitability, which would adversely affect our business,
prospects, financial condition and results of operations. We also cannot predict the likelihood, nature or extent of
government regulation that may arise from future legislation or administrative or executive action, either in the United
States or abroad.
In the United States, the Patient Protection and Affordable Care Act, as amended by the Health Care and
Education Reconciliation Act, or collectively the Affordable Care Act, or ACA, substantially changed the way healthcare is
financed by both governmental and private insurers.
New laws 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. We cannot predict whether these challenges will continue or other
proposals will be made or adopted, or what impact these efforts may have on us. Further, there has been heightened
governmental scrutiny over the manner in which manufacturers set prices for their marketed products, which has resulted
in several recent Congressional inquiries and proposed bills designed to, among other things, bring more transparency to
drug pricing, review the relationship between pricing and manufacturer patient programs, reduce the price of drugs under
Medicare and reform government program reimbursement methodologies for drug products. We expect that additional state
and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and
state governments will pay for healthcare products and services, which could result in reduced demand for our product
candidates or additional pricing pressures.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result
in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, new payment
methodologies and additional downward pressure on the price that we receive for any approved product and/or the level of
reimbursement physicians receive for administering any approved product we might bring to market. For example, on
August 16, 2022, President Biden signed the Inflation Reduction Act of 2022, or IRA, into law, which among other things,
extends enhanced subsidies for individuals purchasing health insurance coverage in ACA marketplaces through plan year
2025. The IRA also eliminates the “donut hole” under the Medicare Part D program beginning in 2025 by significantly
lowering the beneficiary maximum out-of-pocket cost and creating a new manufacturer discount program. Reductions in
reimbursement levels may negatively impact the prices we receive or the frequency with which our products are prescribed
or administered. Any reduction in reimbursement from Medicare or other government programs may result in a similar
reduction in payments from private payors.
Other legislative changes have been proposed and adopted in the United States since the ACA was enacted. In
August 2011, the Budget Control Act of 2011, among other things, created measures for spending reductions by Congress.
A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2
trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic
reduction to several government programs. This includes aggregate reductions of Medicare
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payments to providers up to two percent (2%) per fiscal year, which went into effect in April 2013 and will remain in effect
until 2032 unless additional Congressional action is taken.
Some states are also considering legislation and ballot initiatives that would control the prices and coverage and
reimbursement levels of drugs, including laws to allow importation of pharmaceutical products from lower cost
jurisdictions outside the U.S. and laws intended to impose price controls on state drug purchases.
We expect healthcare reform measures that may be adopted in the future may result in more rigorous coverage
criteria and in additional downward pressure on the price that we receive for DANYELZA and any other approved product.
The implementation of cost containment measures or other healthcare reforms may prevent us from being able to generate
revenue, attain profitability, or commercialize our product candidates. We expect that additional state and federal healthcare
reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will
pay for healthcare products and services, which could result in reduced demand for our drug candidates or additional
pricing pressures. The cost of prescription pharmaceuticals in the United States has also been the subject of considerable
discussion in the United States, and members of Congress and the Administration have stated that they will address such
costs through new legislative and administrative measures. The pricing of prescription pharmaceuticals is also subject to
governmental control outside the United States. In these countries, pricing negotiations with governmental authorities can
take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval
in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product
candidates to that of other available therapies. If reimbursement of our products is unavailable or limited in scope or
amount, or if pricing is set at unsatisfactory levels, our ability to generate revenues and become profitable could be
impaired.
Legislative and regulatory proposals have also been made to expand post-approval requirements and restrict sales
and promotional activities for pharmaceutical products. We cannot be sure whether additional legislative changes will be
enacted, or whether the FDA regulations, guidance or interpretations will be changed, or what the impact of such changes
on the marketing approvals of DANYELZA or our other approved products, if any, may be. In addition, increased scrutiny
by the Congress of the FDA’s approval process may significantly delay or prevent marketing approval, as well as subject us
and any future collaborators to more stringent drug labeling and post-marketing testing and other requirements.
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. As an example, the regulatory landscape related to clinical
trials in the EU has evolved. The EU Clinical Trials Regulation, or CTR, which was adopted in April 2014 and repeals the
EU Clinical Trials Directive, became applicable on January 31, 2022. The CTR permits trial sponsors to make a single
submission to both the competent authority and an ethics committee in each EU Member State, leading to a single decision
for each EU Member State. The assessment procedure for the authorization of clinical trials has been harmonized as well,
including a joint assessment of some elements of the application by all EU Member States in which the trial is to be
conducted, and a separate assessment by each EU Member State with respect to specific requirements related to its own
territory, including ethics rules. Each EU Member State’s decision is communicated to the sponsor through a centralized
EU portal, the Clinical Trial Information System, or CTIS. The CTR provides a three-year transition period. The extent to
which ongoing clinical trials will be governed by the CTR varies. For clinical trials in relation to which an application for
approval was made on the basis of the Clinical Trials Directive before January 31, 2023, the CTD will continue to apply on
a transitional basis until January 31, 2025. By that date, all ongoing trials will become subject to the provisions of the CTR.
The CTR will apply to clinical trials from an earlier date if the related clinical trial application was made on the basis of the
CTR or if the clinical trial has already transitioned to the CTR framework before January 31, 2025.
In addition, on April 26, 2023, the European Commission adopted a proposal for a new Directive and Regulation
to revise the existing pharmaceutical legislation. If adopted in the form proposed, the recent European Commission
proposals to revise the existing EU laws governing authorization of medicinal products may result in a decrease in data and
market exclusivity opportunities for our product candidates in the EU and make them open to generic or biosimilar
competition earlier than is currently the case with a related reduction in reimbursement status.
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If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or
policies governing clinical trials, our development plans may be impacted.
Government price controls or other changes in pricing regulation could restrict the amount that we are able to charge
for DANYELZA or any of our other product candidates that may be approved in the future, which would adversely
affect our revenue and results of operations.
We expect that coverage and reimbursement of pharmaceutical products may be increasingly restricted both in the
U.S. and internationally. The escalating cost of health care has led to increased pressure on the health care industry to
reduce costs. In particular, drug pricing by pharmaceutical companies has come under increased scrutiny and continues to
be subject to intense political and public debate in the U.S. and abroad. Government and private third-party payors have
proposed health care reforms and cost reductions. A number of federal and state proposals to control the cost of health care,
including the cost of drug treatments, have been made in the U.S. Specifically, there have been several recent U.S.
Congressional inquiries and proposed bills designed to, among other things, bring more transparency to drug pricing,
review the relationship between pricing and manufacturer patient programs and reform government program
reimbursement methodologies for drugs. For example, the IRA, among other things, (i) directs the U.S. Department of
Health and Human Services, or HHS, to negotiate the price of certain high-expenditure, single-source drugs and biologics
covered under Medicare, and subject drug manufacturers to civil monetary penalties and a potential excise tax by offering a
price that is not equal to or less than the negotiated “maximum fair price” for such drugs and biologics under the law, and
(ii) imposes rebates with respect to certain drugs and biologics covered under Medicare Part B or Medicare Part D to
penalize price increases that outpace inflation. The IRA permits HHS to implement many of these provisions through
guidance, as opposed to regulation, for the initial years. HHS has and will continue to issue and update guidance as these
programs are implemented. These provisions take effect progressively starting in fiscal year 2023. On August 29, 2023,
HHS announced the list of the first ten drugs that will be subject to price negotiations, although the Medicare drug price
negotiation program is currently subject to legal challenges. It is currently unclear how the IRA will be implemented but is
likely to have a significant impact on the pharmaceutical industry. Further, in response to the Biden administration’s
October 2022 executive order, on February 14, 2023, HHS released a report outlining three new models for testing by the
Centers for Medicare & Medicaid Services Innovation Center which will be evaluated on their ability to lower the cost of
drugs, promote accessibility, and improve quality of care. It is unclear whether the models will be utilized in any health
reform measures in the future. In some international markets, the government controls the pricing, which can affect the
profitability of drugs. On December 7, 2023, the Biden administration announced an initiative to control the price of
prescription drugs through the use of march-in rights under the Bayh-Dole Act. On December 8, 2023, the National
Institute of Standards and Technology published for comment a Draft Interagency Guidance Framework for Considering
the Exercise of March-In Rights which for the first time includes the price of a product as one factor an agency can use
when deciding to exercise march-in rights. While march-in rights have not previously been exercised, it is uncertain if that
will continue under the new framework.
Current government regulations and possible future legislation regarding health care may affect coverage and
reimbursement for medical treatment by third-party payors, which may render DANYELZA or our other product
candidates, if approved, not commercially viable or may adversely affect our anticipated future revenues and gross
margins.
In markets outside of the United States, reimbursement and healthcare payment systems vary significantly by
country, and many countries have instituted price ceilings on specific products and therapies. For example, the EU
provides options for EU 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. An EU Member State may
approve a specific price for the medicinal product, it may refuse to reimburse a product at the price set by the manufacturer
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. Many EU Member States also periodically review their reimbursement procedures for medicinal
products, which could have an adverse impact on reimbursement status. We expect that legislators, policymakers and
healthcare insurance funds in the EU Member States will continue to propose and implement cost-containing measures,
such as lower maximum prices, lower or lack of reimbursement coverage and incentives to use cheaper, usually generic,
products as an alternative to branded products, and/or branded products available through parallel import to keep
healthcare costs down.
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Moreover, in order to obtain reimbursement for our products in some European countries, including some EU
Member States, we may be required to compile additional data comparing the cost-effectiveness of our products to other
available therapies. This Health Technology Assessment (“HTA”) of medicinal products is becoming an increasingly
common part of the pricing and reimbursement procedures in some EU Member States, including those representing the
larger markets. The HTA process is the procedure to assess therapeutic, economic and societal impact of a given medicinal
product in the national healthcare systems of the individual country. The outcome of an HTA will often influence the
pricing and reimbursement status granted to these medicinal products by the competent authorities of individual EU
Member States. The extent to which pricing and reimbursement decisions are influenced by the HTA of the specific
medicinal product currently varies between EU Member States. In December 2021, Regulation No 2021/2282 on HTA
amending Directive 2011/24/EU, was adopted in the EU. This Regulation, which entered into force in January 2022 and
will apply as of January 2025, is intended to boost cooperation among EU Member States in assessing health technologies,
including new medicinal products, and providing the basis for cooperation at EU level for joint clinical assessments in
these areas. The Regulation foresees a three-year transitional period and will permit EU Member States to use common
HTA tools, methodologies, and procedures across the EU, working together in four main areas, including joint clinical
assessment of the innovative health technologies with the most potential impact for patients, joint scientific consultations
whereby developers can seek advice from HTA authorities, identification of emerging health technologies to identify
promising technologies early, and continuing voluntary cooperation in other areas. Individual EU Member States will
continue to be responsible for assessing non-clinical (e.g., economic, social, ethical) aspects of health technologies, and
making decisions on pricing and reimbursement. If we are unable to maintain favorable pricing and reimbursement status
in EU Member States for product candidates that we may successfully develop and for which we may obtain regulatory
approval, any anticipated revenue from and growth prospects for those products in the EU could be negatively affected.
We cannot predict the extent to which our business may be affected by these or other potential future legislative or
regulatory developments. However, future price controls or other changes in pricing regulation or negative publicity related
to the pricing of pharmaceutical drugs generally could restrict the amount that we are able to charge for any our future
products, which would adversely affect our anticipated revenue and results of operations.
Our relationships with healthcare providers, physicians and third-party payors are subject to applicable anti-kickback,
fraud and abuse and other healthcare laws and regulations, which could expose us to penalties, including criminal
sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings.
Our relationships with healthcare providers, physicians and third-party payors are subject to additional healthcare
statutory and regulatory requirements and enforcement by the federal government and the states and foreign governments
in which we conduct our business. Our current and future arrangements with healthcare providers, physicians and third-
party payors and patients 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
DANYELZA and other our products for which we obtain marketing approval. Restrictions under applicable federal and
state healthcare laws and regulations include the following:
● Anti-Kickback Statute—the federal healthcare anti-kickback statute prohibits, among other things, persons
from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly,
in cash or in kind, to induce or reward, or in return for, either the referral of an individual for, or the purchase,
order or recommendation or arranging of, any good or service, for which payment may be made under
federal and state healthcare programs, such as Medicare and Medicaid. A person or entity does not need to
have actual knowledge of the statute or specific intent to violate it in order to have committed a violation;
● False Claims Act—the federal False Claims Act imposes criminal and civil penalties, including through civil
whistleblower or qui tam actions, against individuals or entities for, among other things, knowingly
presenting, or causing to be presented, false or fraudulent claims for payment by a federal healthcare program
or making a false statement or record material to payment of a false claim or avoiding, decreasing
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or concealing an obligation to pay money to the federal government, with potential liability including
mandatory treble damages and significant per-claim penalties;
● HIPAA—the federal Health Insurance Portability and Accountability Act of 1996, or HIPAA, imposes
criminal and civil liability for executing a scheme to defraud any healthcare benefit program, or knowingly
and willfully falsifying, concealing or covering up a material fact or making any materially false statement in
connection with the delivery of or payment for healthcare benefits, items or services; similar to the federal
Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the statute or specific
intent to violate it in order to have committed a violation;
● HIPAA Privacy Provisions—as amended by the Health Information Technology for Economic and Clinical
Health Act (“HITECH”) and its implementing regulations, HIPAA also imposes obligations on certain
covered entity healthcare providers, health plans, and healthcare clearinghouse as well as their business
associates and subcontractors that perform certain services involving the use or disclosure of individually
identifiable health information, including mandatory contractual terms and technical safeguards, with respect
to safeguarding the privacy, security and transmission of individually identifiable health information, and
HIPAA, as amended, requires notification to affected individuals and regulatory authorities of certain
breaches of security of individually identifiable health information;
● Transparency Requirements—the federal legislation commonly referred to as the Physician Payments
Sunshine Act, enacted as part of the Affordable Care Act, and its implementing regulations, which requires
certain manufacturers of drugs, devices, therapeutic biologics and medical supplies reimbursable under
Medicare, Medicaid, and Children’s Health Insurance Programs to report annually to the Department of
Health and Human Services information related to certain payments and other transfers of value, including
consulting fees, travel reimbursements, research grants, and other payments or gifts with values over $10
made to physicians (defined to include doctors, dentists, optometrists, podiatrists, and chiropractors), other
healthcare providers (such as physician assistants and nurse practitioners), and teaching hospitals, as well as
ownership and investment interests held by physicians and their immediate family members;
● FDCA—the FDCA, which prohibits, among other things, the adulteration or misbranding of drugs, biologics
and medical devices; and
● Analogous State and Foreign Laws—analogous state and foreign fraud and abuse laws and regulations, such
as state anti-kickback and false claims laws that may apply to sales or marketing arrangements and claims
involving healthcare items or services reimbursed by non-governmental third-party payors, including private
insurers.
Outside the United States, interactions between pharmaceutical companies and health care professionals are also
governed by strict laws, such as national anti-bribery laws of European countries, national sunshine rules, regulations,
industry self-regulation codes of conduct and physicians’ codes of professional conduct. Failure to comply with these
requirements could result in reputational risk, public reprimands, administrative penalties, fines or imprisonment.
Some state and foreign laws require pharmaceutical companies to comply with the pharmaceutical industry’s
voluntary compliance guidelines and the relevant compliance guidance promulgated by the government and require drug
manufacturers to report information related to payments and other transfers of value to physicians and other healthcare
providers or marketing expenditures and pricing information.
Efforts to ensure that our business arrangements with third parties comply with applicable healthcare laws and
regulations involve substantial costs. It is possible that interpretation of healthcare laws and regulations will vary across
jurisdictions, and 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,
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imprisonment, exclusion of drugs from government-funded healthcare programs, such as Medicare and Medicaid, or
comparable foreign programs, and the curtailment or restructuring of our operations. We have established internal policies
and procedures to mitigate our compliance risks. However, no assurance can be given that such policies and procedures
will be adequate to ensure compliance with applicable laws and regulations. Moreover, although effective compliance
programs can mitigate the risk of investigation and prosecution for violations of these laws, these risks cannot be entirely
eliminated. Any action against us for an alleged or suspected violation could cause us to incur significant legal expenses
and could divert our management’s attention from the operation of our business, even if our defense is successful. 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, it may be costly to us in terms of money, time and resources, and they may be subject to
criminal, civil or administrative sanctions, including exclusions from government-funded healthcare programs.
We are subject to stringent and evolving U.S. and foreign laws, regulations, rules, contractual obligations, policies and
other obligations related to data privacy and security. Our actual or perceived failure to comply with such obligations
could lead to regulatory investigations or actions; litigation (including class claims) and mass arbitration demands;
fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of
customers or sales; and other adverse business consequences.
In the ordinary course of business, we and our collaborators and third-party providers may collect, receive, store,
process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share (collectively,
process) personal data and other sensitive information, such as proprietary and confidential business data, trade secrets,
intellectual property, and data we collect about trial participants in connection with our clinical trials. Our data processing
activities may subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance,
industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the
processing of sensitive information by us and on our behalf. In the United States, federal, state, and local laws and
regulations, including federal health information privacy laws, state data breach notification laws, state health information
privacy laws and federal and state consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), govern
the collection, use, disclosure and protection of health-related and other personal data and could apply to our operations or
the operations of our collaborators and third-party providers. In addition, we may obtain health information from third
parties (including research institutions from which we obtain clinical trial data) that are subject to privacy and security
requirements under HIPAA, as amended by HITECH, which imposes specific requirements relating to the privacy, security,
and transmission of individually identifiable health information. Depending on the facts and circumstances, we could be
subject to significant penalties if we violate HIPAA.
In the past few years, numerous U.S. states—including California, Virginia, Colorado, Connecticut, and Utah—have
enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific
disclosures in privacy notices and affording residents with certain rights concerning their personal information. As
applicable, such rights may include the right to access, correct, or delete certain personal information, and to opt-out of
certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of
these rights may impact our business and ability to provide our products and services. These state laws also allow for
statutory fines for noncompliance. For example, the California Consumer Privacy Act of 2018, as amended by the
California Privacy Rights Act of 2020, collectively the CCPA, applies to personal information of consumers, business
representatives, and employees who are California residents and requires businesses to provide specific disclosures in
privacy notices and honor requests of California residents to exercise certain privacy rights . The CCPA provides for fines
of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to seek to recover
potentially significant statutory damages. While the CCPA and many of these state laws also exempt some data processed
in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and
compliance costs for us and the third parties upon whom we rely. We expect more states to pass similar laws in the future.
Outside the United States, an increasing number of laws, regulations, and industry standards govern data privacy and
security. For example, the European Union’s General Data Protection Regulation, or EU GDPR, the United Kingdom’s
GDPR, or UK GDPR, Brazil’s General Data Protection Law (Lei Geral de Proteção de Dados Pessoais, or LGPD) (Law
No. 13,709/2018), and China’s Personal Information Protection Law, or PIPL, impose strict requirements
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for processing personal data. In particular, the EU GDPR applies to any company established in the European Economic
Area, or EEA, and to companies established outside the EEA that process personal data in connection with the offering of
goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA. The
obligations from the EU GDPR and UK GDPR, together referred to as GDPR, may include limiting personal data
processing to only what is necessary for specified, explicit, and legitimate purposes; requiring a legal basis for personal
data processing; complying with specific requirements to process health-related data; requiring the appointment of a data
protection officer in certain circumstances; increasing transparency obligations to data subjects; requiring data protection
impact assessments in certain circumstances; limiting the collection and retention of personal data; increasing rights for
data subjects; formalizing a heightened and codified standard of data subject consents; requiring the implementation and
maintenance of technical and organizational safeguards for personal data; mandating notice of certain personal data
breaches to the relevant supervisory authority(ies) and affected individuals; and mandating the appointment of
representatives in the UK and/or the EU in certain circumstances. Under the GDPR, companies may face temporary or
definitive bans on data processing and other corrective actions; fines of up to 20 million Euros under the EU GDPR (17.5
million British Pounds under the UK GDPR) or 4% of annual global revenue, in each case, whichever is greater; or private
litigation related to processing of personal data brought by classes of data subjects or consumer protection organizations
authorized at law to represent their interests.
In addition, we may be unable to transfer personal data from Europe and other jurisdictions to the United States or
other countries due to data localization requirements or limitations on cross-border data flows. Europe and other
jurisdictions have enacted laws requiring data to be localized or limiting the transfer of personal data to other countries. In
particular, the EEA and UK have significantly restricted the transfer of personal data to the United States and other
countries whose data privacy laws they generally believe are inadequate. Other jurisdictions may adopt similarly stringent
interpretations of their data localization and cross-border data transfer laws. Although there are currently various
mechanisms that may be used to transfer personal data from the EEA and UK to the United States in compliance with law,
such as the EU’s standard contractual clauses, the UK’s International Data Transfer Agreement/Addendum, and the EU-
U.S. Data Privacy Framework and the UK extension thereto (which allows for transfers for relevant U.S.-based
organizations who self-certify compliance and participate in the Framework), these mechanisms may be subject to legal
challenges, and there is no assurance that we can satisfy or rely on these measures to lawfully transfer personal data to the
United States. If there is no lawful manner for us to transfer personal data from the EEA, the UK, or other jurisdictions to
the United States, or if the requirements for a legally-compliant transfer are too onerous, we could face significant adverse
consequences, including the interruption or degradation of our operations, the need to relocate part of or all of our business
or data processing activities to other jurisdictions at significant expense, increased exposure to regulatory actions,
substantial fines and penalties, the inability to transfer data and work with partners, vendors and other third parties, and
injunctions against our processing or transferring of personal data necessary to operate our business. Additionally,
companies that transfer personal data out of the EEA and UK to other jurisdictions, particularly to the United States, are
subject to increased scrutiny from regulators, individual litigants, and activities groups. Some European regulators have
ordered certain companies to suspend or permanently cease certain transfers of personal data out of Europe for allegedly
violating the EU GDPR’s cross-border data transfer limitations. In addition to data privacy and security laws, we are also
bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may
not be successful. For example, certain privacy laws, such as the GDPR and the CCPA, require our customers to impose
specific contractual restrictions on their service providers.
We publish privacy policies, marketing materials and other statements, such as confirmation of compliance with
certain certifications or self-regulatory principles, regarding data privacy and security. If these policies, materials or
statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we
may be subject to investigation, enforcement actions by regulators or other adverse consequences.
Obligations related to data privacy and security (and consumers’ data privacy expectations) are quickly changing,
becoming increasingly stringent, and creating uncertainty. Additionally, these obligations may be subject to differing
applications and interpretations, which may be inconsistent or conflict among jurisdictions. Preparing for and complying
with these obligations requires us to devote significant resources, which may necessitate changes to our services,
information technologies, systems, and practices and to those of any third parties that process personal data on our behalf.
In addition, these obligations may require us to change our business model.
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We may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security
obligations. Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such
obligations, which could negatively impact our business operations. If we or the third parties on which we rely fail, or are
perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face
significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines,
penalties, audits, inspections, and similar); litigation (including class-action claims and mass arbitration demands);
indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management’s
attention; additional reporting requirements and/or oversight; bans on processing personal data; orders to destroy or not use
personal data; and imprisonment of company officials. In particular, plaintiffs have become more active in bringing
privacy-related claims against companies, including class claims and mass arbitration demands. Some of these claims
allow for the recovery of statutory damages on a per violation basis, and, if viable, carry the potential for monumental
statutory damages, depending on the volume of data and the number of violations.
Any of these events could have a material adverse effect on our reputation, business, or financial condition, including
but not limited to: loss of customers; interruptions or stoppages in our business operations (including, as relevant, clinical
trials); interruptions or stoppages of data collection needed to train our algorithms; inability to process personal data or to
operate in certain jurisdictions; limited ability to develop or commercialize our products; expenditure of time and resources
to defend any claim or inquiry; adverse publicity; or substantial changes to our business model or operations.
If our information technology systems or data, or those of third parties upon which we rely, are or were compromised,
we could experience adverse consequences resulting from such compromise, including but not limited to regulatory
investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss
of revenue or profits; loss of customers or sales; and other adverse consequences.
In the ordinary course of our business, we and the third parties upon which we process proprietary, confidential,
and sensitive data, including personal data (such as health-related data), intellectual property and trade secrets (collectively,
sensitive information).
Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the
confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the
third parties upon which we rely, including our current and future CROs, CMOs, other contractors and consultants. Such
threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including
traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through
theft or misuse), sophisticated nation-states, and nation-state-supported actors. Some actors now engage and are expected
to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in
conjunction with military conflicts and defense activities. During times of war and other major conflicts, we, the third
parties upon which we rely, and our customers may be vulnerable to a heightened risk of these attacks, including retaliatory
cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and
distribute our goods and services.
We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited
to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake,
and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent
threat intrusions), denial-of-service attacks, credential stuffing, credential harvesting, personnel misconduct or error,
ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or
other information technology assets, adware, attacks enhanced or facilitated by AI, telecommunications failures,
earthquakes, fires, floods, and other similar threats. In particular, severe ransomware attacks are becoming increasingly
prevalent – particularly for companies like ours in the medical field – and can lead to significant interruptions in our
operations, loss of sensitive data and income, reputational harm, and diversion of funds. Extortion payments may alleviate
the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for
example, applicable laws or regulations prohibiting such payments.
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Remote work has become more common and has increased risks to our information technology systems and data,
as more of our employees utilize network connections, computers and devices outside our premises or network, including
working at home, while in transit and in public locations.
Future or past business transactions (such as acquisitions or integrations) could expose us to additional
cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or
integrated entities’ systems and technologies. Furthermore, we may discover security issues that were not found during due
diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information
technology environment and security program.
We rely on third-party service providers and technologies to operate critical business systems to process sensitive
information in a variety of contexts, including, without limitation, communication systems, cloud-based infrastructure, data
center facilities, encryption and authentication technology, employee email, content delivery to customers, and other
functions. Our ability to monitor these third parties’ information security practices is limited, and these third parties may
not have adequate information security measures in place. If our third-party service providers experience a security
incident or other interruption, we could experience adverse consequences. While we may be entitled to damages if our
third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient
to cover our damages, or we may be unable to recover such award.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third
parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.
We take steps to detect and remediate vulnerabilities, but we may not be able to detect and remediate all
vulnerabilities because the threats and techniques used to exploit the vulnerability change frequently and are often
sophisticated in nature. Therefore, such vulnerabilities could be exploited but may not be detected until after a security
incident has occurred. These vulnerabilities pose risks to our business. Further, we may experience delays in developing
and deploying remedial measures designed to address any such identified vulnerabilities.
Any of the previously identified or similar threats could cause a security incident or other interruption that could
result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure
of, or access to our sensitive information or our information technology systems, or those of the third parties upon whom
we rely, including our research partners or collaborators. We may expend significant resources or modify our business
activities (including our clinical trial activities or product development) to try to protect against security incidents.
Certain data privacy and security obligations may require us to implement and maintain specific security measures
or industry-standard or reasonable security measures to protect our information technology systems and sensitive
information.
While we have implemented security measures designed to protect against security incidents, there can be no
assurance that these measures will be effective.
Applicable data privacy and security obligations may require us to notify relevant stakeholders of security
incidents, including affected individuals, customers, regulators, and investors. Such disclosures are costly, and the
disclosure or the failure to comply with such requirements could lead to adverse consequences.
If we, or a third party upon whom we rely, experience a security incident or are perceived to have experienced a
security incident, we may experience adverse consequences, such as government enforcement actions (for example,
investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on
processing sensitive information (including personal data); litigation (including class claims); indemnification obligations;
negative publicity; reputational harm; monetary fund diversions; diversions of management’s attention; interruptions in our
operations (including availability of data); financial loss; and other similar harms. Security incidents and attendant
consequences may cause customers to stop using our products, deter new customers from using our products, and
negatively impact our ability to grow and operate our business. For example, the loss of clinical trial data
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from completed or future clinical trials could result in delays in our regulatory approval efforts and significantly increase
our costs to recover or reproduce the data. To the extent that any disruption or security breach were to result in a loss of, or
damage to, our data or applications, or disclosure of confidential or proprietary information, further development and
commercialization of our product candidates could be delayed.
Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that
limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data
privacy and security obligations. We cannot be sure that our insurance coverage will be adequate or sufficient to protect us
from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be
available on commercially reasonable terms or at all, or that such coverage will pay future claims.
In addition, third parties may gather, collect, or infer competitively sensitive information about us from public
sources, data brokers, or by other means that could be used to undermine our competitive advantage or market position.
Additionally, any sensitive information (including confidential, competitive, proprietary, or personal data) that we input
into a third-party generative AI platform could be leaked or disclosed to others, including if sensitive information is used to
train the third parties’ AI model.
Coverage and reimbursement may be limited or unavailable in certain market segments for DANYELZA and our
product candidates, which could make it difficult for us to sell DANYELZA and our product candidates profitably.
Successful sales of DANYELZA and our product candidates, if approved, depend on the availability of adequate
coverage and reimbursement from third-party payors. In addition, because DANYELZA and our product candidates
represent relatively new approaches to the treatment of cancer, we cannot accurately estimate the potential revenue from
DANYELZA or our product candidates.
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. Adequate coverage and reimbursement from governmental
healthcare programs, such as Medicare and Medicaid, and commercial payors are critical to new product acceptance.
Government authorities and 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. Coverage and
reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s
determination that use of a 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.
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. To date, although a number of third-party providers have established coverage
policies and provided reimbursement for DANYELZA, there is no guarantee that third-party providers will establish
coverage policies or provided reimbursement for any of our other product candidates, if approved. The reimbursement
payment rates for DANYELZA or any other product we commercialize might not be adequate for us to achieve or
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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 our
products, if approved. Third-party payors are increasingly challenging the prices charged, examining the medical necessity,
and reviewing the cost-effectiveness of medical products and services, and imposing controls to manage costs. Our rebate
payments may increase, or our prices may be adjusted under value-based purchasing arrangements based on evidence-
based measures or outcomes-based measures for a patient or beneficiary based on use of DANYELZA or any other product
we commercialize. Patients are unlikely to use our product unless coverage is provided and reimbursement is adequate to
cover a significant portion of the cost of our products. Because our products and product candidates have a higher cost of
goods than conventional therapies, and may require long-term follow up evaluations, the risk that coverage and
reimbursement rates may be inadequate for us to achieve profitability may be greater. Further, coverage policies and third-
party payor 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. In addition, companion diagnostic tests require coverage and reimbursement
separate and apart from the coverage and reimbursement for their companion pharmaceutical or biological products.
Similar challenges to obtaining coverage and reimbursement, applicable to pharmaceutical or biological products, will
apply to companion diagnostics.
To date DANYELZA has been approved for sale in the United States, Israel, China and Brazil only, but we intend
to seek approval to market our products in additional selected foreign jurisdictions. If we obtain approval in one or more
foreign jurisdictions for our product candidates, we or our partner holding the approval such as Takeda Israel, holding the
approval of DANYELZA in Israel will be subject to rules and regulations in those jurisdictions. In some foreign countries,
particularly those in the EU, the pricing of biologics is subject to governmental control. 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 health care reform measures.
We may incur significant liability if enforcement authorities allege or determine that we are engaging in commercial
activities or promoting DANYELZA or another product candidate in a way that violates applicable regulations.
Physicians have the discretion to prescribe drug products for uses that are not described in the product’s labeling
and that differ from those approved by the FDA or other applicable regulatory authorities. Off label uses are common
across medical specialties. Although the FDA and other regulatory authorities do not regulate a physician’s choice of
treatments, the FDA and other regulatory authorities regulate a manufacturer’s communications regarding off label use and
prohibit off label promotion, as well as the dissemination of false or misleading labeling or promotional materials.
Manufacturers may not promote drugs for off label uses. Accordingly, we may not promote DANYELZA in the United
States for use in any indications other than relapsed/refractory high risk neuroblastoma in bone and/or bone marrow. The
FDA and other regulatory and enforcement authorities actively enforce laws and regulations prohibiting promotion of off
label uses and the promotion of products for which marketing approval has not been obtained. A company that is found to
have improperly promoted off label uses may be subject to significant liability, which may include civil and administrative
remedies as well as criminal sanctions.
Notwithstanding regulations related to product promotion, the FDA and other regulatory authorities allow
companies to engage in truthful, non-misleading, and non-promotional scientific exchange concerning their products. We
intend to engage in medical education activities and communicate with healthcare providers in compliance with all
applicable laws and regulatory guidance.
Due to the nature of radioactive isotopes in radioimmunotherapy product candidates, the product shelf life is limited
and susceptible to spoilage and/or loss, which could adversely affect our business, financial condition and operating
results.
Our radioimmunotherapy product candidates have a very limited shelf life once radiolabeled with radioactive
elements. For commercial manufacture and supply these product candidates require reliable transportation and
radiolabeling production facilities located in close proximity to our final customers to avoid spoilage, damage and/or
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loss. The failure of third parties with whom we contract to deliver these product candidates within the scope of their limited
shelf lives could result in the loss of a given shipment and the sales associated with it. Any delay in shipment results in a
loss of the radioactive dose as a result of radioactive decay, with the risk that the entire useful dose may be lost. Moreover,
since each order is made individually and delivered with dedicated transportation in compliance with local regulations
applicable to the handling of radioactive materials, we do not have readily available replacements to substitute for a lost
delivery if circumstances beyond our control, such as delays or problems caused by inclement weather or a failure in the
transportation system operated by third parties that we hire, prevent the timely delivery of a batch, or if the receiving
facility fails to distribute the ordered batch in a timely fashion in accordance with specifications. Such losses or failures
could have a material adverse effect on our business, financial condition and results of 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 have a material adverse effect on our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing
laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our
operations involve the use of hazardous, radioactive and flammable materials, including chemicals and biological
materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal
of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of
contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages,
and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines
and penalties.
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
commercialization efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties
or other sanctions.
Laws and regulations governing any international operations we may have in the future may preclude us from
developing, manufacturing and selling certain products or product candidates outside of the United States and require
us to develop and implement costly compliance programs.
We currently have operations in the United States and Denmark and we maintain relationships with CMOs in the
United States as well as other parts of Europe for the manufacture of our product candidates. If we further expand our
operations outside of the United States, we must comply with numerous laws and regulations in each new jurisdiction in
which we plan to operate. The creation and implementation of international business practices compliance programs is
costly and such programs are difficult to enforce, particularly where reliance on third parties is required. No assurance can
be given that our compliance policies and procedures are or will be sufficient or that our directors, officers, employees,
representatives, consultants and agents have not engaged and will not engage in conduct for which we may be held
responsible, nor can we assure you that our business partners have not engaged and will not engage in conduct that could
materially affect their ability to perform their contractual obligations to us or even result in our being held liable for such
conduct.
The FCPA prohibits any U.S. individual or business from paying, offering, authorizing payment or offering of
anything of value, directly or indirectly, to any foreign official, political party or candidate for the purpose of influencing
any act or decision of the 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 the company to maintain books and records that accurately and fairly reflect all transactions of the
corporation, including international subsidiaries, and to devise and maintain an adequate system of internal accounting
controls for international operations. The anti-bribery provisions of the FCPA are enforced primarily by the DOJ. The
Securities and Exchange Commission, or SEC, is involved with enforcement of the books and records provisions of the
FCPA.
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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. Similar laws in other countries, such as the U.K.
Bribery Act 2010, may apply to our operations.
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 drugs 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 penalties,
including suspension or debarment from government contracting. Violation of the FCPA or other export control, anti-
corruption, anti-money laundering and anti-terrorism laws or regulations can result in significant civil and criminal
penalties. Indictment alone under the FCPA can lead to suspension of the right to do business with the U.S. government
until the pending claims are resolved. Conviction of a violation of the FCPA can result in long-term disqualification as a
government contractor. The termination of a government contract or relationship as a result of our failure to satisfy any of
our obligations under laws governing international business practices would have a negative impact on our operations and
harm our reputation and ability to procure government contracts. The SEC also may suspend or bar issuers from trading
securities on U.S. exchanges for violations of the FCPA’s accounting provisions.
Risks related to our intellectual property
Our success depends in part on our ability to protect our intellectual property. 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 proprietary rights including
patent, trademark and trade secret protection of our products, product candidates and related proprietary technologies, their
respective components, formulations, methods used to manufacture them and methods of treatment, as well as successfully
defending these patents against third-party challenges. Our ability to stop unauthorized third parties from making, using,
selling, offering to sell or importing our products, product candidates and related proprietary technologies is dependent
upon the extent to which we have rights under valid and enforceable patents or trade secrets that cover these activities.
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 be able to
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. Our pending and future patent
applications may not result in issued patents that protect our product candidates or related technologies, in whole or in part.
In addition, our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from
using our technology or from developing competing product candidates or products and related technologies.
We currently depend on proprietary technology licensed from MSK and MIT and may depend on other third-party
licensors in the future. If we lose our existing licenses or are unable to acquire or license additional proprietary rights
from MSK, MIT or other third parties, we may not be able to continue developing our products.
We currently in-license certain intellectual property from MSK and MIT. In the future we may in-license
intellectual property from other licensors. We rely on certain of these licensors to file and prosecute patent applications and
maintain patents and otherwise protect the intellectual property we license from them. We have limited control over these
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
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applicable laws and regulations or will result in valid, enforceable or sufficient patents and other intellectual property
rights. We have limited control over the manner in which our licensors may 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 proceedings or defense activities may be less vigorous than had we conducted
them ourselves.
The growth of our business may depend in part on our ability to acquire or in-license additional proprietary rights.
For example, our programs may involve additional product candidates that may require the use of additional proprietary
rights held by third parties. Our products or product candidates may also require specific formulations to work effectively
and efficiently. These formulations may be covered by intellectual property rights held by others. We may develop products
containing our compounds and pre-existing pharmaceutical compounds. These pharmaceutical compounds may be covered
by intellectual property rights held by others. We may be required by the FDA or comparable foreign regulatory authorities
to provide a companion diagnostic test or tests with our products or product candidates. Such diagnostic test or tests may
be covered by intellectual property rights held by others. We may not own, or may have to share, the intellectual property
rights obtained in collaboration with any other party, or intellectual property rights obtained relating to improvements of in-
licensed products or processes.
We may be unable to acquire or in-license any relevant third-party intellectual property rights 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 would 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 under such intellectual
property rights, any such license may be non-exclusive, which may allow our competitors to access the same technologies
licensed to us. Additionally, we sometimes collaborate with academic and other institutions, such as MSK, to accelerate
our pre-clinical research or development under written agreements with these institutions. In certain cases, these
institutions 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 practice, and companies
that 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, products and related proprietary technologies. More established companies may have a competitive advantage
over us due to their larger size and cash resources or 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 are a party to license agreements with MSK, MIT and others, pursuant to which we in-license key patent and
patent applications for our product candidates, products and related proprietary technologies. These existing licenses
impose various diligence, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with
these obligations or otherwise materially breach a license agreement, 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. In addition, any claims asserted against us by our licensors may be costly and time-consuming, divert the
attention of key personnel from business operations or otherwise have a material adverse effect on our business.
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Uncertainty as to the issuance, scope, validity, enforceability and value of patents, and the potential for future changes
in patent and other intellectual property protections, may result in inadequate protection of our as well as in-licensed
intellectual property or may result in alleged or actual infringement of the intellectual property rights of third parties.
The patent position of pharmaceutical and biotechnology companies generally is highly uncertain and involves
complex legal and factual questions for which many legal principles remain unresolved. In recent years patent rights have
been the subject of significant litigation. As a result, the issuance, scope, validity, enforceability and commercial value of
our patent rights and in-licensed patent rights are highly uncertain. Our pending and future patent applications and in-
licensed patent applications may not result in patents being issued in the United States or in other jurisdictions which
protect our products or product candidates or related technologies or which effectively prevent others from
commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent
laws in the United States and other countries may diminish the value of our and in-licensed patents or narrow the scope of
our patent protection. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of
the United States. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent
applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some
cases not at all. Therefore, we cannot be certain that we were the first to make the inventions claimed in our patents or
pending patent applications, or that we were the first to file for patent protection of such inventions. In addition, the U.S.
Patent and Trademark Office, or USPTO, might require that the term of a patent issuing from a pending patent application
be disclaimed and limited to the term of another patent that is commonly owned or names a common inventor. As a result,
the issuance, scope, validity, enforceability and commercial value of our as well as in-licensed patent rights are highly
uncertain.
Recent or future patent reform legislation could increase the uncertainties and costs surrounding the prosecution of
our and in-licensed patent applications and the enforcement or defense of the issued patents. In March 2013, under the
Leahy-Smith America Invents Act, or America Invents Act, 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 our patent applications and the enforcement or defense of our issued
patents, all of which could have a material adverse effect on our business and financial condition. During examination of
our own as well as our in-licensed patent applications third parties may present observations or submit patents, published
patent applications or other prior art which may affect the patentability of the claimed inventions. The costs for obtaining
patent protection may be increased significantly by the need for appeal proceedings or oral proceedings, which may also
result in a patent not being issued. We may become involved in opposition, interference, derivation, post-grant review, inter
partes review, ex-parte re-examination or other proceedings challenging our patent rights or the patent rights of others, and
the outcome of any proceedings are highly uncertain. An adverse determination in any such proceeding could reduce the
scope of, or invalidate, our and in-licensed patent rights, allow third parties to commercialize our products, product
candidates and related technologies and compete directly with us, without payment to us, or result in our inability to
manufacture or commercialize products without infringing third-party patent rights.
Intellectual property rights do not necessarily address all potential threats.
Even if our owned or in-licensed patent applications issue as patents, they may not issue in a form that will
provide us with any meaningful protection, prevent competitors from competing with us or otherwise provide us with any
competitive advantage. Our competitors may be able to circumvent our owned or licensed patents by developing similar or
alternative technologies or products in a non-infringing manner. The issuance of a patent is not conclusive as
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to its scope, validity or enforceability, and our owned and in-licensed patents may be challenged in the courts or patent
offices in the United States and abroad. Such challenges may result in the patent claims of our owned or in-licensed patents
being narrowed, invalidated or held unenforceable, which could limit our ability to stop or prevent us from stopping others
from using or commercializing similar or identical technology and products, or limit the duration of the patent protection of
our products, product candidates and technology. Given the amount of time required for the development, testing and
regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such
candidates are commercialized. As a result, our owned and in-licensed patent portfolio may not provide us with sufficient
rights to exclude others from commercializing products similar or identical to ours or otherwise provide us with a
competitive advantage.
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 pharmaceutical compounds used in our
products or product candidates but that are not covered by the claims of our patents;
● the APIs in our current products or product candidates may eventually become commercially available in
generic drug products, and no patent protection may be available with regard to formulation, method of
manufacture or method of use;
● we may not be able to prevent parallel importation of products into the U.S., EU member states and/or other
jurisdictions, which may reduce our profit margin;
● we or our licensors, as the case may be, may fail to meet our 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;
● we or our 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 products or
product candidates and proprietary technologies;
● it is possible that our owned or in-licensed 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;
● we may not be able to obtain patent term extensions or supplementary protection certificates covering our
products;
● 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 product candidates, products or technologies 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 or products;
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● 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 our 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;
● we have engaged in scientific relationships in the past, such as with MSK, and expect to continue to do so
with MSK and/or other third parties in the future. Such third parties may develop adjacent or competing
products to ours that are outside the scope of our licensed patents and/or the respective research
collaboration/agreement with such third parties;
● we may not develop additional proprietary technologies for which we can obtain patent protection;
● it is possible that products, product candidates or diagnostic tests we develop may be covered by third
parties’ patents or other proprietary rights; or
● the patents of others may have an adverse effect on our business.
In addition, during the course of business we have decided not to pursue certain products or processes and we may
do so again in the future. If it is later determined that our activities, product or product candidates infringed the intellectual
property of any third-party, we may be liable for damages, enhanced damages or subjected to an injunction, any of which
could have a material adverse effect on our business.
We also may rely on trade secrets to protect our technology, especially where we do not believe patent protection
is appropriate or obtainable. However, trade secrets are difficult to protect, and we have limited control over the protection
of trade secrets used by our licensors, collaborators and suppliers. Although we use reasonable efforts to protect our trade
secrets, our employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or
willfully disclose our information to competitors or use such information to compete with us. Moreover, our competitors
may independently develop equivalent knowledge, methods and know-how. If our confidential or proprietary information
is divulged to or acquired by third parties, including our competitors, our competitive position in the marketplace will be
harmed and this would have a material adverse effect on our business.
If any of our owned or in-licensed patents are found to be invalid or unenforceable, or if we are otherwise unable
to adequately protect our rights, it could have a material adverse impact on our business and our ability to commercialize or
license our technology products and product candidates. Likewise, our current owned patents and patents in-licensed from
MSK relating to our proprietary technologies and our product candidates comprise patents that are expected to expire on
various dates from 2026 through 2042, without taking into account any possible patent term adjustments, extensions or
supplementary protection. Upon the expiration of our current patents, we may lose the right to exclude others from
practicing the relevant inventions. The expiration of these patents could also have a similar material adverse effect on our
business, results of operations, financial condition and prospects. We own or in-license pending patent applications from
MSK and others covering our proprietary technologies or our product candidates that if issued as patents are expected to
expire from 2031 through 2041, without taking into account any possible patent term adjustments, extensions or
supplementary protections. However, no assurance can be given that the USPTO or relevant foreign patent offices will
grant any of these patent applications. Even if granted, we may fail to obtain patent term extensions or supplementary
protection certificates covering our products.
We may incur substantial costs as a result of litigation or other proceedings relating to patents, and we may be unable to
protect our rights to our product candidates, products and technologies.
If we or our licensors choose to go to court to stop a third-party from using the inventions claimed in our owned or
in-licensed patents, that third-party may ask the court to rule that the patents are invalid and/or should not be enforced
against that third-party. These lawsuits are expensive and would consume time and other resources even if we or they, as
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the case may be, were successful in stopping the infringement of these patents. In addition, there is a risk that the court will
decide that these patents are not valid and that we or they, as the case may be, do not have the right to stop others from
using the inventions.
There is also a risk that, even if the validity of these patents is upheld, the court will refuse to stop the third-party
on the ground that such third-party’s activities do not infringe our owned or in-licensed patents. In addition, the U.S.
Supreme Court has changed some legal principles that affect patent applications, granted patents and assessment of the
eligibility or validity of these patents. As a consequence, issued patents may be found to contain invalid claims according
to the newly revised eligibility and validity standards. Some of our owned or in-licensed patents may be subject to
challenge and subsequent invalidation or significant narrowing of claim scope in proceedings before the USPTO, or during
litigation, under the revised criteria which could also make it more difficult to obtain patents. Similar considerations pertain
to patents granted outside of the United States, for which the validity, enforceability and/or scope of protection may be
influenced by changing national and/or international legal principles.
We, or our licensors, may not be able to detect infringement against our owned or in-licensed patents, as the case
may be, which may be especially difficult for manufacturing processes or formulation patents. Even if we or our licensors
detect infringement by a third party of our owned or in-licensed patents, we or our licensors, as the case may be, may
choose not to pursue litigation against or settlement with the third party. If we, or our licensors, later sue such third party
for patent infringement, the third party may have certain legal defenses available to it, which otherwise would not be
available except for the delay between when the infringement was first detected and when the suit was brought. Such legal
defenses may make it impossible for us or our licensors to enforce our owned or in-licensed patents, as the case may be,
against such third party. If another party questions the patentability of any of our claims in our owned or in-licensed U.S.
patents, the third party can request that the USPTO review the patent claims such as in an inter partes review, ex parte re-
exam or post-grant review proceedings. These proceedings are expensive and may result in a loss of scope of some claims
or a loss of the entire patent. In addition to potential USPTO review proceedings, we may become a party to patent
opposition proceedings in the European Patent Office, or EPO, or similar proceedings in other foreign patent offices, where
either our owned or in-licensed foreign patents are challenged. The costs of these opposition or similar proceedings could
be substantial, and such oppositions may result in a loss of scope of some claims or a loss of the entire patent. An
unfavorable result at the USPTO, EPO or other patent office may result in the loss of our right to exclude others from
practicing one or more of our inventions in the relevant country or jurisdiction, which could have a material adverse effect
on our business.
We may incur substantial costs as a result of litigation or other proceedings relating to intellectual property rights other
than patents, and we may be unable to protect our rights to our product candidates, products and technologies.
We may rely on trade secrets and confidentiality or nondisclosure agreements to protect our proprietary
technology and know-how, especially where we do not believe patent protection is appropriate or obtainable. Where we
enter into agreements imposing confidentiality or nondisclosure obligations upon employees or third parties to protect our
proprietary technology and know-how, these confidentiality obligations may be breached or may not provide meaningful
protection for our trade secrets or proprietary technology and know-how. Furthermore, despite the existence of such
confidentiality and nondisclosure agreements, or other contractual restrictions, we may not be able to prevent the
unauthorized disclosure or use of our confidential proprietary information or trade secrets by consultants, vendors, former
employees or current employees. In addition, adequate remedies may not be available in the event of an unauthorized
access, use, or disclosure of our trade secrets or know-how.
Enforcing a claim that a third party illegally obtained and is using any of our trade secrets is expensive and time
consuming, and the outcome is unpredictable. In addition, courts outside the United States may be less willing to protect
trade secrets effectively or to the same extent as the laws of the United States. 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.
Third parties may obtain knowledge of our trade secrets through independent development or other access by
legal means. The occurrence of such events could limit or preclude our ability to produce or sell our products in a
competitive manner or otherwise have a material adverse effect on our business.
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If we are sued for infringing patents or other intellectual property rights of third parties, it will be costly and time
consuming, and an unfavorable outcome in that litigation may have a material adverse effect on our business.
Our commercial success depends upon our ability to develop, manufacture, market and sell our products or
product candidates and use our proprietary technologies without infringing the proprietary rights of third parties. U.S. and
foreign issued patents and pending patent applications, which are owned by third parties, exist in the fields relating to our
product candidates or products. As the biotechnology and pharmaceutical industries expand and more patents are issued,
the risk increases that others may assert that our products or product candidates infringe others’ patent rights. 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 or
products, technologies or methods.
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 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 related to our products or product candidates, technology
covered by our owned and in-licensed issued patents or our pending applications, or that we or, if applicable, a licensor
were the first to invent the technology. Our competitors may have filed, and may in the future file, patent applications
covering our products or technology similar to ours. Any such patent application may affect technology covered by our
owned and in-licensed patent applications or patents, 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.
There is a substantial amount of litigation involving patent and other intellectual property rights in the
biotechnology and pharmaceutical industries generally. We may be subject to, or threatened with litigation by third parties
having patent or other intellectual property rights alleging that our product candidates or products and/or proprietary
technologies infringe, misappropriate or violate their intellectual property rights.
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
products, 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, it may not be offered on reasonable terms and may require that we
pay substantial royalties, upfront fees and other amounts, and/or grant cross-licenses to intellectual property
rights for our products; and
● redesigning our products or product candidates or processes so they do not infringe, which may not be
possible or may require substantial monetary expenditures and time.
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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.
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 EPO, or other foreign patent office. The costs of these opposition proceedings could
be substantial, and such proceedings may consume our time or other resources. If we fail to obtain a favorable result at the
USPTO, EPO or other patent office then we may be exposed to litigation by a third party alleging that the patent may be
infringed by our product candidates or products or proprietary technologies.
We may not be able to protect our intellectual property rights with patents throughout the world.
Filing, prosecuting and defending patents on all of our products or product candidates throughout the world would
be prohibitively expensive. Competitors may use our technology 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 in the United States. These products may compete with
our products or product candidates 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 so competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in
foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the
enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals, which
could make it difficult for us 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.
Obtaining and maintaining our patent protection depends upon 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.
The USPTO and various foreign governmental patent agencies require compliance with a number of procedural,
documentary, fee payment and other provisions during the patent prosecution process and following the issuance of a
patent. Our failure to comply with such requirements could result in abandonment or lapse of a patent or patent application,
resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able
to enter the market earlier than would otherwise have been the case if our patent were in force, which would have a
material adverse effect on our business.
Failure to secure trademark registrations could adversely affect our business.
If we do not successfully register our trademarks, we may encounter difficulty in enforcing, or be unable to
enforce, our trademark rights against third parties, which could adversely affect our business and our ability to effectively
compete in the marketplace. When we file registration applications for trademarks relating to our products or product
candidates, those applications may be rejected, and registered trademarks may not be obtained, maintained or enforced.
During trademark registration proceedings in the United States and foreign jurisdictions, we may receive rejections. We are
given an opportunity to respond to those rejections, but we may not be able to overcome such rejections. In addition, in the
United States Patent and Trademark Office and in comparable agencies in many foreign jurisdictions, third parties may
oppose pending trademark registration applications or seek to cancel registered trademarks. Opposition or cancellation
proceedings may be filed against our trademarks, and our trademark registrations may not survive such proceedings.
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In addition, any proprietary name we use, such as DANYELZA, or propose to use with any of our products or
product candidates in the United States must be approved by the FDA, regardless of whether we have registered, or applied
to register, the proposed proprietary name as a trademark. The FDA typically conducts a review of proposed product
names, including an evaluation of potential for confusion with other product names. If the FDA objects to any of our
proposed proprietary product names, we may be required to expend significant additional resources in an effort to identify
a suitable proprietary product name that would qualify under applicable trademark laws, not infringe the existing rights of
third parties and be acceptable to the FDA.
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, which may have a material adverse effect on our business.
We rely on our trademarks, trade names, service marks, domain names and logos, as appropriate, to market our
brands and to build and maintain brand recognition. We rely on trademark protections to protect our business and our
products and services. We generally seek to register and continue to register and renew, or secure by contract where
appropriate, trademarks, trade names and service marks as they are developed and used, and reserve, register and renew
domain names as appropriate. Our registered trademarks or unregistered trademarks, trade names or service marks may be
challenged, infringed, circumvented or declared generic or determined to be infringing on other marks. Effective trademark
protection may not be available or may not be sought in every country in which our products are made available and
contractual disputes may affect the use of marks governed by private contract. Similarly, not every variation of a domain
name may be available or be registered, even if available. We may not be able to protect our rights to these trademarks,
trade names, service marks and domain names, which we need to build brand name recognition in our markets of interest.
And while we seek to protect the trademarks we use in the United States and in other countries, we may be unsuccessful in
obtaining registrations and/or otherwise protecting these trademarks. If that were to happen, we may be prevented from
using our names, brands and trademarks unless we enter into appropriate royalty, license or coexistence agreements. Over
the long-term, if we are unable to establish name recognition based on our trademarks, trade names, service marks and
domain names, then we may not be able to compete effectively, resulting in a material adverse effect on our business.
Risks related to employee matters and managing growth
We depend heavily on our executive officers. Our future success depends on our ability to retain our senior
management and other key executives and to attract, retain and motivate qualified personnel. The loss of their services
could materially harm our business.
We are highly dependent on the members of our executive management as well as the other principal members of
our management and scientific teams. Our agreements with any of them do not prevent them from terminating their
employment with us at any time.
In April 2022 we announced the departure of our then Chief Executive Officer and in October 2023, we
announced additional management transitions, including the appointment of a new President and Chief Executive Officer
and transition of our President and Interim Chief Executive Officer to Chief Business Officer. We cannot assure you that
any management change will not have an adverse impact on our business operations. The loss of the services of members
of our executive management team and the failure to find appropriate replacements in a timely fashion could impede the
achievement of our research, development and commercialization objectives.
Our President and Chief Executive Officer, Michael Rossi, joined us in November 2023. It is important to our
success that Mr. Rossi, as well as any other key employees that join us in the future, quickly adapt to and excel in their new
roles. If they are unable to do so, our business and financial results could be materially adversely affected.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel remains
critical to our success. We currently conduct a significant portion of our operations in the New York City metropolitan area,
in a region that is headquarters to many other biopharmaceutical companies and many academic and research institutions.
Competition for skilled personnel is intense and the turnover rate can be high, which may limit our ability to
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hire and retain highly qualified personnel on acceptable terms or at all. We expect that we will need to recruit talent from
outside of our region, and doing so may be costly and difficult.
To induce valuable employees to join and remain at our company, in addition to salary and cash incentives, we
have provided, and intend to continue to provide, stock option and/or restricted stock grants that vest over time. The value
to employees of these equity grants that vest over time may be significantly affected by movements in the fair market value
of our capital stock that are beyond our control, and may at any time be insufficient to counteract more lucrative offers
from other companies. Although we have employment agreements with our key employees, these employment agreements
provide for at-will employment, which means that any of our employees could leave our employment at any time, with or
without notice. We do not maintain “key person” insurance for any of our executives or other employees.
In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in
formulating our research and development and commercialization strategy. Our consultants and advisors may be employed
by employers other than us and may have commitments under consulting or advisory contracts with other entities that may
limit their availability to us.
We may need to increase the size of our organization in the future, and we may experience difficulties managing
growth. If we are unable to manage the anticipated growth of our business, our future revenue and operating results
may be adversely affected.
We may need to expand the size of our organization in the future. The growth we may experience in the future
may provide challenges to our organization, requiring us to also rapidly expand other aspects of our business, including our
manufacturing operations. Rapid expansion in personnel may result in less experienced people producing and selling our
products, which could result in unanticipated costs and disruptions to our operations. If we cannot scale and manage our
business appropriately, our potential growth may be impaired and our financial results will suffer.
Risks related to our common stock
Our executive officers, directors and principal stockholders have ownership of a significant percentage of our stock and
will be able to exercise significant influence over matters subject to stockholder approval.
As of February 22, 2024, our executive officers, directors and our stockholders, who own more than 5% of our
outstanding common stock in the aggregate beneficially, own shares representing approximately 22.6% of our common
stock. As a result, if these stockholders were to choose to act together, they would be able to exert significant influence
over all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these
persons, if they chose to act together, would have significant influence over the election of directors and approval of any
merger, consolidation or sale of all or substantially all of our assets. This concentration of voting power could delay or
prevent an acquisition of our company on terms that other stockholders may desire.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of us, which may be
beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our
current management or members of our board of directors.
Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may
discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider
favorable, including transactions in which a stockholder might otherwise receive a premium for their shares. These
provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock,
thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for
appointing the members of our management team, these provisions may frustrate or prevent any attempts by our
stockholders to replace or remove our current management by making it more difficult for stockholders to replace members
of our board of directors. Among other things, these provisions:
● establish a classified board of directors such that not all members of the board are elected at one time;
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● allow the authorized number of our directors to be changed only by resolution of our board of directors;
● limit the manner in which stockholders can remove directors from the board;
● establish advance notice requirements for stockholder proposals that can be acted on at stockholder meetings
and nominations to our board of directors;
● require that stockholder actions must be effected at a duly called stockholder meeting and prohibit actions by
our stockholders by written consent;
● limit who may call stockholder meetings;
● authorize our board of directors to issue preferred stock without stockholder approval, which could be used
to institute a “poison pill” that would work to dilute the stock ownership of a potential hostile acquirer,
effectively preventing acquisitions that have not been approved by our board of directors; and
● require the approval of the holders of at least 75% of the votes that all our stockholders would be entitled to
cast to amend or repeal certain provisions of our charter or bylaws.
Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the
General Corporation Law of the State of Delaware, or DGCL, which prohibits a person who owns in excess of 15% of our
outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in
which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved
in a prescribed manner.
Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited.
Our ability to utilize our net operating loss carry-forwards and certain other tax attributes depends on many
factors, including our future income, which cannot be assured, and the impact of any tax reform legislation or proposals.
Under current law, U.S. federal net operating loss carryforwards generated in tax years beginning before January 1, 2018
may be carried forward for 20 tax years. U.S. federal net operating loss carryforwards generated in tax years beginning
after December 31, 2017 may be carried forward indefinitely, but the deductibility of such net operating loss carryforwards
is limited to 80% of taxable income. It is uncertain if and to what extent various states will conform to U.S. federal income
tax law.
Under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, if a corporation
undergoes an “ownership change” (generally defined as a greater than 50 percentage point cumulative change (by value) in
the equity ownership of certain stockholders over a rolling three-year period), an annual limitation is imposed on the
corporation’s use of its change net operating loss carry-forwards and certain other pre-change tax attributes to offset its
post-change taxable income or taxes. Based on our analysis of our Section 382 ownership changes through December 31,
2022, we believe that it is more likely than not that none of our net operating loss carryforwards will expire because of
existing limitations under Section 382 of the Code, due to the large size of such limitations. We may experience Section
382 ownership changes in the future as a result of subsequent shifts in our equity ownership, many of which are outside our
control. State net operating loss carryforwards may be similarly limited, and there may be periods during which the use of
such net operating loss carryforwards is suspended or otherwise limited, which could accelerate or permanently increase
our state taxes owed.
Changes in tax laws or regulations that are applied adversely to us or our customers may have a material adverse
effect on our business, cash flow, financial condition, or results of operations.
New income, sales and use, or other tax laws or regulations could be enacted at any time, and existing tax laws
and regulations could be interpreted, modified, or applied adversely to us. These events could require us to pay additional
taxes on a prospective or retroactive basis, as well as penalties, interest, and other costs for past amounts
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deemed to be due. New laws, or laws that are changed, modified, or interpreted or applied differently also could increase
our compliance, operating, and other costs, as well as the costs of our products. Recent legislation in the United States,
commonly referred to as the Inflation Reduction Act, enacts a 15% minimum tax on the adjusted financial statement
income of certain large U.S. corporations for tax years beginning after December 31, 2022, as well as a 1% excise tax on
stock repurchases made by public corporations after December 31, 2022. Further, the Tax Cuts and Jobs Act of 2017, or the
Tax Act, enacted many significant changes to U.S. tax laws, some of which were further modified by the Coronavirus Aid,
Relief, and Economic Security Act, and may be modified in the future by the current or a future presidential administration.
Among other changes, the Tax Act amended the Code to require that certain research and experimental expenditures be
capitalized and amortized over five years if incurred in the United States or fifteen years if incurred in foreign jurisdictions
for tax years beginning after December 31, 2021. Although the U.S. Congress has considered legislation that would defer,
modify, or repeal the capitalization and amortization requirement, there is no assurance that such changes will be made. If
the requirement is not deferred, repealed, or otherwise modified, it may increase our cash taxes and effective tax rate. In
addition, it is uncertain if and to what extent various states will conform to current federal law, or any newly enacted
federal tax legislation. Changes in corporate tax rates, the realization of net operating losses and other deferred tax assets
relating to our operations, the taxation of foreign earnings, and the deductibility of expenses could have a material impact
on the value of our deferred tax assets and could increase our future tax expense.
Because we do not anticipate paying any cash dividends on our capital stock for the foreseeable future, capital
appreciation, if any, of our common stock will be the source of gain associated with investment in our common stock.
We have never declared or paid cash dividends on our capital stock. We currently intend to retain all of our future
earnings, if any, to finance the growth and development of our business. In addition, the terms of any future debt
agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be
the sole source of gain associated with investment in our common stock for the foreseeable future.
Future sales of common stock by us or our stockholders may cause substantial dilution to our existing stockholders and
have an adverse effect on the then prevailing market price of our common stock.
Sales of a substantial number of shares of our common stock in the public market could occur at any time. These
sales, or the perception in the market that the holders of a large number of shares intend to sell shares, could reduce the
market price of our common stock.
Sales of our common stock may be made by holders of our public float or by holders of restricted securities in
compliance with the provisions of Rule 144 of the Securities Act of 1933, or the Securities Act. There were 43,777,105
shares of common stock outstanding as of February 22, 2024. In addition, we have issued stock options and other equity
awards under our equity compensation plans. The shares underlying these awards are registered on a registration statement
on Form S-8. As a result, upon vesting, these shares can be freely exercised, as applicable, and sold in the public market
upon issuance, subject to volume limitations applicable to affiliates.
We have also registered 14,278,887 shares of our common stock that we may issue under our equity compensation
plans as of February 22, 2024, and we plan to increase that number further.
Also, in general under Rule 144, a non-affiliated person who has satisfied a six-month holding period in a
company registered under the Exchange Act, as amended, may, sell their restricted common stock without volume
limitation, so long as the issuer is current with all reports under the Exchange Act in order for there to be adequate common
public information.
Affiliated persons may also sell their common shares held for at least six months, but affiliated persons will be
required to meet certain other requirements, including manner of sale, notice requirements and volume limitations. Non-
affiliated persons who hold their common shares for at least one year will be able to sell their common stock without the
need for there to be current public information in the hands of the public. Future sales of shares of our public float or by
restricted common stock made in compliance with Rule 144 may have an adverse effect on the then prevailing market
price, if any, of our common stock.
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We may issue additional shares of our common stock or securities convertible into our common stock from time
to time in connection with a financing, acquisition, investments or otherwise. Any such issuance could result in substantial
dilution to our existing stockholders and cause the trading price of our common stock to decline.
We currently have on file with the SEC a shelf registration statement, which allows us to offer and sell certain
registered securities, such as common stock, preferred stock, debt securities, warrants and units, from time to time pursuant
to one or more offerings at prices and terms to be determined at the time of sale. We may sell common stock, convertible
securities or other equity or debt securities in one or more transactions at prices and in a manner we determine from time to
time. If we sell common stock, convertible securities or other equity or debt securities in more than one transaction,
investors may be materially diluted by subsequent sales. These sales may also result in material dilution to our existing
stockholders, and new investors could gain rights superior to our existing stockholders.
Our amended and restated certificate of incorporation designates the state courts in the State of Delaware or, if no state
court located within the State of Delaware has jurisdiction, the federal court for the District of Delaware, as the sole and
exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could
discourage lawsuits against us and our directors, officers and employees.
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection
of an alternative forum, the Court of Chancery of the State of Delaware (or, if the Court of Chancery does not have
jurisdiction, the federal district court for the District of Delaware) is the sole and exclusive forum for any derivative action
or proceeding brought on our behalf, any action asserting a claim of breach of a fiduciary duty owed by any of our
directors, officers or employees to our company or our stockholders, any action asserting a claim against us arising
pursuant to any provision of the DGCL or our amended and restated certificate of incorporation or amended and restated
bylaws, or any action asserting a claim against us governed by the internal affairs doctrine. This exclusive forum provision
may limit the ability of our stockholders to bring a claim in a judicial forum that such stockholders find favorable for
disputes with us or our directors, officers or employees, which may discourage such lawsuits against us and our sales of our
common stock by us, our insiders or other stockholders.
The price of our common stock has been and is likely to be volatile and fluctuate substantially, which could result in
substantial losses for purchasers of our common stock. Also, the volatility of our stock price may adversely affect our
ability to attract equity funding in the future on reasonable terms or at all.
Our stock price has been and is likely to be volatile. The stock market in general and the market for
pharmaceutical and biotechnology companies in particular have experienced extreme volatility that has often been
unrelated to the operating performance of particular companies. Since our common stock began trading on The Nasdaq
Global Select Market on September 22, 2018, our stock has traded at prices as low as $2.70 per share and as high as $55.22
per share through February 22, 2024. In the last 12 months, our stock has traded at prices as low as $2.83 per share and as
high as $17.01 per share through February 22, 2024. As a result of this volatility, investors in our common stock may not
be able to sell their shares at or above the prices they paid. Further, as a result of this volatility it may be difficult for us to
attract new equity investments, including additional public offerings of our common stock, on terms we consider
reasonable, or at all.
The market price for our common stock may be influenced by many factors, including:
● our ability to successfully launch and commercialize DANYELZA and any other product candidates, if
approved;
● the timing and results of clinical trials of any of our product candidates;
● regulatory actions with respect to our products or product candidates or our competitors’ products and
product candidates;
● the success of existing or new competitive products or technologies;
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● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures,
collaborations or capital commitments;
● establishment or termination of collaborations for our products and product candidates or development
programs;
● failure or discontinuation of any of our development programs;
● results of clinical trials of product candidates of our competitors;
● regulatory or legal developments in the United States and other countries;
● developments or disputes concerning patent applications, issued patents or other proprietary rights;
● the recruitment or departure of key personnel;
● the level of revenues and expenses related to any of our products, product candidates or development
programs;
● the results of our efforts to discover, develop, acquire or in-license additional product candidates or products;
● our ability to accurately forecast demand for our products, actual or anticipated changes in forecasts of
financial performance, or changes in development timelines;
● announcement or expectation of additional financing efforts;
● sales of our common stock by us, our insiders or other stockholders;
● variations in our financial results or those of companies that are perceived to be similar to us;
● changes in estimates or recommendations by securities analysts, if any, that cover our stock;
● changes in the structure of healthcare payment systems;
● market conditions and investor sentiment in the pharmaceutical and biotechnology sectors;
● general economic, industry and market conditions, such as an increased rate of inflation, increased cost of
goods, supply-chain disruptions and uncertain global financial markets, and geopolitical events, such as the
conflict between Ukraine and Russia and related sanctions; and
● the other factors described in this “Risk Factors” section.
In the past, securities class-action litigation has often been instituted against companies following periods of
volatility in the price of their common stock. For example, following volatility in the price of our common stock following
the ODAC meeting in October 2022, one of our stockholders filed a putative class action lawsuit in the federal district
court for alleged violations of the Securities Exchange Act of 1934, as amended. Litigation could result in substantial costs
and divert our management’s attention and resources, which could have a material and adverse effect on our financial
condition, business, and the per share trading price of our common stock.
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We, our Chief Business Officer and Vice Chairman Mr. Thomas Gad, and our former Chief Executive Officer, Dr.
Claus Juan Møller San Pedro, have been named as defendants in a lawsuit that could result in substantial costs and
divert management’s attention, and we have also been named in other lawsuits. Any of these lawsuits could result in
substantial costs and divert management’s attention.
As described elsewhere in this report in “Part II, Item 1—Legal Proceedings,” we and our Chief Business Officer
and Vice Chairman Mr. Thomas Gad, and our former Chief Executive Officer Dr. Claus Juan Møller San Pedro, have been
named as defendants in a class-action lawsuit that alleges that we and the individuals named in the lawsuit violated
Sections 10(b) and/or 20(a) of the Exchange Act and Rule 10b-5 promulgated thereunder. Further, as also described
elsewhere in this report in “Part II, Item 1—Legal Proceedings,” on February 8, 2023, Jeffrey Hazelton, a purported Y-
mAbs stockholder, filed a putative stockholder derivative action. These complaints seek, among other things, unspecified
damages, and reasonable costs and expenses, including attorneys’ fees.
As of the date of this report, we are unable to predict the outcome of these matters. Although we have insurance, it
provides for a substantial retention of liability and is subject to limitations and may not cover a significant portion, or any,
of the expenses or liabilities we may incur or be subject to in connection with the class-action lawsuit or other litigation to
which we are party. Moreover, any conclusion of these matters in a manner adverse to us and for which we incur
substantial costs or damages not covered by our directors’ and officers’ liability insurance would have a material adverse
effect on our financial condition and business. In addition, the litigation has caused and will continue to cause our
management and board of directors to divert time and attention to the litigation and could adversely impact our reputation
and further divert management and our board of directors’ attention and resources from other priorities, including the
execution of our business plan and strategies that are important to our ability to grow our business and advance our product
candidates, any of which could have a material adverse effect on our business. In addition, additional lawsuits may be filed,
the conclusion of which in a manner adverse to us and for which we incur substantial costs or damages not covered by our
directors’ and officers’ liability insurance would have a material adverse effect on our financial condition and business.
General risk factors
Our business, financial condition and results of operations have been and may in the future be adversely affected by
pandemics or similar health crises, macroeconomic conditions and by geopolitical events, including the global conflict
resulting from the invasion of Ukraine by Russia, and sanctions related thereto, which resulted in the suspension of our
clinical trial and regulatory activities in Russia, and the state of war between Israel and Hamas.
Our financial condition, results of operations, business and cash flow may be negatively affected by general
conditions in the global economy and in the global financial markets and uncertainty about economic stability. The global
economy has experienced extreme volatility and disruptions, including as a result of the COVID-19 pandemic, as well as
from international conflicts, terrorism or other geopolitical events, such as the Russian invasion of Ukraine, and related
sanctions and other economic disruptions or concerns.
Sanctions imposed by the United States and other countries in response to such conflicts, may also adversely
impact the financial markets and the global economy, and the economic countermeasures by the affected countries or
others could exacerbate market and economic instability. On February 24, 2022, Russia initiated significant military action
against Ukraine. In response, the United States and certain other countries imposed significant sanctions and trade actions
against Russia and could impose further sanctions, trade restrictions, and other retaliatory actions if the conflict continues
or worsens. It is not possible to predict the broader consequences of the conflict, including related geo-political tensions,
and the measures and retaliatory actions that will be taken by the United States and other countries in respect thereof, as
well as any countermeasures or retaliatory actions Russia may take in response, are likely to cause regional instability and
geo-political shifts and could materially adversely affect global trade, currency exchange rates, regional economies, and the
global economy. While it is difficult to anticipate the ultimate impact of any of the foregoing on our company in particular,
the conflict and actions taken in response to the conflict has caused us to terminate our clinical trials and suspend our
regulatory activities to obtain marketing authorization for DANYELZA in Russia although we may still provide drug to be
used on a compassionate use basis. Additional actions that we or others may take in response to the conflict could increase
our costs, disrupt our supply chain, impair our ability to raise or access additional
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capital when needed on acceptable terms, if at all, or otherwise adversely affect our business, financial condition, and
results of operations. For additional detail regarding this conflict, see the risk factor above “—Russia’s invasion of Ukraine
and ancillary developments may have an adverse effect on our business.”
In addition, on October 7, 2023, Hamas militants infiltrated Israel’s southern border from the Gaza Strip and
conducted a series of attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war
against Hamas. It is currently not possible to predict the duration or severity of the ongoing conflict, whether it will
develop into a wider conflict or its effects on our business, operations and financial conditions. The ongoing conflict is
rapidly evolving and developing and may have a material adverse impact on Takeda Israel’s ability to sell our products
and/or collect receivables from customers in the State of Israel pursuant to the Takeda Licensing Agreement as well as on
Takeda Israel’s ability to pursue the development, marketing and/or commercialization of DANYELZA in the State of
Israel, West Bank and Gaza Strip, which may ultimately have an adverse impact on the amount of royalties we receive
pursuant to the Takeda Licensing Agreement.
There can be no assurance that further deterioration in credit and financial markets, global banking stability, and
confidence in economic conditions will not occur. A severe or prolonged economic downturn could result in a variety of
risks to our business, including weakened demand for any product candidates we may develop and our ability to raise
additional capital when needed on acceptable terms, if at all. A weak or declining economy could also strain our suppliers,
possibly resulting in supply disruption. If the equity and credit markets deteriorate, it may make any necessary debt or
equity financing more difficult, more costly, and more dilutive. Failure to secure any necessary financing in a timely
manner and on favorable terms could impair our ability to achieve our growth strategy, could harm our financial
performance and stock price and could require us to delay or abandon clinical development plans. In addition, there is a
risk that our current or future service providers, manufacturers or other collaborators may not survive such difficult
economic times, which could directly affect our ability to attain our operating goals on schedule and on budget. We cannot
anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact
our business.
If we engage in future acquisitions, partnerships, or other strategic transactions, this may increase our capital
requirements, dilute our stockholders if we issue equity securities, cause us to incur debt or assume contingent
liabilities, and subject us to other risks.
We may evaluate various acquisitions, partnerships or other strategic transactions, including licensing or acquiring
complementary products, intellectual property rights, technologies, or businesses. Any potential acquisition or strategic
partnership may entail numerous risks, including:
● increased operating expenses and cash requirements;
● the assumption of additional indebtedness or contingent liabilities;
● the issuance of our equity securities;
● assimilation of operations, intellectual property and products of an acquired company, including difficulties
associated with integration;
● the diversion of our management’s attention from our existing product programs and initiatives in pursuing
such a strategic merger or acquisition;
● retention of key employees, the loss of key personnel, and uncertainties in our ability to maintain key
business relationships;
● risks and uncertainties associated with the other party to such a transaction, including the prospects of that
party and their existing products or product candidates and regulatory approvals; and
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● our inability to generate revenue from acquired technology and/or products sufficient to meet our objectives
in undertaking the acquisition or even to offset the associated acquisition and maintenance costs.
In addition, if we undertake acquisitions, we may issue dilutive securities, assume or incur debt obligations, incur
large one-time expenses and acquire intangible assets that could result in significant future amortization expense.
Moreover, we may not be able to locate suitable acquisition opportunities, which could impair our ability to grow or obtain
access to technology or products that may be important to the development of our business.
We expect our operating results to fluctuate in future periods, which may adversely affect our stock price.
Our operating results have fluctuated in the past, and we believe they will continue to do so in the future. Our
operating results may fluctuate due to the level of success of our commercial efforts, as well as the variable nature of our
operating expenses as a result of the timing and magnitude of expenditures. In one or more future periods, our results of
operations may fall below the expectations of securities analysts and investors. In that event, the market price of our
common stock could decline.
A variety of risks associated with operating our business internationally, including through collaboration partners,
could materially adversely affect our business.
We have obtained and plan to continue to seek regulatory approval of our product candidates outside of the United
States. We also have existing commercialization collaborations in certain territories outside the United States such as with
SciClone, Takeda Israel, Swixx Biopharma AG, Adium, and WEP Clinical Ltd. Takeda Israel obtained regulatory approval
for DANYELZA in Israel in August 2022 and we obtained regulatory approval for DANYELZA in China in December
2022. In May 2023, we obtained regulatory approval for DANYELZA in Brazil and in September 2023, we obtained
regulatory approval for DANYELZA in Mexico. Accordingly, we and our existing and potential collaborators in
jurisdictions outside the US, are subject to additional risks related to operating in foreign countries, including:
● differing regulatory requirements in foreign countries;
● unexpected changes in tariffs, trade barriers, price and exchange controls, and other regulatory requirements;
● economic weakness, including inflation, or political instability in particular foreign economies and markets;
● compliance with tax, employment, immigration, and labor laws for employees living or traveling abroad;
● foreign taxes, including local transfer pricing regulations and withholding of payroll taxes;
● foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and
other obligations incident to doing business in another country;
● difficulties staffing and managing foreign operations;
● workforce uncertainty in countries where labor unrest is more common than in the United States;
● potential liability under the FCPA, or OFAC, Anti-Money Laundering Program as required by the Bank
Secrecy Act and its implementing regulations, or comparable foreign laws;
● challenges enforcing our contractual and intellectual property rights, especially in those foreign countries that
do not respect and protect intellectual property rights to the same extent as the United States;
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● production shortages resulting from any events affecting raw material supply or manufacturing capabilities
abroad; and
● business interruptions resulting from geo-political actions, including war and terrorism.
These and other risks associated with our current and planned international operations may materially adversely
affect our ability to attain or maintain profitable operations.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and
expenses.
Our operations, and those of our third-party research institution collaborators, CROs, CMOs, suppliers, other
contractors and consultants, could be subject to earthquakes, power shortages, telecommunications failures, water
shortages, droughts, floods, hurricanes, typhoons, fires, extreme weather conditions, climate change events, medical
epidemics, terrorist activities, wars or other armed conflicts, geopolitical tensions, such as the ongoing conflict between
Russia and Ukraine and related sanctions and the state of war between Hamas and Israel and a potential larger conflict,
cyber security attacks and other natural or man-made disasters or business interruptions, for which we are predominantly
self-insured, and other severe hazards or global health crises, such as an outbreak of Ebola or COVID-19, or other actual or
threatened epidemic, pandemic, outbreak and spread of a communicable disease or virus, in the countries where we operate
or plan to sell our products, if approved, could adversely affect our operations and financial performance. In addition, we
rely on our third-party research institution collaborators for conducting research and development of our product
candidates, and they may be affected by government shutdowns or withdrawn funding. The occurrence of any of these
business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. We
rely on third-party manufacturers to produce and process DANYELZA, and our other product candidates. Our ability to
obtain clinical supplies of our product candidates could be disrupted if the operations of these suppliers are affected by a
man-made or natural disaster or other business interruption. Damage or extended periods of interruption to our third-party
collaborators’, including MSK’s, corporate, development or research facilities due to fire, natural disaster, power loss,
communications failure, unauthorized entry or other events could cause us to cease or delay development of some or all of
our product candidates. Although we intend to maintain property damage and business interruption insurance coverage on
these facilities, our insurance might not cover all losses under such circumstances and our business may be seriously
harmed by such delays and interruption. The ultimate extent of the impact of any epidemic, pandemic or other global
health crisis, such as COVID-19, on our business, financial condition and results of operations will depend on future
developments which are highly uncertain and cannot be predicted, including new information that may emerge concerning
the duration and severity of such epidemic, pandemic or other global health crisis, actions taken to contain or prevent their
further spread and the pace of global economic recovery following containment of the spread.
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 the sale of DANYELZA and clinical testing of our
product candidates and will face an even greater risk if we commercialize more products. For example, we may be sued if
our product candidates cause or are perceived to cause injury or are found to be otherwise unsuitable during use, clinical
testing, manufacturing, marketing or sale. Any such product liability claims 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
our product candidates. Even successful defense would require significant financial and management resources. Regardless
of the merits or eventual outcome, liability claims may result in:
● decreased demand for our products;
● injury 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;
● a diversion of management’s time and our resources;
● substantial monetary awards to trial participants or patients;
● product recalls, withdrawals or labeling, marketing or promotional restrictions;
● exhaustion of any available insurance and our capital resources;
● the inability to commercialize any product candidate;
● loss of any potential future revenue; and
● a decline in our share 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 DANYELZA or any product candidates we
develop, alone or with collaborators. The amount of clinical trial and product liability insurance coverage that we may
obtain, may not be adequate, we may be unable to maintain such insurance, or we may not be able to obtain additional or
replacement insurance at a reasonable cost, if at all. Our insurance policies may 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 such amounts. Even if our agreements with any future corporate
collaborators entitle us to indemnification against losses, such indemnification may not be available or adequate should any
claim arise.
Our employees, independent contractors, consultants, commercial 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 fraud, misconduct or other illegal activity by our employees, independent
contractors, consultants, commercial partners and vendors. Misconduct by these parties could include intentional, reckless
and negligent conduct that fails to: comply with the regulations of the FDA, the EU and other similar foreign regulatory
requirements; provide true, complete and accurate information to the FDA, the EMA, the European Commission, and other
similar foreign regulatory bodies; 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. As we have obtained FDA approval of DANYELZA and have begun
commercializing DANYELZA in the United States, our exposure under such laws has increased significantly, and our costs
associated with compliance with such laws have increased significantly and are likely to continue to increase. These laws
impact, among other things, our current activities with principal investigators and research patients, as well as proposed
and future sales, marketing and education programs. In particular, 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 in the course of patient recruitment for clinical trials, which could result in regulatory sanctions and
cause serious harm to our reputation. It is not always possible to identify and deter misconduct by employees and other
parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or
unmanaged risks or losses or in
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protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these
laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or
asserting our rights, those actions could have a significant impact on our business, including the imposition of significant
fines or other sanctions.
We may be subject to claims that our licensors, employees, consultants or advisors have wrongfully used or disclosed
alleged trade secrets of their former employers or their clients.
As is common in the biotechnology and pharmaceutical industries, we employ individuals who were previously
employed at other biotechnology or pharmaceutical companies, including our competitors or potential competitors.
Although no claims against us are currently pending, we may be subject to claims that these employees or we have
inadvertently or otherwise used or disclosed trade secrets or other proprietary information of their former employers.
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 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.
The increasing use of social media platforms presents new risks and challenges.
Social media is increasingly being used to communicate about our drug, clinical development programs, and the
diseases our drug and drug candidates are being developed to treat, and we are utilizing what we believe is appropriate
social media in connection with our commercialization efforts for DANYELZA and we intend to do the same for our future
products, if approved. Social media practices in the biopharmaceutical industry continue to evolve and regulations relating
to such use are not always clear. This evolution creates uncertainty and risk of noncompliance with regulations applicable
to our business, resulting in potential regulatory actions against us. For example, patients may use social media channels to
comment on their experience in an ongoing blinded clinical study or to report an alleged adverse event, or AE. When such
disclosures occur, there is a risk that we fail to monitor and comply with applicable AE reporting obligations or we may not
be able to defend our business or the public’s legitimate interests in the face of the political and market pressures generated
by social media due to restrictions on what we may say about our investigational products. There is also a risk of
inappropriate disclosure of sensitive information or negative or inaccurate posts or comments about us on any social
networking website. If any of these events were to occur or we otherwise fail to comply with applicable regulations, we
could incur liability, face regulatory actions, or incur other harm to our business.
If securities analysts do not publish research or reports about our business or if they publish negative evaluations of our
stock, the price of our stock could decline.
The trading market for our common stock relies in part on the research and reports that industry or financial
analysts publish about us or our business. If one or more of the analysts covering our business downgrades their
evaluations of our stock, the price of our stock could decline. If one or more of these analysts cease to cover our stock, we
could lose visibility in the market for our stock, which in turn could cause our stock price to decline.
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If we fail to maintain proper and effective internal control over financial reporting, our ability to produce accurate and
timely consolidated financial statements could be impaired, which could harm our operating results, investors’ views of
us and, as a result, the value of our common stock.
We qualified as a smaller reporting company and as a non-accelerated filer for the years ended December 31, 2023
and 2022. As a public company we are required to provide management’s attestation on internal controls pursuant to
Section 404 of the Sarbanes-Oxley Act. However, as a non-accelerated filer, we are not required to include an attestation
report on internal control over financial reporting issued by our independent registered public accounting firm in this
Annual Report on Form 10-K for the fiscal year ended December 31, 2023.
Our inability to operate controls effectively could cause material weaknesses in our internal control over financial
reporting in the future, could have a material adverse impact on our company and consolidated financial statements and we
may not be able to accurately or timely report our financial condition or results of operations, which may adversely affect
investor confidence in us and, as a result, the value of our common stock. In addition, we may in the future be required to
provide Section 404 of the Sarbanes-Oxley Act, or Section 404, reports by our independent registered public accounting
attesting to the effectiveness of our internal control over financial reporting. An adverse report could have a material
adverse impact on our company and consolidated financial statements, investor confidence in us and, as a result, the value
of our common stock.
The rules governing the standards that must be met for management and, when applicable, our independent
registered public accounting firm to assess our internal control over financial reporting are complex and require significant
documentation, testing, and possible remediation. In connection with our and our independent registered public accounting
firm’s evaluations of our internal control over financial reporting, we may need to upgrade systems, including information
technology, implement additional financial and management controls, reporting systems, and procedures, and hire
additional accounting and finance staff.
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 conducted by us or our independent
registered public accounting firm may reveal deficiencies in our internal control over financial reporting that are deemed to
be material weaknesses or that may require prospective or retroactive changes to our consolidated financial statements or
identify other areas for further attention or improvement. Inferior 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 common
stock. Internal control deficiencies could also result in a restatement of our financial results in the future. We could become
subject to stockholder or other third-party litigation, as well as investigations by the SEC, the Nasdaq Global Select
Market, or other regulatory authorities, which could require additional financial and management resources and could
result in fines, trading suspensions, payment of damages or other remedies. Further, any delay in compliance with the
auditor attestation provisions of Section 404, if and when applicable, could subject us to a variety of administrative
sanctions, including ineligibility for short-form resale registration, action by the SEC and the suspension or delisting of our
common stock, which could reduce the trading price of our common stock and could harm our business.
We will continue to incur costs associated with satisfying our obligations as public company, and our management is
required to devote substantial time to new compliance initiatives.
As a public company, we continue to incur significant legal, accounting and other expenses. In addition, the
Sarbanes-Oxley Act and rules subsequently implemented by the SEC and Nasdaq have imposed various requirements on
public companies, including establishment and maintenance of effective disclosure and financial controls and corporate
governance practices. Our management and other personnel devote a substantial amount of time to these compliance
initiatives. Moreover, these rules and regulations increase our legal and financial compliance costs and make some
activities more time-consuming and costly. For example, these rules and regulations make it more difficult and more
expensive for us to obtain director and officer liability insurance.
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We may be adversely affected by global climate change or by legal, regulatory or market responses to such change.
Increasing stakeholder environmental, social and governance, or ESG, expectations, physical and transition risks
associated with climate change, and emerging ESG regulation and policy requirements may pose risk to our market
outlook, and reputation, financial outlook, cost of capital, supply-chain and production continuity, which may impact our
ability to achieve our business objectives. Changes in environmental and climate change laws or regulations could lead to
additional operational restrictions and compliance requirements upon us or our third-party providers or otherwise could
negatively impact our business. Changes in market dynamics, stakeholder expectations, local, national and international
climate change policies, and the frequency and intensity of extreme weather events on critical infrastructure in the United
States and abroad, all have the potential to disrupt our business and operations. Such events could result in a significant
increase in our costs and expenses and harm our future revenue, cash flows and financial performance. Global climate
change is resulting in, and may continue to result, in certain natural disasters and adverse weather events, such as droughts,
wildfires, storms, sea-level rise and flooding, occurring more frequently or with greater intensity, which could cause
business disruptions and impact employees’ abilities to commute or to work from home effectively. Government failure to
address climate change in line with the Paris Agreement could result in greater exposure to economic and other risks from
climate change and impact our ability to achieve our goals.
ITEM 1B.
UNRESOLVED STAFF COMMENTS.
None.
ITEM 1C.
CYBERSECURITY.
Risk management and strategy
We have implemented and maintain various information security processes designed to identify, assess and
manage material risks from cybersecurity threats to our critical computer networks, third party hosted services,
communications systems, hardware and software, and our critical data, including intellectual property, confidential
information that is proprietary, strategic or competitive in nature, and information related to our clinical trials and product,
product candidates, and technology (“Information Systems and Data”).
We have a multi-stakeholder team to help identify, assess, and manage the Company’s cybersecurity threats and
risks, comprised of representatives from our third-party IT administrator, Legal and Compliance Administration, and
Finance departments. This team, along with our third-party IT service providers, identifies and assesses risks from
cybersecurity threats by monitoring and evaluating our threat environment using various methods including, for example,
by using automated monitoring tools, subscribing to analysis and services that identify cybersecurity threats, conducting
scans of the threat environment, conducting internal and external review of certain data and systems, and having third
parties conduct periodic assessments of our threat environment.
Depending on the environment, we implement and maintain various technical, physical, and organizational
measures, processes, standards and policies designed to manage and mitigate material risks from cybersecurity threats to
our Information Systems and Data, including, for example maintaining an incident response policy and incident detection
and response procedures, disaster recovery and business continuity plans and an IT contingency policy, encrypting certain
data, conducting risk assessments for certain data and systems, implementing certain network security, physical and access
controls, monitoring our systems, providing periodic training to employees and using tools such as penetration testing
tools.
Our assessment and management of material risks from cybersecurity threats are integrated into the Company’s
overall risk management processes. For example, our IT and Legal and Compliance departments work with management
to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material
impact to our business.
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We use third-party service providers to assist us from time to time to identify, assess, and manage material risks
from cybersecurity threats, including for example, our third-party IT service provider, cybersecurity consultants, outside
legal counsel, software providers, and penetration testing firms.
We use third-party service providers to perform a variety of functions throughout our business, including hosting
providers, CROs, and CMOs. We have a vendor management program to manage cybersecurity risks associated with our
use of these providers. The program includes, as appropriate, risk assessments of vendors, reviewing our vendors’
information security program, reports, audits, and imposing relevant contractual obligations on our vendors. Depending on
the nature of the services provided, the sensitivity of the Information Systems and Data at issue, and the identity of the
provider, our vendor management process may involve different levels of assessment designed to help identify
cybersecurity risks associated with a provider and impose contractual obligations related to cybersecurity on the provider.
For a description of the risks from cybersecurity threats that may materially affect the Company and how they
may do so, see our risk factors under Part 1. Item 1A. Risk Factors in this Annual Report on Form 10-K, including under
the heading “If our information technology systems or data, or those of third parties upon which we rely, are or were
compromised, we could experience adverse consequences resulting from such compromise, including but not limited to
regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational
harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences”
Governance
Our board of directors addresses the Company’s cybersecurity risk management as part of its general oversight
function. The board of directors’ audit committee is responsible for overseeing Company’s cybersecurity risk management
processes, including oversight and mitigation of risks from cybersecurity threats.
Our cybersecurity risk assessment and management processes are implemented and maintained by certain
individuals in Company management, including our Director of IT, HR & Administration, and our Chief Financial Officer,
Treasurer and Secretary (CFO).
Our Director of IT, HR & Administration has been responsible for IT and cybersecurity for approximately 15
years across several organizations, and is currently responsible for hiring appropriate personnel, helping to integrate
cybersecurity risk considerations into the Company’s overall risk management strategy, and communicating key priorities
to relevant personnel. Our CFO has had the overall IT and cybersecurity responsibility since inception of the Company in
2015 and is currently responsible for approving IT and cybersecurity related policies, processes, and procedures, approving
related activities and budgets, helping prepare for cybersecurity incidents, and reviewing security assessments and other
security-related reports.
Our cybersecurity incident response policy is designed to escalate certain cybersecurity incidents to members of
management depending on the circumstances, including our CFO and CEO, as appropriate and provides for our
management team to work with the Company’s incident response team to help the Company mitigate and remediate
cybersecurity incidents of which they are notified. In addition, the Company’s incident response policy includes reporting
to the audit committee of the board of directors for certain cybersecurity incidents.
As part of its oversight of the Company’s overall risk management, the audit committee is periodically updated by
our CFO concerning cybersecurity threats and risks and the processes the Company has implemented to address them.
ITEM 2.
PROPERTIES.
Our corporate headquarters are located in New York, New York, where we currently lease 4,312 square feet
pursuant to a lease agreement dated as of January 10, 2018. The term of the lease was six years from the date the Company
began to occupy the premises and the lease was to expire in April 2024. In August 2023, we entered into a
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lease amendment to extend the term to April 2025. In addition, we lease 4,783 square feet of combined office and
laboratory space located in Nutley, New Jersey pursuant to a lease agreement dated as of February 11, 2019, as amended,
which expires on February 14, 2025.
Our wholly owned Danish subsidiary, Y-mAbs Therapeutics A/S, leases approximately 21,955 square feet of
office space in Hørsholm, Denmark pursuant to a lease agreement dated September 26, 2021, which commenced on
November 1, 2021. The lease is expected to last for 48 months, and we have the option, at our discretion, to terminate a
portion of the lease. In January 2023, the Company notified the landlord of the Company’s intention to reduce the leased
premises as a result of the Company’s January 2023 strategic restructuring.
We believe that suitable additional or alternative space for both our U.S. and Danish locations would be available
as required in the future on commercially reasonable terms.
ITEM 3.
LEGAL PROCEEDINGS.
Donoghue vs. Y-mabs Therapeutics, Inc., and Gad
The Company has been named a nominal defendant in a lawsuit filed in the U.S. District Court, Southern District
of New York, on August 25, 2021, by one of the Company’s stockholders, Deborah Donoghue (Case No. 1:21-cv-07182).
The suit names the Company’s Chief Business Officer, and Vice Chairman of the Company’s board of directors, Mr.
Thomas Gad as an additional defendant, and it seeks to compel Mr. Gad to disgorge alleged short swing profits stemming
from a certain transaction involving the Company’s common stock undertaken by Mr. Gad on March 10, 2021 together
with appropriate interest and costs of the lawsuit. On December 17, 2021, Mr. Gad filed a Motion to Dismiss the lawsuit.
On August 8, 2022, the Court denied Mr. Gad’s Motion to Dismiss the lawsuit. The parties have completed documentary
discovery and depositions. On February 1, 2024, both the Plaintiff and Mr. Gad filed their respective motions for summary
judgement. The Company is of the opinion that the claim is without merit and intends to maintain this position in the
proceedings. In addition, the Company has been informed by Mr. Gad that he also believes the claim is without merit, that
he has strong defenses against such claim and that he intends to vigorously defend the action. The Company has assessed
the proceedings and does not believe that it is probable that a gain or a liability will be realized by the Company. As a
result, the Company did not record any loss or gain contingencies for this matter.
In re Y-mAbs Therapeutics, Inc. Securities Litigation
On January 18, 2023, a putative class-action lawsuit was filed against the Company and certain of the Company’s
current and former officers for alleged violations of the U.S. federal securities laws in the United States District Court,
Southern District of New York (Case No.: 1:23-cv-00431). The amended complaint filed on May 23, 2023, asserts claims
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, on behalf of a proposed class
consisting of those who acquired the Company’s common stock between October 6, 2020 and October 28, 2022. The
amended complaint alleges that there were material misrepresentations and/or omissions regarding the FDA’s consideration
of the Company’s BLA for omburtamab for the treatment of pediatric patients with CNS/leptomeningeal metastasis from
neuroblastoma firstly submitted in 2020 and resubmitted in 2022. The amended complaint seeks unspecified damages, and
costs and expenses, including attorneys’ fees. On September 29, 2023, the defendants’ motion to dismiss the amended
complaint was fully briefed. On February 5, 2024, the Court granted in part and denied in part the defendants’ motion to
dismiss. The Court dismissed the plaintiff’s claims relating to three of four categories of challenged statements and
dismissed in part plaintiff’s claims relating to the fourth category of challenged statements. The Court also dismissed one
of the individual defendants from the case. The Company believes that the remaining claims are without merit and intends
to vigorously defend against these claims. The Company has not established a liability for this claim as of December 31,
2023 as the Company does not consider a loss on the claim to be probable.
Hazelton vs. Y-mAbs Therapeutics Inc., and Gad, et al.
The Company has been named a nominal defendant in a lawsuit filed in the Court of Chancery of the State of
Delaware, on February 8, 2023, by a purported stockholder, Jeffrey Hazelton (Case No. 2023-0147-LWW). The
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amended complaint filed on May 12, 2023, purports to bring claims on behalf of the Company against current and former
members of the Company’s board of directors for allegedly awarding themselves excessive compensation for fiscal years
2020 and 2021. The amended complaint seeks, among other things, recovery of alleged excessive compensation, an order
directing the Company to undertake certain corporate governance reforms, and an award of costs and expenses, including
attorneys’ fees. The Court has not yet issued its ruling on the defendants’ motion to dismiss the amended complaint, which
was fully briefed as of September 8, 2023. The Company is of the opinion that the claims are without merit and intends to
maintain this position in the proceedings. The Company has not established a liability for this claim as of December 31,
2023 as the Company does not consider a loss on the claim to be probable.
ITEM 4.
MINE SAFETY DISCLOSURES.
Not applicable.
PART II
ITEM 5.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER
MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.
Certain Information Regarding the Trading of Our Common Stock
Our common stock trades under the symbol “YMAB” on The Nasdaq Global Select Market and has been publicly
traded since September 21, 2018. Prior to this time, there was no public market for our common stock.
Holders of Our Common Stock
As of February 22, 2024 there were 6 holders of record of shares of our common stock. This number does not
include stockholders for whom shares are held in “nominee” or “street” name.
Dividends
We have never declared or paid any cash dividends on our capital stock. We currently intend to retain all available
funds and any future earnings for use in the operation of our business and do not anticipate paying any dividends on our
common stock in the foreseeable future. Any future determination to declare dividends will be made at the discretion of our
board of directors and will depend on our financial condition, operating results, capital requirements, general business
conditions and other factors that our board of directors may deem relevant.
ITEM 6.
Reserved
ITEM 7.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
You should read the following discussion and analysis of our financial condition and results of operations together
with our accompanying consolidated financial statements and related notes thereto included elsewhere in this Annual
Report on Form 10-K. Some of the information contained in this discussion and analysis or set forth elsewhere in this
Annual Report on Form 10-K, including information with respect to our plans and strategy for our business and related
financing, includes forward-looking statements that involve risks and uncertainties. For a detailed discussion of these risks
and uncertainties, see Item 1A “Risk Factors” in this Annual Report on Form 10-K. See also “Forward-Looking
Statements.” We caution the reader not to place undue reliance on these forward-looking statements, which reflect
management’s analysis only as of the date of this Annual Report on Form 10-K. We undertake no obligation to update
forward-looking statements, to reflect events or circumstances occurring after the date of this Annual Report, except as
required by law. For convenience of presentation some of the numbers have been rounded in the text below.
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Overview
We are a commercial-stage biopharmaceutical company focused on the development and commercialization of
novel, antibody-based therapeutic products for the treatment of cancer. We are leveraging our proprietary antibody
platforms and deep expertise in the field of antibodies to develop a broad portfolio of innovative medicines.
Our only approved drug DANYELZA (naxitamab-gqgk) received accelerated approval by the United States Food
and Drug Administration, or the FDA, in November 2020 for the treatment, in combination with Granulocyte-Macrophage
Colony-Stimulating Factor, or GM-CSF, of pediatric patients one year of age and older and adult patients with relapsed or
refractory, or R/R, high-risk neuroblastoma, or NB, in the bone or bone marrow who have demonstrated a partial response,
minor response, or stable disease to prior therapy. We are commercializing DANYELZA in the United States and began
shipping in February 2021. In December 2022, we announced a distribution agreement with WEP Clinical Ltd., or WEP, in
connection with an early access program for DANYELZA in Europe.
DANYELZA has been evaluated in a Phase 2 clinical study in front-line NB, a pilot study of
chemoimmunotherapy for high-risk NB, and is currently being evaluated in a pivotal-stage multicenter trial (Study 201)
which is designed to satisfy the accelerated approval confirmatory study and post-marketing requirements of the FDA, as
well as a Phase 2 clinical study in second-line relapsed osteosarcoma patients.
We are using our proprietary SADA BiDE (two-step Self-Assembly and DisAssembly Bispecific DOTA Engaging
antibody system) Pre-targeted Radioimmunotherapy Platform, or the SADA PRIT Technology, a concept we also refer to
as Liquid RadiationTM, to advance a series of antibody constructs, using a two-step pre-targeting approach. The bispecific
antibody fragments bind to the tumor before a radioactive payload is subsequently injected. The aim is specifically to
deliver the radioactive payload to the tumor while minimizing exposure to normal tissue as indicated in non-clinical
studies.
GD2-SADA for potential use in GD2-positive solid tumors is our first SADA construct, and we had our first
clinical patients dosed in April 2023 in our Phase 1, dose-escalation, single-arm, open-label, non-randomized, multicenter
trial, for the treatment of certain solid tumor cancers, including small cell lung cancer, sarcoma, and malignant melanoma.
We currently have six active treatment sites as of December 2023. We are pleased with our observations so far and in
particular that patients dosed with the GD2-SADA protein have not experienced treatment related pain, dose limiting
toxicities, related severe adverse events or serious adverse events. Based on the SPECT/CT scans performed, we believe
that we have demonstrated proof of concept for GD2-SADA by demonstrating that the GD2-SADA molecules can find and
bind to tumors and that the radionuclide targets the SADA molecules. At this point, we have completed cohorts 1, 2 and 3,
using a radioactive payload of 200 mCi and a two to five days interval between the SADA protein and the payload. The
initial blood PK profile of the construct in these patients dosed with the 0.3 mg/kg and 1 mg/kg protein dose appears to
match our pre-clinical models in terms of clearance data, and the blood PK profiles from patients are comparable and
supportive of the current dose interval of two to five days. We are currently treating patients at 3.0 mg/kg in cohort 4.
The IND for our first hematological target, the CD38-SADA construct for the treatment of patients with Relapsed
or Refractory Non-Hodgkin Lymphoma was cleared in October 2023, and we expect to dose the first patient in 2024. We
believe the SADA PRIT Technology could potentially improve the efficacy of immunological therapeutics, e.g., naked
monoclonal antibodies, in tumors that have not historically demonstrated meaningful responses to immunological agents.
In January 2023 following receipt of a complete response letter in November 2022 from the FDA for our
Biologics License Application for radiolabeled 131I-omburtamab for central nervous system leptomeningeal metastases, we
announced a strategic restructuring plan designed to extend our cash resources and prioritize resources on the
commercialization and potential label extension of DANYELZA and development of the SADA PRIT Technology
platform. In addition to deprioritizing the omburtamab program for all indications and product candidates, we have
deprioritized other pipeline programs, including activities relating to the GD2-GD3 Vaccine and CD33 bispecific antibody
constructs by delaying trial initiation and overall timelines as part of the restructuring plan. We completed the restructuring
in May 2023, which resulted in an approximately 35% reduction to our workforce. As a result of the
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decrease in operating expenses in 2023 following the restructuring, we estimate that our cash and cash equivalents, when
combined with anticipated DANYELZA revenues, should support our operations into 2027.
This estimate reflects our current business plan, including our development plans and business strategy following
the restructuring, that is supported by assumptions that may prove to be inaccurate, such that we could use our available
capital resources sooner than we currently expect. This estimate assumes no income from potential new partnerships or
other business development activities, and no further development of the omburtamab program. We cannot provide any
assurance that we will be able to obtain additional capital from additional equity or debt financings, collaborations,
licensing arrangements, or other sources.
Since our inception on April 30, 2015, we have devoted substantially all of our resources to organizing and
staffing our company, business planning, identifying potential product candidates, conducting pre-clinical studies of our
product candidates and clinical trials of our lead product candidates, commercializing our approved product, raising capital,
and acquiring and developing our technology platform among other matters. We developed DANYELZA and our product
candidates based on intellectual property subject to several license agreements with MSK, and one agreement with the
Massachusetts Institute of Technology. These agreements are important to our business; for a more detailed discussion of
their terms and conditions, see NOTE 9—LICENSE AGREEMENTS AND COMMITMENTS in the notes to the consolidated
financial statements included in Item 8. Financial Statements and Supplementary Data.
To date, we have financed our operations primarily through private placements of our securities, proceeds from
our IPO and proceeds from our two subsequent public offerings, product and license revenues generated from
DANYELZA, and the proceeds from our sale of the Priority Review Voucher, or PRV, obtained upon FDA approval of
DANYELZA.
As of December 31, 2023 and December 31, 2022, we had an accumulated deficit of $457.5 million and $436.0
million, respectively. For the years ended December 31, 2023 and 2022, our net loss was $21.4 million and $95.6 million,
respectively. We have incurred significant net operating losses in every year since our inception. We expect our net
operating losses to decrease in the future as our DANYELZA product revenue grows to help fund our significant research
and development expenses. Our net losses may fluctuate significantly from quarter to quarter and year to year as we:
•
•
•
•
•
•
continue to advance our lead product candidates through the regulatory process both in the U.S. and
internationally;
continue to advance our other product candidates through pre-clinical and clinical development;
continue to identify additional research programs and additional product candidates, as well as additional
indications for existing product candidates;
initiate pre-clinical studies and clinical trials for any additional product candidates we identify;
develop, maintain, expand and protect our intellectual property portfolio; and
hire additional research, sales force, commercialization, clinical and scientific personnel.
For DANYELZA, and for any other product candidates for which we obtain regulatory approval, if any, we expect
to incur significant milestone costs, as well as commercialization expenses related to product sales, marketing,
manufacturing and distribution. Accordingly, we may continue to fund our operations through public or private equity or
debt financings or other sources, including strategic collaborations. We may, however, be unable to raise additional funds
or enter into such other arrangements when needed on favorable terms or at all. Our failure to raise capital or enter into
such other arrangements as and when needed would have a negative impact on our financial condition and our ability to
develop our current product candidates, or any additional product candidates. Because of the numerous risks and
uncertainties associated with the development of our existing product candidates and any future product candidates, our
platform and technology and because the extent to which we may enter into collaborations with third parties for
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development of any of our product candidates is uncertain, we are unable to estimate the amounts of increased capital
outlays and operating expenses associated with completing the research and development of our product candidates. If we
raise additional funds through collaborations, strategic alliances, or licensing arrangements with third parties, we may have
to relinquish valuable rights to our technologies, future revenue streams, research programs, product candidates or grant
licenses on terms that may not be favorable to us and could have a negative impact on our financial condition.
Recent Developments and Other Developments
New Chief Executive Officer and Executive Officer Transition
On November 6, 2023, our new President and Chief Executive Officer started at the Company. As part of the
transition, our President, Interim Chief Executive Officer and Head of Business Development and Strategy transitioned to
the position of Chief Business Officer.
Omburtamab BLA and Advisory Committee Meeting
In August 2016, the FDA granted Orphan Drug Designation, or ODD, to omburtamab for NB, and in June 2017,
the compound received breakthrough designation for the treatment of pediatric patients with R/R NB who have central
nervous system, or CNS, leptomeningeal metastases, or LM, from NB. We submitted a BLA to the FDA for omburtamab
for CNS /LM from NB in August 2020, and received a Refusal-to-File letter from the FDA in October 2020. The reason
for the FDA’s decision to issue the Refusal-to-File letter was that upon preliminary review, the FDA determined that certain
parts of the Chemistry, Manufacturing and Control, or CMC Module and the Clinical Module of the BLA required further
detail. We completed the resubmission of the BLA for omburtamab in March 2022 following a series of meetings with the
FDA, and in May 2022, the agency accepted our BLA for priority review. In October 2022, we met with the FDA’s
Oncologic Drugs Advisory Committee, or ODAC, who reviewed 131I-omburtamab and voted 16 to 0 that we had not
provided sufficient evidence to conclude that omburtamab improves overall survival. In December 2022, we received a
complete response letter, or CRL, for the BLA. In the CRL, and in our Type A meeting held subsequent to receipt of the
CRL, the FDA made recommendations for us to consider in terms of trial design to demonstrate substantial evidence of
effectiveness and a favorable benefit-risk profile. We are currently considering the future for our omburtamab development
program and have received an 18-month extension of the BLA, which expires on May 30, 2025. We can provide no
assurance that the development of omburtamab will continue or that omburtamab will ultimately receive FDA approval.
DANYELZA Regulatory Developments
On September 26, 2022, we announced that our partner Adium Pharma S.A. (“Adium”) submitted a regulatory
filing for DANYELZA for the treatment of patients with R/R high-risk NB to the Brazilian Health Regulatory Agency. On
May 23, 2023, the Brazilian Health Regulatory Agency granted marketing authorization for DANYELZA. Our distribution
agreement with Adium contains no regulatory license revenue milestones related to the Brazilian Health Regulatory
Agency marketing authorization. In September 2023, DANYELZA received marketing authorization in Mexico. We
recognized $0.5 million of regulatory-based license revenue from Adium pursuant to our distribution agreement with
Adium in the year ended December 31, 2023 in connection with the achievement of the marketing authorization in Mexico.
In January 2024, we accepted the price for DANYELZA in Brazil from the Brazilian Medicines Market Regulation
Chamber, or CMED. We received a $0.5 million regulatory-based milestone payment in connection with the price approval
from CMED in the first quarter of 2024.
We entered into a license agreement for DANYELZA and omburtamab with SciClone Pharmaceuticals
International Ltd., or SciClone, for Greater China, including Mainland China, Taiwan, Hong Kong and Macau in December
2020. In December 2022, DANYELZA was granted conditional approval by National Medical Products Administrative in
China. In July 2023, SciClone announced that DANYELZA was officially launched in China. For the year ended
December 31, 2023, we recorded $3.5 million of product revenue and related royalties from the commercial launch
inventory stocking order from SciClone.
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Known Trends, Geopolitical Events and Uncertainties
On February 24, 2022, Russia launched a wide-ranging attack on Ukraine. The resulting conflict and retaliatory
measures by the global community have created global security concerns, including the possibility of expanded conflict,
which have had and are likely to continue to have, short-term and longer-term adverse impacts on Russia, Ukraine and
Europe and around the globe. Sanctions issued by the U.S. and other countries against Russia and related counter-sanctions
issued by Russia have made it very difficult for us to operate in Russia, and we terminated our clinical trials of
DANYELZA in Russia and put on hold our regulatory activities to obtain marketing authorization for DANYELZA in
Russia. This has negatively impacted our plans to commercialize and sell DANYELZA in Russia and may therefore
adversely affect our business. In addition, the war between Russia and Ukraine has had significant ramifications on global
financial and energy markets, including volatility in the U.S. and global financial markets, which has led to disruptions to
trade, commerce, pricing stability, credit availability, supply-chain continuity and reduced access to liquidity globally, and
has caused and may continue to cause volatility in the price of our common stock, which may adversely impact our ability
to raise capital on favorable terms or at all.
The full economic and social impact of the sanctions imposed on Russia and possible future punitive measures that
may be implemented, as well as the counter measures imposed by Russia, in addition to the ongoing military conflict
between Ukraine and Russia remains uncertain; however, both the conflict and related sanctions have resulted and could
continue to result in disruptions to trade, commerce, pricing stability, credit availability and supply-chain continuity and
reduced access to liquidity on acceptable terms, in both Europe and globally, and has introduced significant uncertainty into
global markets.
In addition, on October 7, 2023, Hamas militants infiltrated Israel’s southern border from the Gaza Strip and
conducted a series of attacks on civilian and military targets. Following the attack, Israel’s security cabinet declared war
against Hamas. It is currently not possible to predict the duration or severity of the ongoing conflict, whether it will
develop into a wider conflict or its effects on our business, operations and financial condition. The ongoing conflict is
rapidly evolving and developing and may have a material adverse impact on our business and/or our partners. For example,
it may have an adverse impact on Takeda Israel’s ability to sell our products and/or collect receivables from customers in
the State of Israel pursuant to the exclusive licensing and distribution agreement we entered into with Takeda Israel in
November 2022, or the Takeda Licensing agreement, as well as on Takeda Israel’s ability to pursue the development,
marketing and/or commercialization of DANYELZA in the State of Israel, West Bank and Gaza Strip, which may
ultimately have an adverse impact on the amount of royalties we receive pursuant to the Takeda Licensing Agreement.
The recent trends towards rising inflation may also materially affect our business and corresponding financial
position and cash flows. Inflationary factors, such as increases in the cost of our clinical trial materials and supplies,
interest rates and overhead costs have and may continue to adversely affect our operating results. Rising interest rates also
present a recent challenge impacting the U.S. economy and could make it more difficult for us to obtain traditional
financing on acceptable terms, if at all, in the future. Additionally, the general consensus among economists suggests that
we should expect a higher recession risk to continue over the next year, which, together with the foregoing, could result in
further economic uncertainty and volatility in the capital markets in the near term, and could negatively affect demand for
our product and our operations. Furthermore, such economic conditions have produced downward pressure on share prices.
We may experience increases in our operating costs, including our labor costs and research and development costs, due to
supply-chain constraints, the ongoing conflict between Russia and Ukraine, the state of war between Israel and Hamas, and
employee availability and wage increases, which may result in additional stress on our working capital resources.
In addition, the closures of Silicon Valley Bank and Signature Bank in 2023 have resulted in broader financial
institution liquidity risk and concerns, and future adverse developments with respect to specific financial institutions or the
broader financial services industry may lead to market-wide liquidity shortages. The failure of any bank in which we
deposit our funds could reduce the amount of cash we have available for our operations or corporate development, or delay
our ability to access such funds. Any such future bank failure may increase the possibility of a sustained deterioration of
financial market liquidity, or illiquidity at clearing, cash management and/or custodial financial institutions. To help guard
against that risk, our cash and cash equivalents are held at a large major federal, national
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bank. In the event we have a commercial relationship with a bank that has failed or is otherwise distressed, we may
experience delays or other issues in meeting our financial obligations. If other banks and financial institutions fail or
become insolvent in the future in response to financial conditions affecting the banking system and financial markets, our
ability to access our cash and cash equivalents may be threatened and our ability to borrow or raise additional capital when
needed to operate our business could be substantially impaired.
Components of Our Results of Operations
Product Revenue, Net
Product revenue consists of sales of DANYELZA, and royalty revenue generated from the sales of DANYELZA.
License Revenue
License revenue consists of payments received for the licensing rights to DANYELZA. Refer to NOTE 3—
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the notes to the consolidated financial statements included in
Item 8. Financial Statements and Supplementary Data for additional details.
Operating Costs and Expenses
Cost of goods sold
Cost of goods sold includes direct and indirect costs related to the manufacturing and distribution of
DANYELZA, including materials, third-party manufacturing costs, packaging services, freight, labor costs for personnel
involved in the manufacturing process, indirect overhead costs, third-party royalties payable on our net product revenues
and charges for excess and obsolete inventory reserves and inventory write-offs.
License royalties
License royalties include third-party royalty expenses related to license revenues that have been recognized by the
Company.
Research and development
Research and development expenses consist of expenses incurred in connection with the discovery and
development of our product candidates. We expense research and development costs as incurred. These expenses include,
but are not limited to:
● sponsored research, laboratory facility services, clinical trial and data service at MSK under the
Sponsored Research Agreements, or the SRAs, the two CFSAs, the MCTA, and the MDSA, with MSK;
● expenses incurred under agreements with CROs, as well as investigative sites and consultants that
conduct our non-clinical and pre-clinical studies and clinical trials;
● expenses incurred under agreements with CMOs, including manufacturing scale-up expenses and the cost
of acquiring and manufacturing pre-clinical study and clinical trial materials, including manufacturing of
validation batches;
● upfront, milestone and other non-revenue related payments due under our third-party licensing agreements;
● employee-related expenses, which include salaries, benefits, travel and stock-based compensation;
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● expenses related to regulatory activities, including filing fees paid to regulatory agencies;
● outsourced professional scientific development services; and
● allocated expenses for utilities and other facility-related costs, including rent, insurance, supplies and
maintenance expenses, and other operating costs.
The successful development and regulatory approval of our product candidates is highly uncertain. At this time,
we cannot reasonably estimate or know the nature, timing and costs of the efforts that will be necessary to complete the
remainder of the development of DANYELZA or any other product candidates we may develop. This uncertainty is due to
the numerous risks and uncertainties associated with the duration and cost of clinical trials, which vary significantly over
the life of a project as a result of many factors, including, but not limited to:
● the number of clinical sites included in the trials;
● the availability and length of time required to enroll a sufficient number of suitable patients in our
clinical trials;
● the actual probability of success for our product candidates, including the safety and efficacy, early
clinical data, competition, manufacturing capability and commercial viability;
● significant and changing government regulation and regulatory guidance;
● the performance of our existing and any future collaborators;
● the number of doses patients receive;
● the duration of patient follow-up;
● the results of our clinical trials and pre-clinical studies;
● the establishment of commercial manufacturing capabilities;
● adequate ongoing availability of raw materials and drug substance for clinical development and any
commercial sales;
● the terms and timing of potential regulatory approvals, including the timing of any BLA and Marketing
Authorization Application, or MAA, submissions and their acceptance;
● the potential receipt of marketing approvals, including a safety, tolerability and efficacy profile that is
satisfactory to the FDA, the EMA, and the European Commission or any other non-U.S. regulatory
authority;
● any requirement by the FDA, the EMA and the European Commission or any other non-US regulatory
authority to conduct post market surveillance or safety studies;
● the expense of filing, prosecuting, defending and enforcing any patent claims and other intellectual
property rights; and
● the success of commercialization of approved products.
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A change in the outcome of any of these variables with respect to the development of a product candidate could
mean a significant change in the costs and timing associated with the development of that product candidate. For example,
in its CRL for omburtamab, and in our Type A meeting held subsequent to receipt of the CRL, the FDA made
recommendations for us to consider in terms of a potential trial design to demonstrate substantial evidence of effectiveness
and a favorable benefit-risk profile. If we are required and we determine to conduct additional clinical trials of a product
candidate, including if we determine to resume development of omburtamab, we will need substantial additional funds and
there is no assurance that the results of any such additional clinical trials will be sufficient for approval.
Research and development activities are central to our business model. Product candidates in later stages of
clinical development generally have higher development costs than those in earlier stages of clinical development,
primarily due to the increased size and duration of later-stage clinical trials. Our research and development expenses
include personnel costs, including stock-based compensation, and the costs of conducting clinical trials and potentially
preparing regulatory submissions for our pipeline candidates, including supplementary regulatory submissions for
DANYELZA. In January 2023 we announced a strategic restructuring plan designed to extend our cash resources and
prioritize resources on the commercialization and potential label extension of DANYELZA and development of the SADA
PRIT Technology platform. In addition to deprioritizing the omburtamab program for all indications and product
candidates, we have deprioritized other pipeline programs, including activities relating to the GD2-GD3 Vaccine and CD33
bispecific antibody constructs by delaying trial initiation and overall timelines as part of the restructuring plan. Our
research and development expenses have decreased as a result of our January 2023 restructuring.
Selling, general, and administrative
Selling, general, and administrative expenses consist primarily of employee related expenses, including salaries,
bonus, benefits, and stock-based compensation expenses for personnel in executive, commercial, finance and
administrative functions. Other significant costs include facility costs not otherwise included in research and development
expenses or cost of goods sold, legal fees relating to corporate matters, and fees for patent, accounting, tax, and consulting
services.
Our selling, general, and administrative, or SG&A, expenses include administrative costs to support continued
research and development activities, potential commercialization of additional product candidates and additional
indications and costs associated with operating as a public company, including expenses related to services associated with
maintaining compliance with exchange listing and SEC requirements, director and officer insurance costs and investor and
public relations costs.
Other income/(loss), net
Other income / (loss), net primarily consists of interest income earned on our money market fund and foreign
currency transaction gains and losses. Other income / (loss), net can vary quarter-to-quarter based on interest rates and
foreign currency fluctuations.
Critical Accounting Policies and Significant Judgments and Estimates
Our management’s discussion and analysis of our financial condition and results of operations is based on our
consolidated financial statements, which we have prepared in accordance with U.S. generally accepted accounting
principles, or GAAP. We believe that several accounting policies are significant to understanding our historical and future
performance. We refer to these policies as critical because these specific areas generally require us to make judgments and
estimates about matters that are uncertain at the time we make the estimate, and different estimates—which also would
have been reasonable—could have been used. On an ongoing basis, we evaluate our estimates and judgments, including
those described in greater detail below. We base our estimates on historical experience and other market specific or other
relevant assumptions that we believe to be 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.
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While our significant accounting policies are described in more detail in the notes to our consolidated financial
statements appearing elsewhere in this Annual Report on Form 10-K, we believe the following accounting policies to be
most critical to the judgments and estimates used in the preparation of our consolidated financial statements.
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are
not limited to, net product revenues, the accrual for research and development expenses, the accrual of milestone and
royalty payments, the valuation of stock options and asset impairments. Estimates are periodically reviewed in light of
changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become
known. Actual results could differ from those estimates.
The full extent to which the macroeconomic conditions will directly or indirectly impact our business, results of
operations and financial condition, including revenues, expenses, manufacturing, clinical trials, research and development
costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of
the economic impact on local, regional, national and international markets.
Revenue Recognition
To determine revenue recognition for product revenue and license revenue arrangements that we determine are
within the scope of ASC 606, we perform the following five steps: (i) identify the contract(s) with a customer, (ii) identify
the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the
performance obligations in the contract, and (v) recognize revenue when (or as) we satisfy a performance obligation. We
only apply the five-step model to arrangements that meet the definition of a contract with a customer under ASC 606,
including when it is probable that we will collect the consideration we are entitled to in exchange for the goods or services
we transfer to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, we
assess the goods or services promised within each contract, determine those that are performance obligations, and assess
whether each promised good or service is distinct. We then recognize as revenue the amount of the transaction price that is
allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
We recognize revenue from sales of DANYELZA at a point in time when our customer is deemed to have
obtained control of the product, which generally occurs upon receipt at the end-user hospital for sales in the United States,
and upon delivery to the distributors for sales in the international territories.
The amount of revenue we recognize from sales of DANYELZA varies due to rebates, chargebacks, returns and
discounts provided under governmental and other programs, distribution-related fees and other sales-related deductions. In
order to determine those deductions, we estimate, utilizing the expected value method, the amount of revenue that we will
ultimately be entitled to. This estimate is based upon contracts with customers and government agencies, statutorily-
defined discounts applicable to government-funded programs, estimated payor mix, and other relevant factors. Calculating
these amounts involves estimates and judgments, and we review these estimates quarterly. If actual results, rebates,
chargeback, returns and discounts vary from our original estimates, we will adjust these estimates quarterly, which would
affect net product revenue and earnings in the period such variances occur.
When evaluating arrangements with intellectual property licensing, in determining performance obligations, we
evaluate whether the license is distinct from the other performance obligations with the collaborative partner based on the
relevant facts and circumstances for each arrangement. If the license to our intellectual property is determined to be distinct
from the other performance obligations identified in the arrangement, we recognize revenues from non-refundable, up-front
fees allocated to the license when the license is transferred to the distributor and the distributor is able to use and benefit
from the license. For licenses that are bundled with other promises, we evaluate the nature of the combined performance
obligation to determine whether the combined performance obligation is satisfied over time or at
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a point in time and, if over time, we determine the appropriate method of measuring progress for purposes of recognizing
revenue from non-refundable, up-front fees. In assessing whether a promised good or service is distinct in the licensing
arrangement, we consider factors such as the research, manufacturing and commercialization capabilities of the licensing
partner 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.
When evaluating arrangements that include regulatory and commercial milestone payments, we evaluate whether the
milestones are considered probable of being reached and estimate the amount to be included in the transaction price using
the most likely amount method. If it is probable that a significant revenue reversal would not occur, the associated
milestone value is included in the transaction price. Milestone payments that are not within our control or the control of the
licensee, such as regulatory approvals, are not considered probable of being achieved until those approvals are received.
The sales-based milestones and royalty payments are recognized when the milestone is achieved or the related sales occur.
Research and Development
Research and development costs are charged to operations when incurred and are included in operating expenses.
Research and development costs consist principally of compensation cost for our employees and consultants that perform
our research activities, the costs to obtain and maintain our licenses, the payments to third-party CMOs and CROs for
additional product manufacturing and development, and consumables and other materials used in research and
development. We record accruals for estimated ongoing research costs. When evaluating the adequacy of accrued
liabilities, we analyze progress of the studies or clinical trials, including the phase or completion of events, invoices
received and contracted costs. Actual results could differ from our estimates. We are obligated to make certain milestone
and royalty payments in accordance with the contractual terms of the MSK License, CD33 License, MabVax/Y-mAbs
Sublicense, and SADA License Agreement based upon the resolution of certain contingencies. Certain of these milestone
payments are due and payable with the passage of time whether or not the milestones have actually been met. We record
the milestone and royalty payment when the achievement of the milestone (including the passage of time) or payment of
the milestone or royalty is probable, and the amount of the payment is reasonably estimable.
Fair Value Measurements
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:
● Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;
● Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are
observable either directly or indirectly for substantially the full term of the asset or liability; and
● Level 3 — Unobservable inputs for the asset or liability, which include management's own assumption about
the assumptions market participants would use in pricing the asset or liability, including assumptions about
risk.
Our cash equivalents are carried at fair value, determined according to the fair value hierarchy described above.
Fair Value of Stock Options
We measure stock options granted to employees and directors based on the fair value on the date of the grant and
recognize compensation expense of those awards, over the requisite service period, which is the vesting period of the
respective award for employees and directors. Forfeitures are accounted for as they occur. We issue stock options to
employees and directors with only service-based vesting conditions and record the expense for these awards using the
straight-line method over the requisite service period.
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The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing
model. Historically, we have been a private company and lack company-specific historical and implied volatility
information for our shares. Therefore, we estimate our expected share price volatility based on a combination of the
historical volatility of a group of publicly-traded peer companies and the historical volatility of the Y-mAbs share price,
and we expect to continue to do so until such time as we have adequate historical data regarding the volatility of our own
traded share price. The expected term of our stock options has been determined utilizing the “simplified” method for
awards as we have limited historical data to support the expected term assumption. The risk-free interest rate is determined
by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately
equal to the expected term of the award. The expected dividend yield is based on the fact that we have never paid cash
dividends on shares of our common stock and do not expect to pay any cash dividends in the foreseeable future.
Income Taxes
We account for income taxes under the asset and liability approach for the financial accounting and reporting of
income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to net
operating loss carry forwards and temporary differences between the financial statement carrying amounts of existing
assets and liabilities and their respective tax bases. These assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which the temporary differences are expected to reverse. A valuation
allowance is established when management determines that it is more likely than not that some portion or all of the
deferred tax assets will not be realized.
We prepare and file tax returns based on our interpretation of tax laws and regulations. In the normal course of
business, our tax returns are subject to examination by various taxing authorities. Such examinations may result in future
tax and interest assessments by these taxing authorities. In determining our tax provision for financial reporting purposes,
we establish a reserve for uncertain tax positions unless such positions are determined to be more likely than not of being
sustained upon examination based on their technical merits. We consider many factors when evaluating and estimating our
tax positions and tax benefits, which may require periodic adjustments and which may not accurately
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anticipate actual outcomes. Accordingly, we will report a liability for unrecognized tax benefits resulting from any
uncertain tax positions taken or expected to be taken on a tax return.
Our policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of income tax
expense.
Results of Operations
Comparison of the Years Ended December 31, 2023 and 2022
The following table summarizes our results of operations for the years ended December 31, 2023 and 2022:
Year Ended
December 31,
Change
2023
2022
Amount
Percent
(in thousands)
REVENUES
Product revenue, net
License revenue
Total revenues
OPERATING COSTS AND EXPENSES
Cost of goods sold
License royalties
Research and development
Selling, general, and administrative
Total operating costs and expenses
Loss from operations
OTHER INCOME / (LOSS), NET
Interest and other income/(loss)
LOSS BEFORE INCOME TAXES
Provision for income taxes
NET LOSS
Revenues
$ 84,319
500
84,819
$ 49,267
16,000
65,267
$ 35,052
(15,500)
19,552
11,366
50
54,219
44,856
110,491
(25,672)
7,467
100
91,572
60,939
160,078
(94,811)
3,899
(50)
(37,353)
(16,083)
(49,587)
69,139
4,806
(20,866)
561
5,563
74,702
561
$ (21,427) $ (95,568) $ 74,141
(757)
(95,568)
—
71 %
(97)
30
52
(50)
(41)
(26)
(31)
(73)
(735)
(78)
N/A
(78)%
Our product revenue, net was $84.3 million and $49.3 million in the years ended December 31, 2023 and 2022,
respectively. The increase was primarily driven by an increase in new US patients and an incremental benefit from
expanding into international markets. The Company’s product revenue, net was generated from sales of DANYELZA and
consists of the following (in thousands):
(in thousands)
United States
Other countries
Total product revenue, net
Year ended December 31,
Change
2023
2022
Amount
Percent
$
$
67,814
16,505
84,319
$
$
46,259
3,008
49,267
$
$
21,555
13,497
35,052
47 %
449
71 %
Our product revenue from other countries for the year ended December 31, 2023 increased by $13.5 million,
mainly driven by an increase of $8.6 million of product revenue, net from our distribution partner, WEP and an increase of
$3.5 million of product revenue and related royalties for the 2023 commercial launch initial inventory stocking order from
our distribution partner, SciClone, which launched commercial sales in China in June 2023. We recognized royalty
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revenue from our distribution partners of $4.5 million and $2.1 million in the years ended December 31, 2023 and 2022,
respectively.
In addition, we recognized $0.5 million in license revenue for the year ended December 31, 2023 upon the
September 2023 achievement of marketing authorization for DANYELZA in Mexico under the terms of the non-
refundable license milestone within our sublicense agreement with Adium. During the year ended December 31, 2022, we
recognized license revenue for a regulatory-based milestone of $15.0 million from SciClone, which we received in
connection with the conditional marketing approval of DANYELZA in China and $1.0 million of license revenue upon the
delivery of the updated FDA BLA Dossier under our sublicense with Adium.
Cost of Goods Sold
Our cost of goods sold includes amounts related to materials, third-party contract manufacturing, third-party
packaging services, freight, indirect labor costs, third-party royalties for approved products, and indirect overhead costs.
Cost of goods sold was $11.4 million and $7.5 million for the years ended December 31, 2023 and 2022, respectively. The
cost of goods sold increase was primarily driven by increased product revenue, net, and $0.8 million inventory write-off for
the year ended December 31, 2023, while there was a $1.2 million charge related to a DANYELZA production batch that
did not meet our quality specifications during the year ended December 31, 2022.
Our gross margin, excluding the 2023 and 2022 inventory charges, remained at 87% for the year ended December
31, 2023, compared to 2022, which was a net impact of the gross margin increase from higher revenues in the United
States, offset by increased revenues from geographic areas outside of the United States, which were at a lower gross
margin. We define gross margin as net product revenues less cost of goods sold divided by net product revenues.
License Royalties
License royalties include third-party royalty expenses related to license revenues that have been recognized.
During 2023 and 2022, license royalties related to MSK’s share of licensing revenues. We incurred license royalty expense
of $50,000 during the year ended December 31, 2023 upon the September 2023 achievement of marketing authorization
for DANYELZA in Mexico under our sublicense agreement with Adium, noted above. We incurred license royalty
expense of $0.1 million during the year ended December 31, 2022 upon the delivery of the updated FDA BLA Dossier for
DANYELZA in accordance with our sublicense with Adium, noted above.
Research and Development
We do not record our research and development expenses on a program-by-program or on a product-by-product
basis as they primarily relate to personnel, research, manufacturing, license fees and consumable costs, which are
simultaneously deployed across multiple projects under development. These costs are included in the table below.
(in thousands)
Outsourced manufacturing
Clinical trials
Outsourced research and supplies
Milestones and license acquisition costs
Personnel costs
Professional and consulting fees
Stock-based compensation
Information technology expenses
Other
Year Ended
December 31,
Change
2023
2022
Amount
Percent
13,731
6,934
949
4,125
14,043
1,685
6,252
2,442
4,058
54,219
$
$
34,750
8,904
9,945
300
18,532
3,077
7,830
2,238
5,996
91,572
$ (21,019)
(1,970)
(8,996)
3,825
(4,489)
(1,392)
(1,578)
204
(1,938)
$ (37,353)
(60)%
(22)
(90)
1,275
(24)
(45)
(20)
9
(32)
(41)%
$
$
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Research and development expenses were $54.2 million for the year ended December 31, 2023, as compared to
$91.6 million for the year ended December 31, 2022. The $37.4 million decrease was mainly due to a $21.0 million
decrease in outsourced manufacturing, a $9.0 million decrease in outsourced research and supplies, a $6.1 million decrease
in personnel related costs, inclusive of stock-based compensation, and a $2.0 million decrease in clinical trials. These
decreases were partially offset by a $3.8 million increase in milestones and license acquisition costs primarily related to
$4.1 million increase in our SADA License Agreement, as we determined certain time-based clinical milestones within the
agreement are probable based on the availability of necessary data and the assessment of clinical progress during 2023.
Please refer to NOTE 9— LICENSE AGREEMENTS AND COMMITMENTS in the consolidated financial statements in this
Annual Report on Form 10-K for further discussion on our SADA License Agreement.
Outsourced manufacturing decreased by $21.0 million, compared to 2022, primarily due to decreased production
of SADA clinical trial materials as the majority of the materials for current trials were produced in prior years, a decrease
in omburtamab production due to our deprioritization of that program as a result of the CRL, and a decrease in naxitamab
materials designated for clinical use.
Decreased spending on deprioritized programs resulted in decreases in outsourced manufacturing related to
omburtamab production, as described above, outsourced research and supplies, personnel related costs and clinical trial
costs. Outsourced research and supplies decreased by $9.0 million mainly due to a decrease in spending in clinical studies
and regulatory affairs as we were preparing for the potential launch of omburtamab during 2022.
Personnel related costs, inclusive of stock-based compensation, decreased to $20.3 million in the year ended
December 31, 2023, a $6.1 million decrease compared to the year ended December 31, 2022, due to the impact of the
strategic restructuring plan we announced in January 2023. Please refer to NOTE 14— RESTRUCTURING CHARGE in the
consolidated financial statements in this Annual Report on Form 10-K for further discussion.
Selling, General, and Administrative
Selling, general and administrative expenses were $44.9 million for the year ended December 31, 2023, as
compared to $60.9 million for the year ended December 31, 2022. The $16.0 million decrease in selling, general and
administrative expenses was primarily attributable to a $10.9 million charge for severance and share-based compensation
expense in the year ended December 31, 2022 related to our former Chief Executive Officer as discussed further in NOTE
9—LICENSE AGREEMENTS AND COMMITMENTS in the consolidated financial statements included within this annual
report on Form 10-K, and, to a lesser extent, a $3.4 million decrease in commercial expense, inclusive of costs incurred in
2022 for the preparation of a potential omburtamab launch.
Interest and Other Income/(Loss)
Interest and other income for the year ended December 31, 2023 was $4.8 million and interest and other loss for
the year ended December 31, 2022 was $0.8 million. The $5.6 million favorable change in our interest and other
income/(loss), reflects increased interest income for the year ended December 31, 2023, and was driven by increased
money market fund investment income. We recorded impairment charges totaling $1.4 million related to the write down of
the book value to fair value for two Secured Promissory Notes during the year ended December 31, 2022.
Provision for Income Taxes
Provision for income taxes was $0.6 million for the year ended December 31, 2023. We did not record any
provision for income taxes for the year ended December 31, 2022. The increase in provision for income taxes was
primarily driven by certain U.S. state jurisdictions, and, to a lesser extent, limitation on utilization of U.S. federal net
operating losses.
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Liquidity and Capital Resources
Overview
Each year we have experienced a significant use of cash to fund our net operating losses since inception. We
expect our net operating losses to decrease in the future as our DANYELZA product revenues grow and contribute to
funding our significant research expenses. Our net losses may fluctuate significantly from quarter to quarter and year to
year. We currently have one approved product, DANYELZA, which launched in the first quarter of 2021. We have
financed our operations primarily through proceeds from sales of shares of our common stock, including our initial public
offering in September 2018 and our subsequent public offerings in November 2019 and February 2021, as well as
additional funding from the sales of DANYELZA and from the sale of our PRV obtained upon FDA approval of
DANYELZA.
As of December 31, 2023 and 2022, we had cash and cash equivalents of $78.6 million and $105.8 million,
respectively. As a result of the decrease in forecasted operating expenses following the restructuring we announced in
January 2023, we estimate that our cash and cash equivalents, when combined with anticipated DANYELZA revenues,
should support our operations into 2027. This estimate is based on our current business plan, and on assumptions that may
prove to be wrong, and we could use our available capital resources sooner than we currently expect. This estimate
assumes no income from new partnerships or other new business development activities, and no further development of the
omburtamab program. We cannot provide any assurance that we will be able to obtain additional capital from additional
equity or debt financings, collaborations, licensing arrangements, or other sources.
For an analysis of the type of contractual obligations and the relevant time periods for the related cash
requirements of such obligations which may have a material impact on our liquidity and capital resources refer to NOTE 9
—LICENSE AGREEMENTS AND COMMITMENTS.
Cash Flows
The following table provides information regarding our cash flows for the years ended December 31, 2023 and
2022:
Year Ended December 31,
2023
2022
Change
Amount
Percent
(in thousands)
Net cash used in operating activities
Net cash provided by investing activities
Net cash provided by financing activities
Effect of exchange rates on cash and cash equivalents
Net decrease in cash and cash equivalents
$
Net Cash Used in Operating Activities
$
(27,232)
—
100
7
(27,125)
$ (75,921)
—
84
35
$ (75,802)
$
$
48,689
—
16
(28)
48,677
(64)%
NA
19
(80)
(64)%
The use of cash in all periods resulted primarily from our net losses adjusted for non-cash charges and changes in
components of working capital.
Net cash used in operating activities was $27.2 million for the year ended December 31, 2023, as compared to net
cash used in operating activities of $75.9 million for the year ended December 31, 2022. The $48.7 million decrease in
cash used in operating activities during the year ended December 31, 2023, compared to 2022, was primarily due to a $58.1
million improvement in our net loss, net of non-cash adjustments, which was partially offset by an increase in cash used for
working capital of $9.4 million during the year ended December 31, 2023, compared to the corresponding period in 2022.
The $9.4 million increase in cash used for working capital for the year ended December 31, 2023, as compared to the year
ended December 31, 2022, was driven by higher accounts receivable from increased sales activity of $5.1 million, lower
accounts payable of $5.9 million due to the impact of deprioritized programs, partially offset by decreased cash used for
inventories, inclusive of current and non-current inventories, of $1.4 million.
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Net Cash Used in Investing Activities
We did not generate or use cash for investing activities during the years ended December 31, 2023 and 2022.
Net Cash Provided by Financing Activities
Net cash provided by financing activities was $0.1 million for the years ended December 31, 2023 and 2022, and
consisted of proceeds from the exercise of stock options in both years.
Future Funding Requirements
We plan to advance the development of our pipeline programs, initiate new research and pre-clinical development
efforts and seek marketing approval for any additional product candidates and indications that we successfully develop. If
we obtain approval for any additional product candidates and indications, we expect to incur commercialization expenses,
which may be significant, related to establishing sales, marketing, manufacturing capabilities, distribution and other
commercial infrastructure to commercialize such products. Accordingly, we may need to obtain substantial additional
funding in connection with our continuing operations. However, global economic conditions have been worsening, with
disruptions to, and volatility in, the credit and financial markets in the U.S. If these conditions persist and deepen, we could
experience an inability to access additional capital or our liquidity could otherwise be impacted. If we are unable to raise
capital when needed or on attractive terms, we would be forced to delay, reduce or eliminate our research and development
programs and/or future commercialization efforts.
Our cash and cash equivalents were $78.6 million as of December 31, 2023. As a result of the decrease in
operating expenses after the restructuring program we announced in January 2023, we estimate that our cash and cash
equivalents, when combined with anticipated DANYELZA revenues, should support operations into 2027. This estimate is
based on our current business plan and on assumptions that may prove to be wrong, and we could use our available capital
resources sooner than we currently expect. This estimate assumes no new partnerships or other new business development
and no further development of the omburtamab program. We cannot provide any assurance that we will be able to obtain
additional capital from new equity or debt financings, collaborations, licensing arrangements, or other sources. As a result
of our 2023 reduction in workforce and revised business plan, we incurred restructuring expenses of $4.5 million,
consisting predominantly of cash related to notice and severance payments of $2.8 million, which were paid in 2023, and
acceleration of stock-based compensation of $1.7 million. The restructuring expenses were recognized in the first quarter
of 2023.
Because of the numerous risks and uncertainties associated with the further development and commercialization
of DANYELZA, and the research, development and commercialization of other potential product candidates, we are
unable to estimate the exact amount of our operating capital requirements. Our future capital requirements will depend on
many factors, including:
● the scope, progress, timing, costs and results of clinical trials for developing DANYELZA, and conducting
pre-clinical studies and clinical trials for our SADA constructs;
● research and pre-clinical development efforts for any future product candidates that we may develop;
● our ability to enter into and the terms and timing of any collaborations, licensing agreements, distribution
agreements or other arrangements;
● the achievement of milestones or occurrence of other developments that trigger payments under any
collaboration or other agreements;
● the number of future product candidates that we may pursue and their development requirements;
● the outcome, timing and costs of seeking regulatory approvals;
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● the costs of commercialization activities for any of our product candidates that may receive marketing
approval to the extent such costs are not the responsibility of any future collaborators, including the costs and
timing of establishing product sales, marketing, distribution and manufacturing capabilities;
● the amount and timing of future revenue, if any, received from commercial sales of our current and future
product candidates upon any marketing approvals;
● proceeds received, if any, from monetization of any future PRVs;
● our headcount and associated costs as we focus our research and development efforts on additional
indications for DANYELZA and our SADA PRIT Technology and expand our commercial infrastructure;
● the costs of preparing, filing and prosecuting patent applications, maintaining and protecting our intellectual
property rights and defending against intellectual property related claims; and
● the costs of operating as a public company.
Identifying potential product candidates and conducting pre-clinical studies and clinical trials is a time-
consuming, expensive and uncertain process that takes many years to complete, and we may never generate the necessary
data or results required to obtain additional marketing approval and achieve additional product sales. In addition, our
product candidates, if approved, may not achieve commercial success. Accordingly, we will need to continue to rely on
additional financing to achieve our business objectives. Adequate additional financing may not be available to us on
acceptable terms, or at all.
Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs
through a combination of equity offerings, debt financings, collaborations, strategic alliances and licensing arrangements.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, existing ownership
interest in our company may be materially diluted, and the terms of these securities may include liquidation or other
preferences that adversely affect common stockholders’ rights. Debt financing, if available, may involve agreements that
include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making
capital expenditures or declaring dividends.
If we raise funds through additional collaborations, strategic alliances or licensing arrangements with third parties,
we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product
candidates or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds through
equity or debt financings when needed, we may be required to delay, limit, reduce or terminate our product development or
future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to
develop and market ourselves.
Contractual Obligations and Commitments
A summary of the financial balances related to our material outstanding contractual commitments and the
maximum financial impact related to milestones under those contractual obligations are included in NOTE 9—LICENSE
AGREEMENTS AND COMMITMENTS in the notes to the consolidated financial statements included in Item 8. Financial
Statements and Supplementary Data.
Contractual obligations as of December 31, 2023 are related to payments of operating leases for our office spaces
at our corporate headquarters in New York, New York, a laboratory space located in Nutley, New Jersey, and
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office space in Hørsholm, Denmark. Our obligations and commitments are disclosed in the contractual obligations table
below:
Operating Lease Commitments
Total
Payments Due By Period (in thousands)
Less Than 1 Year
1 to 3 Years
Total
$
$
1,522
1,522
$
$
996
996
$
$
526
526
In addition, we enter into contracts in the normal course of business with CROs, CMOs, clinical sites and other
third parties for clinical trials, pre-clinical research studies and testing, professional consultants for expert advice and other
vendors for clinical supply, manufacturing and other services. These contracts are not considered contractual obligations, as
they provide for termination upon prior notice, and, therefore, are cancelable contracts and do not include any minimum
purchase commitments. Payments due upon cancellation consist only of payments for services provided or expenses
incurred, including non-cancellable obligations of our service providers, up to the date of cancellation.
As further described in NOTE 9—LICENSE AGREEMENTS AND COMMITMENTS of our enclosed consolidated
financial statements, under various licensing and related agreements with third parties, we have agreed to make milestone
and royalty payments to third parties.
Research and development is inherently uncertain and, should such research and development fail, the MSK
License, the CD33 License, and SADA License are cancelable at our option. We have also considered the development risk
and each party’s termination rights under the three license agreements when considering whether any contingent payments,
certain of which also contain time-based payment requirements, were probable. In addition, to the extent we enter into
sublicense arrangements, we are obligated to pay to MSK a percentage of certain payments that we receive from
sublicensees of the rights licensed to us by MSK, for which the percentage varies based upon the nature of the clinical or
development milestone. To date, we have not entered into any sublicenses related to the CD33 License, the SADA License
or the MabVax/Y-mAbs Sublicense. We have entered into sublicenses and distribution agreements with SciClone and
Takeda in 2020, Adium in 2021, and WEP in 2022, as allowed under the MSK License. Our failure to meet certain
conditions under such arrangements could cause the related license to such licensed product to be canceled and could result
in termination of the entire respective arrangement with MSK. In addition, we may terminate the MSK License, the CD33
License, or the SADA License with prior written notice to MSK.
Recent Accounting Pronouncements
Refer to NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES in the notes to the consolidated
financial statements included in Item 8. Financial Statements and Supplementary Data for a discussion of recent accounting
pronouncements.
ITEM 7A.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, we are not required to provide the
information required by this item.
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ITEM 8.
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
Y-MABS THERAPEUTICS, INC.
Index to Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID 238)
Consolidated Balance Sheets
Consolidated Statements of Net Loss and Comprehensive Loss
Consolidated Statements of Changes in Stockholders' Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Pages
142
144
145
146
147
148
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Report of Independent Registered Public Accounting Firm
To the Board of Directors and Stockholders of Y-mAbs Therapeutics, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Y-mAbs Therapeutics, Inc. and its subsidiaries (the
“Company”) as of December 31, 2023 and 2022, and the related consolidated statements of net loss and comprehensive
loss, of changes in stockholders’ equity, and of cash flows for the years then ended, including 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 as of December 31, 2023 and 2022, and the results of its
operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the
United States of America.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting
firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits of these consolidated financial statements 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 consolidated
financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are
required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an
opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such
opinion.
Our audits included performing procedures to assess the risks of material misstatement of the consolidated 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 consolidated 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 consolidated financial statements. We believe that our audits provide a reasonable
basis for our opinion.
Critical Audit Matters
The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial
statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts
or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the
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 accounts or disclosures to which it relates.
Revenue Recognition – United States (U.S.) Product Revenue
As described in Notes 3 and 4 to the consolidated financial statements, product revenue is generated from sales of
DANYELZA, which are recognized as revenue at the point in time when the customer is deemed to have obtained control
of the product, which occurs upon receipt at the end-user hospital in the U.S. Product sales are primarily recognized
through the Company's arrangements with three national U.S. specialty distributors. The Company’s consolidated net
product revenue was $84.3 million for the year ended December 31, 2023, of which $67.8 million is
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generated from the U.S.
The principal consideration for our determination that performing procedures relating to revenue recognition for U.S.
product revenue is a critical audit matter is a high degree of auditor effort in performing procedures related to the
Company’s revenue recognition.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls
relating to U.S. revenue recognition. These procedures also included, among others, (i) testing management’s reconciliation
of gross revenue recognized from product sales to third-party information; (ii) evaluating the gross revenue recognized on a
sample basis by obtaining and inspecting source documents, including the customer arrangements, purchase orders,
invoices, proof of delivery, and cash receipts from customers; and (iii) confirming a sample of outstanding customer
invoice balances as of December 31, 2023 and, for confirmations not returned, obtaining cash receipts from customers.
/s/ PricewaterhouseCoopers LLP
Florham Park, New Jersey
February 29, 2024
We have served as the Company's auditor since 2017.
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Y-MABS THERAPEUTICS, INC.
Consolidated Balance Sheets
(in thousands, except share and per share data)
ASSETS
CURRENT ASSETS
Cash and cash equivalents
Accounts receivable, net
Inventories
Other current assets
Total current assets
Property and equipment, net
Operating lease right-of-use assets
Intangible assets, net
Other assets
TOTAL ASSETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable
Accrued liabilities
Operating lease liabilities, current portion
Total current liabilities
Accrued milestone and royalty payments
Operating lease liabilities, long-term portion
Other liabilities
TOTAL LIABILITIES
Commitments and contingencies (Note 9)
STOCKHOLDERS’ EQUITY
Preferred stock, $0.0001 par value, 5,500,000 shares authorized and none issued at
December 31, 2023 and December 31, 2022
Common stock, $0.0001 par value, 100,000,000 shares authorized at December 31, 2023 and
December 31, 2022; 43,672,112 and 43,670,109 shares issued and outstanding at
December 31, 2023 and December 31, 2022, respectively
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
TOTAL STOCKHOLDERS’ EQUITY
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY
December 31, December 31,
2023
2022
$
78,637
22,454
5,065
4,955
111,111
224
1,412
2,631
12,491
$ 127,869
$
6,060
13,166
902
20,128
5,375
517
864
26,884
$ 105,762
12,531
6,702
5,452
130,447
604
1,739
2,986
5,680
$ 141,456
$
14,175
13,241
868
28,284
2,250
899
802
32,235
—
—
4
558,002
449
(457,470)
100,985
$ 127,869
4
543,929
1,331
(436,043)
109,221
$ 141,456
The accompanying notes are an integral part of the consolidated financial statements.
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Net Loss and Comprehensive Loss
(In thousands, except share and per share data)
REVENUES
Product revenue, net
License revenue
Total revenues
OPERATING COSTS AND EXPENSES
Cost of goods sold
License royalties
Research and development
Selling, general, and administrative
Total operating costs and expenses
Loss from operations
OTHER INCOME/(LOSS), NET
Interest and other income/(loss)
LOSS BEFORE INCOME TAXES
Provision for income taxes
NET LOSS
Other comprehensive loss
Foreign currency translation
COMPREHENSIVE LOSS
Net loss per share attributable to common stockholders, basic and diluted
Weighted average common shares outstanding, basic and diluted
For the year ended December 31,
2023
2022
$
$
$
$
$
84,319
500
84,819
11,366
50
54,219
44,856
110,491
(25,672)
4,806
(20,866)
561
(21,427)
(882)
(22,309)
(0.49)
43,645,388
$
$
$
49,267
16,000
65,267
7,467
100
91,572
60,939
160,078
(94,811)
(757)
(95,568)
—
(95,568)
(40)
(95,608)
(2.19)
43,703,663
The accompanying notes are an integral part of the consolidated financial statements.
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Changes in Stockholders’ Equity
(In thousands, except share data)
Common Stock
Shares
Amount Paid-in Capital Income / (Loss)
Deficit
Accumulated
Other
Additional
Comprehensive Accumulated
Stockholders’
Equity
Balance December 31, 2021
Exercise of stock options
Retirement of treasury shares – refer
to Note 10
Stock-based compensation expense
Foreign currency translation
Net loss
Balance December 31, 2022
Exercise of stock options
Retirement of treasury shares – refer
to Note 10
Stock-based compensation expense
Foreign currency translation
Net loss
43,694,716
20,000
$
4
$
—
519,206
84
$
1,371
$ (340,475) $ 180,106
84
—
—
(57,887)
13,280
—
—
— —
— —
$
$
4
—
43,670,109
50,000
(58,763)
10,766
—
—
— —
— —
$
$
4
(963)
25,602
—
—
$
543,929
100
(480)
14,453
—
—
$
558,002
—
—
(40)
—
1,331
—
—
—
—
(963)
25,602
(40)
(95,568)
$ (436,043) $ 109,221
100
—
(95,568)
—
—
(882)
—
449
—
—
—
(480)
14,453
(882)
(21,427)
$ (457,470) $ 100,985
(21,427)
Balance December 31, 2023
43,672,112
The accompanying notes are an integral part of the consolidated financial statements.
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Y-MABS THERAPEUTICS, INC.
Consolidated Statements of Cash Flows
(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization
Stock-based compensation
Foreign currency transactions and other transactions
Changes in assets and liabilities:
Accounts receivable, net
Inventories
Other current assets
Other assets
Accounts payable
Accrued liabilities and other
NET CASH USED IN OPERATING ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from exercised stock options
NET CASH PROVIDED BY FINANCING ACTIVITIES
Effect of exchange rates on cash and cash equivalents
NET DECREASE IN CASH AND CASH EQUIVALENTS
Cash and cash equivalents at the beginning of period
Cash and cash equivalents at the end of period
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid for income taxes
SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES
Intangible assets acquisition in accrued liabilities
Right-of-use assets obtained in exchange for lease obligations
Acquisition of treasury shares upon repayment of secured promissory note – refer to Note
10
For the year ended December 31,
2023
2022
$
(21,427)
$
(95,568)
735
14,453
(1,259)
(9,923)
1,637
17
(6,812)
(6,856)
2,203
(27,232)
—
100
100
7
(27,125)
105,762
78,637
367
$
$
839
25,602
3,577
(4,819)
(1,190)
(360)
(2,510)
(919)
(573)
(75,921)
—
84
84
35
(75,802)
181,564
105,762
—
— $
$
636
1,500
347
480
$
963
$
$
$
$
$
The accompanying notes are an integral part of the consolidated financial statements.
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Y-MABS THERAPEUTICS, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1—ORGANIZATION AND DESCRIPTION OF BUSINESS
Y-mAbs Therapeutics, Inc. (“we,” “us,” “our,” the “Company,” or “Y-mAbs”) is a commercial-stage
biopharmaceutical company focused on the development and commercialization of novel, antibody-based therapeutic
products for the treatment of cancer. Y-mAbs is leveraging the Company’s proprietary antibody platforms and deep
expertise in the field of antibodies to develop a broad portfolio of innovative medicines.
The Company is headquartered in New York and was incorporated on April 30, 2015 under the laws of the State
of Delaware.
NOTE 2—BASIS OF PRESENTATION
The Company has incurred losses all years since inception. Operations of the Company are subject to certain risks
and uncertainties, including, among others, uncertainty of drug candidate development; technological uncertainty;
uncertainty regarding patents and proprietary rights; uncertainty in obtaining the FDA approval in the United States and
regulatory approval in other jurisdictions; marketing or sales capability or experience; uncertainty in getting adequate
payor coverage and reimbursement; dependence on key personnel; compliance with government regulations and the need
to obtain additional financing. The Company’s drug candidates currently under development will require significant
additional research and development efforts, including extensive pre-clinical and clinical testing and regulatory approval,
prior to commercialization. These efforts require significant amounts of additional capital, adequate personnel
infrastructure and extensive compliance reporting capabilities.
The Company’s drug candidates are in various stages of development. DANYELZA received accelerated approval
by the FDA in November 2020, but there can be no assurance that the Company’s other research and development efforts
will be successfully completed, that adequate protection for the Company’s intellectual property will be obtained, that any
products developed will obtain necessary government regulatory approval or that any approved products will be
commercially viable. Even if the Company’s product development and commercialization efforts are successful, it is
uncertain when, if ever, the Company will become profitable. The Company operates in an environment of rapid change in
technology and substantial competition from pharmaceutical and biotechnology companies.
The Company’s consolidated financial statements have been prepared on the basis of continuity of operations,
realization of assets and the satisfaction of liabilities in the ordinary course of business. The Company has experienced
negative cash flows from operations since inception, and had an accumulated deficit of $457,470,000 as of December 31,
2023 and $436,043,000 as of December 31, 2022. Through December 31, 2023, the Company has funded the operations
primarily through proceeds from sales of shares of the Company’s common stock, including initial public offering in
September 2018 and the Company’s subsequent public offerings in November 2019 and February 2021, as well as
additional funding from the sales of DANYELZA and from the sale of the Company’s Priority Review Voucher (“PRV”)
obtained upon FDA approval of DANYELZA.
The Company had cash and cash equivalents of $78,637,000 and $105,762,000 as of December 31, 2023 and
2022, respectively. As of the issuance date of the consolidated financial statements for the year ended December 31, 2023,
the Company expects that the cash and cash equivalents at December 31, 2023 will be sufficient to fund the Company’s
operating expenses and capital expenditure requirements as currently planned through at least the next 12 months.
The Company may raise additional capital to fund future operations through the sale of the Company’s equity
securities, incurring debt, entering into licensing or collaboration agreements with partners, grants or other sources of
financing. These potential financing sources are in addition to successful commercialization of DANYELZA and our
product candidates, for which the Company may obtain regulatory approval and marketing authorization. The
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Company’s commercialization strategy may include working with a collaborator or distributor. Sufficient funds may not be
available to the Company on attractive terms or at all when needed from equity, debt or other financing. If the Company is
unable to obtain additional financing from these or other sources when needed, it will likely be necessary to take other
actions to enhance the Company’s liquidity position which may include significantly reducing the rate of spending through
delaying or scaling back operations, or suspending certain research and development programs and other operational
programs in addition to other measures.
The accompanying consolidated financial statements reflect the accounts of the Company and the Company’s
wholly owned subsidiary and have been prepared in accordance with accounting principles generally accepted in the
United States of America (“GAAP”). All intercompany balances and transactions have been eliminated.
NOTE 3—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Use of Estimates
The preparation of consolidated financial statements in conformity with GAAP requires management to make
estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and
liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the
reporting period. Significant estimates and assumptions reflected in these consolidated financial statements include, but are
not limited to, net product revenues, the accrual for research and development expenses, the accrual of milestone and
royalty payments, the valuation of stock options and asset impairments. Estimates are periodically reviewed in light of
changes in circumstances, facts and experience. Changes in estimates are recorded in the period in which they become
known. Actual results could differ from those estimates.
Cash and Cash Equivalents
The Company considers all highly liquid instruments with original maturities of three months or less from date of
purchase to be cash equivalents. All cash and cash equivalents are held in highly rated securities including a treasury
money market fund, which is unrestricted as to withdrawal or use. To date, the Company has not experienced a loss on the
cash and cash equivalents. The carrying amount of cash and cash equivalents approximates its fair value due to its short-
term and liquid nature. The Company’s cash and cash equivalents are held at a large major federal, national bank. The
Company maintains cash balances in excess of insured limits. The Company monitors the financial performance, credit
ratings and liquidity of the money market fund to timely assess and respond to any changes in the asset values of the fund.
The Company does not anticipate any loss with respect to such cash balances.
Accounts Receivable, Net
The Company’s accounts receivable, net balance consists of amounts due from sales of our approved product,
DANYELZA. Receivables from product sales are recorded net of allowances which generally include chargebacks,
doubtful accounts, rebates, returns, and discounts. The allowance is based primarily on assessment of specific identifiable
customer accounts considered at risk or uncollectible, as well as an analysis of current receivables aging and expected
future write-offs. The Company has not historically experienced any significant credit losses. All customer accounts are
actively managed, and no losses are currently expected.
The Company has not experienced any write-offs related to customer accounts receivables and has not recognized
any allowance for doubtful accounts nor reversed any allowances during the years ended December 31, 2023 and 2022.
Concentration of Credit Risk
The Company’s product sales are made through arrangements primarily with three national U.S. specialty
distributors. As of December 31, 2023, the accounts receivable balances from such distributors totaled 66% of the
Company’s outstanding accounts receivable. See Note 4 – Product Revenues, Net, for details of product sales to certain
customers that accounted for more than 10% of total product revenue, net. The remainder of the Company’s accounts
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receivable as of December 31, 2023 represented balances from international distribution partners. The Company has
contractual payment terms with each customer and monitors their financial performance, historical payment terms and
credit worthiness to timely assess and respond to any changes in their credit profile.
Inventories
The Company values the inventories at the lower of cost or net realizable value on a first-in, first-out basis. The
Company’s inventory cost includes amounts related to materials, third-party contract manufacturing, third-party packaging
services, freight, labor costs for personnel involved in the manufacturing process, and indirect overhead costs. Raw and
intermediate materials that may be utilized for both commercial and clinical programs are identical and given the
alternative future use such amounts are initially classified as inventory. Amounts in inventory associated with clinical
development programs are charged to research and development expense when the product enters the research and
development process and can no longer be used for commercial purposes and, therefore, does not have an alternative future
use.
The Company capitalizes inventory costs related to products to be sold in the ordinary course of business. The
Company makes a determination of capitalizing inventory costs for a product based on, among other factors, status of
regulatory approval, information regarding safety, efficacy and expectations relating to commercial sales and recoverability
of costs. For DANYELZA, the Company commenced capitalization of inventory at the receipt of FDA approval.
The Company performs an assessment of the recoverability of capitalized inventory during each reporting period,
and writes down any excess and obsolete inventories to their estimated realizable value in the period in which the
impairment occurs. Such impairment charges, should they occur, are recorded within cost of goods sold. The determination
of whether inventory costs will be realizable requires estimates by management. The Company had inventory write-offs
totaling $831,000 and $1,200,000 in the years ended December 31, 2023 and 2022, respectively, which were each recorded
in cost of goods sold on the Consolidated Statements of Net Loss and Comprehensive Loss.
Fair Value Measurements
Certain assets and liabilities are carried at fair value under GAAP. Fair value is defined as the price that would be
received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the
measurement date (i.e. an exit price). The accounting guidance includes a fair value hierarchy that prioritizes the inputs to
valuation techniques used to measure fair value. The three levels of the fair value hierarchy are as follows:
● Level 1 — Unadjusted quoted prices for identical assets or liabilities in active markets;
● Level 2 — Inputs other than quoted prices in active markets for identical assets and liabilities that are
observable either directly or indirectly for substantially the full term of the asset or liability; and
● Level 3 — Unobservable inputs for the asset or liability, which include management's own assumption about
the assumptions market participants would use in pricing the asset or liability, including assumptions about
risk.
Cash equivalents held in money market funds are valued using other significant observable inputs, which
represent a Level 2 measurement within the fair value hierarchy. The Company has no other cash equivalents.
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The following tables present the Company’s fair value hierarchy for cash equivalents, which are measured at fair
value on a recurring basis (in thousands):
Cash equivalents:
Money market funds
Total
Cash equivalents:
Money market funds
Total
Fair Value Measurements at December 31, 2023 Using:
Level 2 Level 3 Total
Level 1
— $ 75,501
— $ 75,501
$
$
— $ 75,501
— $ 75,501
Fair Value Measurements at December 31, 2022 Using:
Level 2 Level 3 Total
Level 1
— $ 86,965
— $ 86,965
$
$
— $ 86,965
— $ 86,965
$
$
$
$
During the years ended December 31, 2023 and 2022, there were no transfers between Level 1, Level 2 and Level
3.
Operating Lease Right-of-Use Assets and Operating Lease Liabilities
The Company determines if an arrangement includes a lease at inception. Operating lease right-of-use assets
represent the Company’s right to use an underlying asset for the lease term and operating lease liabilities represent the
Company’s obligation to make lease payments arising from the lease. Operating lease right-of-use assets and liabilities are
recognized at the lease commencement date based on the present value of lease payments over the lease term. In
determining the net present value of lease payments, the Company uses an estimated incremental borrowing rate based on
information available at the lease commencement date. Because most of the Compnay’s leases do not provide an implicit
rate of return, an incremental borrowing rate is used based on the information available at the commencement date in
determining the present value of lease payments on an individual lease basis. The Company’s incremental borrowing rate
for a lease is the estimated rate of interest the Company would have to pay on a collateralized basis to borrow an amount
equal to the lease payments under similar terms.
The Company’s leases may include options to extend or terminate a lease which are included in the lease term
when it is reasonably certain that the Company will exercise any such options. None of the Company’s leases contain any
residual value guarantees. Lease expense is recognized on a straight-line basis over the expected lease term. Related
variable lease costs incurred are not material to the Company.
The Company currently elects the short-term lease recognition exemption for all leases that qualify. This means,
for those leases that qualify, the Company will not recognize right-of-use assets or liabilities. The Company also elects the
practical expedient to not separate lease and non-lease components for all of our leases. The Company has made an
accounting policy election to account for each separate lease component of a contract and its associated non-lease
components as a single lease component. See the Lease Agreements section in NOTE 9—LICENSE AGREEMENTS AND
COMMITMENTS for the related disclosures.
Revenue Recognition
To determine revenue recognition for product revenue and license revenue 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 obligations in the contract, (iii) determine the transaction price, (iv) allocate
the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the Company
satisfies a performance obligation. The Company only applies the five-step model to arrangements that meet the definition
of a contract with a customer under ASC 606, including when it is probable that the Company will collect the consideration
the Company is entitled to in exchange for the goods or services it transfers to the customer. At
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contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the goods or
services promised within each contract, determines those that are performance obligations, and assesses whether each
promised good or service is distinct. The company then recognizes as revenue the amount of the transaction price that is
allocated to the respective performance obligation when (or as) the performance obligation is satisfied.
Under the practical expedient permitted under Topic 606, the Company expenses incremental costs of obtaining a
contract as and when incurred if the expected amortization period of the assets is one year or less. If there are multiple
distinct performance obligations, the Company allocates the transaction price to each distinct performance obligation based
on its relative standalone selling price. 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, the Company combines that good or service with other promised goods or services until the
Company identifies a bundle of goods or services that is distinct. The standalone selling price is generally determined
based on the prices charged to customers.
Product revenue, net
The Company recognizes revenue from sales of DANYELZA at a point in time when customer is deemed to have
obtained control of the product, which generally occurs upon receipt at the end-user hospital for sales in the United States,
and upon delivery to the distributors for sales in the international territories.
The amount of revenue the Company recognizes from sales of DANYELZA varies due to rebates, chargebacks
and discounts provided under governmental and other programs, distribution-related fees and other sales-related
deductions. In order to determine those deductions, the Company estimates, utilizing the expected value method, the
amount of revenue that the Company will ultimately be entitled to. This estimate is based upon contracts with customers
and government agencies, statutorily-defined discounts applicable to government-funded programs, estimated payor mix,
and other relevant factors. Calculating these amounts involves estimates and judgments, and the Company reviews these
estimates quarterly. If actual results vary from the Company’s original estimates, the Company will adjust these estimates
quarterly, which would affect net product revenue and earnings in the period such variances occur.
● Rebates and chargebacks
The Company contracts with United States governmental agencies to ensure that DANYELZA will be
eligible for coverage under the various programs administered by the agencies. The Company estimates the
rebates and chargebacks to be provided and deducts these estimated amounts from gross product revenues.
These reserves are recorded in the same period the revenue is recognized, resulting in a reduction of product
revenue and the establishment of accrued liabilities for the rebates and a reduction of accounts receivable for
the chargebacks. The Company develops estimates for rebates and chargebacks based upon (i) the Company’s
contracts with these agencies, (ii) the government-mandated discounts applicable to government-funded
programs, and (iii) information obtained from hospitals and third-party consultants regarding the payor mix.
The Company’s liability for these rebates and chargebacks mainly consists of claims for which invoices have
not yet been received and paid. The Company does not maintain material levels of inventory in the wholesale
or retail channel.
● Discounts and distribution-related fees
The Company provides invoice discounts on DANYELZA sales to distributors for prompt payment and fees
for distribution services and invoice discounts reduce the original accounts receivable balances. The payment
terms for sales to distributors generally include a 2% discount for prompt payment or fees for distribution
services which are based on contractual rates agreed with the respective distributors. Based on historical data
and experiences with the distributors, the Company expects the distributors to earn these discounts and fees
and deduct the full amount of these discounts and fees from the Company’s gross product revenue at the time
such revenues are recognized.
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● Returns
The Company offers customers limited product return rights for damaged, defective, or expiring products.
The Company estimates returns on sales of DANYELZA mainly based on information provided to the
Company from the hospitals and distributors. The return reserves are recorded in the same period the related
revenue is recognized, resulting in a reduction of product revenue and accounts receivable.
In December 2022, the Company announced a distribution agreement with WEP Clinical Ltd., or WEP, in
connection with an early access program for DANYELZA in Europe. There are no regulatory-based or sales-based
milestone payments or royalty arrangements under this distribution agreement. The Company recognizes revenue when
WEP obtains control of the product upon delivery. The Company invoices WEP based on the terms of the distribution
agreement, where a portion is billed upon shipment of product and the unbilled portion is billed at a later date based on
terms of the distribution agreement. The Company has an unconditional right to the unbilled portion of the receivable and
the Company estimates that the receivable will be collected within one year and therefore has recorded the balance at
December 31, 2023, within accounts receivable on the Consolidated Balance Sheets.
License revenue
The Company’s license agreements include regulatory-based milestone payments and sales-based milestone
payments, in addition to royalties. The Company determines whether the achievement of each regulatory-based milestone
is constrained as they are contingent upon regulatory approvals, which are not within the control of the Company and
therefore not deemed probable. The Company expects that the sales-based milestones and royalty payments will be
recognized when the milestone is achieved or the related sales occur. The Company re-evaluates the transaction price each
quarter and as uncertain events are resolved or other changes in circumstances occur, the Company assesses whether this
resolves the constraint and it is appropriate to recognize revenue.
In December 2020, the Company entered into a development and commercialization arrangement with SciClone
International Pharmaceuticals Ltd., or SciClone, for certain indications of DANYELZA and omburtamab for Greater
China, including Mainland China, Taiwan, Hong Kong and Macau. Based on the terms of the agreement, the Company
may receive regulatory-based milestone payments up to $40,000,000, of which $15,000,000 has already been recognized
and received in December 2022 for the conditional approval of DANYELZA in China, and sales-based milestone
payments up to $60,000,000 and is entitled to royalties based upon the net sales generated by SciClone related to the
product indications in the territory. The Company expects that the remaining regulatory-based and sales-based milestones
will be recognized when each milestone is achieved.
In November 2020, the Company entered into an exclusive license and distribution agreement for DANYELZA
and omburtamab with Takeda Israel, a wholly owned subsidiary of Takeda Pharmaceutical Company Limited covering the
State of Israel, West Bank and Gaza Strip. Based on the terms of the arrangement, the Company may receive regulatory-
based milestone payments up to $750,000, of which $250,000 has already been recognized, and sales-based milestone
payments up to $500,000 and is entitled to royalties based upon the net sales generated by Takeda related to the product in
the territory. The Company expects that the remaining regulatory-based and sales-based milestones will be recognized
when the milestone is achieved, or the related sales occur.
In December 2020, the Company entered into a distribution agreement for DANYELZA and omburtamab with
Swixx BioPharma AG for the Eastern European territories Bosnia & Herzegovina, Bulgaria, Croatia, Czech Republic,
Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Russia, Serbia, Slovakia and Slovenia. There are no regulatory-
based or sales-based milestone payments or royalty arrangements under this distribution agreement.
In May 2021, the Company entered into an exclusive distribution agreement with Adium Pharma S.A. (“Adium”)
for Adium to be the exclusive distributor in Latin America of the Company’s antibodies omburtamab, if approved, and
DANYELZA. Under the terms of the agreement, the Company may receive regulatory-based milestone payments up to
$3,000,000, of which $1,000,000 was received in April 2022 upon the submission of the updated FDA BLA dossier for
DANYELZA. In addition, the Company is entitled to royalties based upon DANYELZA net sales generated by Adium in
Latin America. The agreement with Adium does not contain a regulatory-based milestone related
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to the Brazilian Health Regulatory Agency’s approval for marketing authorization, which was granted during the three
months ended June 30, 2023. During the year ended December 31, 2023, the Company recognized $500,000 in regulatory-
based license revenue from Adium pursuant to the distribution agreement in connection with the September 2023
achievement of marketing authorization for DANYELZA in Mexico. In January 2024, the Company accepted the price
approval for the first product in Brazil from the Brazilian Medicines Market Regulation Chamber, or CMED. The
Company received $0.5 million regulatory-based payment from Adium in connection with the price approval from CMED
in the first quarter of 2024. The Company expects that the sales-based milestones and royalty payments will be recognized
when and if the milestones are achieved or the related sales occur.
In December 2022, the Company announced a distribution agreement with WEP Clinical Ltd., or WEP, in
connection with an early access program for DANYELZA in Europe. There are no regulatory, or sales-based milestone
payments or royalties under this distribution agreement.
Segment Information
The Company is engaged solely in operations related to the discovery, development, distribution and
commercialization of novel antibody-based therapeutic products for the treatment of cancer, which the Company defines as
one operating segment.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation expense is recognized using
the straight-line method over the estimated useful life of each asset as follows:
Furniture and fixtures
Machinery and equipment
Leasehold improvements
Estimated Useful Life
5 years
5 years
Shorter of life of lease or 15 years
Depreciation expense on property and equipment was $386,000 and $662,000 for the years ended December 31,
2023 and 2022.
Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from
the accounts and any resulting gain or loss is included in loss from operations. Expenditures for repairs and maintenance
are expensed as incurred.
Impairment of Long-Lived Assets
ASC 360, Property, Plant and Equipment, addresses the financial accounting and reporting for impairment or
disposal of long-lived assets. The Company reviews the recorded values of long-lived assets for impairment whenever
events or changes in business circumstance indicate that the carrying amount of an asset or group of assets may not be fully
recoverable. During the year ended December 31, 2022, the Company recorded an impairment charge of $617,000 to write-
off the net book value of fixed assets that were related to the production of omburtamab, which did not receive FDA
regulatory approval, as the equipment has no alternative use. The impairment charge was recorded within research and
development expense within the Company’s Consolidated Statements of Net Loss and Comprehensive Loss and foreign
currency and other transactions within the Company’s Consolidated Statements of Cash Flows.
The Company did not have impairment of long-lived assets for the year ended December 31, 2023.
Provision for Income Taxes
The Company accounts for income taxes under the asset and liability approach for the financial accounting and
reporting of income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences
attributable to net operating loss carry forwards and temporary differences between the financial statement carrying
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amounts of existing assets and liabilities and their respective tax bases. These assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in which the temporary differences are expected to
reverse. The Company maintains a full valuation allowance on deferred tax assets based on cumulative historical and
expected losses. If the Company achieves profitability, the Company will consider the continued need for such a full
valuation allowance.
Tax returns are prepared and filed based on the Company’s interpretation of tax laws and regulations. In the
normal course of business, the Company’s tax returns are subject to examination by various taxing authorities. Such
examinations may result in future tax and interest assessments by these taxing authorities. In determining the Company’s
provision for income taxes for financial reporting purposes, the Company establishes a reserve for uncertain tax positions
unless such positions are determined to be more likely than not of being sustained upon examination based on their
technical merits. The Company considers many factors when evaluating and estimating tax positions and tax benefits,
which may require periodic adjustments and which may not accurately anticipate actual outcomes. Accordingly, the
Company will report a liability for unrecognized tax benefits resulting from any uncertain tax positions taken or expected
to be taken on a tax return.
The Company’s policy is to recognize, when applicable, interest and penalties on uncertain tax positions as part of
income tax expense.
In accordance with guidance issued by Financial Accounting Standards Board (“FASB”), companies should make
and disclose a policy election as to whether they will recognize deferred taxes for basis differences expected to reverse as
Global Intangible Low-Taxed Income (“GILTI”) or whether they will account for GILTI as period costs if and when
incurred. The Company has elected to recognize the resulting tax with respect to the GILTI provision as a period cost. No
costs were incurred by the Company through December 31, 2023 as a result of GILTI.
Research and Development
Research and development costs are charged to operations when incurred and are included in operating expenses.
Research and development costs consist principally of compensation cost for the Company’s employees and consultants
that perform research activities, the fees paid to maintain licenses, the payments to third-party CMOs and CROs for
manufacturing and services performed for products in development, and consumables and other materials used in research
and development. The Company records accruals for estimated ongoing research and development costs. When evaluating
the adequacy of accrued liabilities, we analyze progress of the studies or clinical trials, including the phase or completion
of events, invoices received and contracted costs. Actual results could differ from our estimates.
Additionally, the Company is obligated to make certain royalty and clinical, regulatory and sales-based milestone
payments in accordance with the contractual terms of the MSK License, CD33 License, MabVax Sublicense, and SADA
License based upon the resolution of certain contingencies. The Company records the clinical and regulatory milestone
payments when the achievement of the milestones or payment of the milestones is deemed probable, and the amount of the
payment is reasonably estimable. As it relates to clinical and regulatory milestone payments under the licensing
arrangements, those may become due and payable with the passage of time whether or not the milestones have actually
been met. When evaluating whether milestones should be recognized under the licensing arrangements, the Company relies
on the collective clinical experience within the organization to determine the likelihood of achievement, as well as the
current stage of the compounds under development, estimates of the progress of the Company’s preclinical studies and
clinical trials, completion of milestone events per underlying agreements, the time expected to complete certain
development activities, each party’s termination right under the license agreements, invoices received and contracted costs
when evaluating whether the clinical milestones should be recognized in each reporting period. The Company reviews
estimates each period and determines whether to make revisions to such estimates as necessary.
Selling, General and Administrative
The Company expenses selling, general, and administrative costs as incurred. Selling, general and administrative
costs consist primarily of salaries, bonus, benefits, and stock-based compensation expenses for personnel in executive,
commercial, finance and administrative functions. Other significant costs include costs of
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commercialization of DAYNELZA, costs of legal matters and insurance. Other significant costs for 2022 also included
commercial cost related to the potential launch of omburtamab in 2022. Advertising and promotion costs are included in
selling, general, and administrative expenses and were immaterial in the years ended December 31, 2023 and 2022.
Advertising and product promotion costs are expensed as incurred.
Stock-Based Compensation
The Company measures stock options granted to employees and directors based on the fair value on the date of
the grant and recognizes compensation expense of those awards, over the requisite service period, which for employees and
directors is the vesting period of the respective award. Forfeitures are accounted for as they occur. The Company issues
stock options with only service-based or immediate vesting conditions and records the expense for these awards using the
straight-line method over the requisite service period.
The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing
model. The Company’s public trading commenced in September 2018, and, as a result, there is limited available historical
volatility experience. Therefore, we estimate our expected share price volatility based on the weighting of our own
volatility in the estimation with the historical volatility of a group of publicly traded peer companies, and we expect to
continue to do so until such time as we have adequate historical data regarding the volatility of our own traded share price.
The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards as the
Company has limited historical data to support the expected term assumption. The risk-free interest rate is determined by
reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to
the expected term of the award. The expected dividend yield is based on the fact that the Company has never paid cash
dividends on common shares and does not expect to pay any cash dividends in the foreseeable future.
The fair value of restricted stock units is determined at the grant-date price of the Company’s common stock.
Comprehensive Loss
Comprehensive loss includes net loss as well as other changes in stockholders’ equity that result from transactions
and economic events other than those with shareholders. The difference between net loss and comprehensive loss for the
period presented in the accompanying consolidated financial statements was due to foreign currency translation.
Foreign Currency
The consolidated financial statements of the Company’s international subsidiary with a functional currency other
than the U.S. dollar is translated into U.S. dollars using period-end exchange rates for assets and liabilities, historical
exchange rates for stockholders’ equity and weighted average exchange rates during the period for operating results.
Translation gains and losses are included in Accumulated Other Comprehensive Income/(Loss) in the Consolidated
Statement of Net Loss and Comprehensive Loss. The Company recognized foreign currency translation losses of $882,000
and $40,000 for the years ended December 31, 2023 and 2022, respectively. Foreign currency transaction gains and losses
are included in interest and other income/(loss), net, in the Consolidated Statements of Net Loss and Comprehensive Loss.
The Company recorded a foreign currency transaction gain of $524,000 and a foreign currency transaction loss of
$848,000 for the years ended December 31, 2023, and 2022, respectively.
Earnings Per Share
The Company reports net earnings per share in accordance with ASC 260, Earnings per Share. Basic net loss per
share (“EPS”) is calculated by dividing net income or loss attributable to common stockholders by the weighted average
common stock outstanding. Diluted EPS is calculated by adjusting weighted average common shares outstanding for the
dilutive effect of common stock options and restricted stock units. In periods in which a net loss is recorded, no effect is
given to potentially dilutive securities, since the effect would be antidilutive. Similarly, securities
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that could potentially dilute basic EPS in the future are not included in the computation of diluted EPS because to do so
would have been antidilutive.
Recently Issued Accounting Pronouncements
From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board, or
FASB, and are adopted by the Company as of the specific effective date. The Company adopted ASU 2022-04, ASU 2022-
02, ASU 2022-01 and ASU 2021-08 effective January 1, 2023, and the adoption of these new standards did not have a
material impact on the Company’s consolidated financial statements or disclosures.
In December 2023, the FASB issued ASU 2023-09, Improvement to income tax disclosures (Topic 740). ASU
2023-09 addresses annual disclosures related to the income tax rate reconciliation and the income taxes paid within the tax
note. ASU 2023-09 requires consistent categories and greater disaggregation of information in the income tax rate
reconciliation as well as a disaggregation of taxes paid by jurisdiction for the income taxes paid. ASU 2023-09 is required
to be adopted by the Company for annual periods beginning after December 15, 2024. Early adoption is permitted for
annual consolidated financial statements that have not yet been issued or made available for issuance. The Company is
evaluating the impact of this update on the Company’s disclosures.
The Company has evaluated all other accounting pronouncements recently issued but not yet adopted and believes
that these pronouncements will not have a material impact on the Company’s consolidated financial statements or
disclosures.
NOTE 4—PRODUCT REVENUE, NET
The Company’s product revenue, net was generated from sales of DANYELZA and consists of the following (in
thousands):
United States
Other countries
Total product revenue, net
Year ended December 31,
2023
2022
$
$
67,814
16,505
84,319
$
$
46,259
3,008
49,267
The majority of the Company’s product sales were in the United States with additional sales in China, Europe,
Latin America and Israel through sublicenses and distribution agreements. The Company’s product revenue, net from other
countries for the year ended December 31, 2023, included $8,621,000 of product revenue, net from the Company’s
distribution partner, WEP. The Company’s product revenue, net from other countries for the year ended December 31,
2023, also included $3,535,000 of product revenue and related royalties for the commercial launch initial inventory
stocking order from the Company’s distribution partner, SciClone, which launched commercial sales in China in June
2023. The Company recognized royalty revenue from the distribution partners of $4,453,000 and $2,120,000 in the years
ended December 31, 2023 and 2022, respectively.
The Company had product sales to certain customers that accounted for more than 10% of total product revenue,
net for the years ended December 31, 2023 and 2022. McKesson, AmerisourceBergen, WEP and Cardinal Health
accounted for 46%, 22%, 10% and 13%, respectively, of the Company’s product revenue, net for the year ended December
31, 2023. McKesson, AmerisourceBergen, and Cardinal Health accounted for 71%, 17%, and 10%, respectively, of the
Company’s product revenue, net for the year ended December 31, 2022.
As of December 31, 2023, the Company has recorded on the Consolidated Balance Sheets accounts receivable of
approximately $5,834,000, of which $3,684,000 represents an unbilled portion to which we have unconditional rights to
collect the consideration, and accrued liabilities of $326,000 related to product sales to WEP during the year ended
December 31, 2023.
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Revenue from product sales is recorded net of applicable provisions for rebates, chargebacks, discounts,
distribution-related fees and other sales-related deductions. Accruals for chargebacks and discounts are recorded as a direct
reduction to accounts receivable. Accruals for rebates, distribution-related fees without contractual right of offset and other
sales-related deductions are recorded within accrued liabilities. As of December 31, 2023, the Company had recorded
accounts receivable allowances of approximately $492,000 and accrued liabilities of $2,309,000 related to product sales.
As of December 31, 2022, the Company had recorded accounts receivable allowances of approximately $508,000 and
accrued liabilities of $2,474,000 related to product sales.
An analysis of the change in reserves for discounts and allowances is summarized as follows (in thousands):
Discounts
Contractual
Allowances and
Government Rebates
Returns
Total
Balance December 31, 2022
Current provisions relating to sales in current year
Payments/credits relating to sales in current year
Change in estimate related to sales in the prior year
Balance December 31, 2023
$
$
33
238
(230)
—
41
$
$
2,905
8,361
(7,482)
(1,090)
2,694
$
$
44
519
(497)
—
66
$
$
2,982
9,118
(8,209)
(1,090)
2,801
During the year ended December 31, 2023, the Company recorded a change in estimate related to assessed
Medicaid claims data experience and reserves for historical earned periods. The change in estimate resulted in a benefit of
$1,090,000 for the year ended December 31, 2023.
NOTE 5—NET LOSS PER SHARE
The calculations of basic and diluted net loss per share are as follows (in thousands, except per share amounts):
Net loss (numerator)
Weighted-average shares (denominator), basic and diluted
Basic and diluted net loss per share
Year ended December 31,
2023
2022
$
$
(21,427)
43,645
(0.49)
$
$
(95,568)
43,704
(2.19)
Potentially dilutive securities excluded from the computation of diluted earnings per share relate to stock options
and unvested restricted share units outstanding totaled 9,658,737 shares and 7,113,122 shares as of December 31, 2023 and
2022, respectively.
NOTE 6—INVENTORIES
Inventories consist of the following (in thousands):
Work In Progress
Finished Goods
Total Inventories
December 31, 2023
December 31, 2022
14,021
2,992
17,013
$
$
11,317
666
11,983
$
$
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Inventories are classified on the Consolidated Balance Sheets in each respective period (in thousands):
CURRENT ASSETS
Inventories
Total recorded in Current Assets
NONCURRENT ASSETS
Other assets
Total recorded in Noncurrent Assets
Total Inventories
December 31, 2023
December 31, 2022
$
$
5,065
5,065
11,948
11,948
17,013
$
$
6,702
6,702
5,281
5,281
11,983
As of December 31, 2023 and 2022, the Company has classified $11,948,000 and $5,281,000, respectively, of
work in progress inventories as noncurrent assets based on the Company’s current demand schedule and expectation that
such inventory will be utilized after one year from the balance sheet date. Changes in noncurrent assets are reflected on the
Consolidated Statements of Cash Flows within the caption of other assets.
During the year ended December 31, 2023 and 2022, the Company recorded charges to write off inventory of
$831,000 and $1,200,000, respectively.
NOTE 7— INTANGIBLE ASSETS, NET
The Company’s intangible assets, net as of December 31, 2023 totaled $2,631,000, net of $669,000 of
accumulated amortization. The Company’s intangible assets, net as of December 31, 2022 totaled $2,986,000, net of
$314,000 of accumulated amortization. The Company recognized an intangible asset of $1,500,000 for the royalty payable
to MSK in 2022 for their share of the regulatory-based milestone payment of $15,000,000 by SciClone for the conditional
approval of DANYELZA in China. The Company’s intangible assets, net related to capitalized milestone payments made
following FDA and other regulatory approvals, and commercialization of DANYELZA.
Intangible assets are amortized on a straight-line basis based on a 10-year useful life of the assets. Annual
amortization expense is expected to be $355,000 each year for the five-year period from 2024 to 2028, and $856,000
thereafter.
NOTE 8—ACCRUED LIABILITIES
Accrued liabilities as of December 31, 2023 and December 31, 2022 are as follows (in thousands):
Accrued licensing, milestone and royalty payments
Accrued clinical costs
Accrued compensation and board fees
Accrued manufacturing costs
Accrued sales reserves
Other
Total
December 31, December 31,
2023
2022
$
$
3,452
597
3,858
2,531
2,309
419
13,166
$
$
4,002
932
2,445
2,977
2,474
411
13,241
NOTE 9—LICENSE AGREEMENTS AND COMMITMENTS
The Company has entered into three license agreements and certain other agreements with Memorial Sloan
Kettering Cancer Center (“MSK”). The license agreements include the MSK License Agreement, dated August 20, 2015,
between the Company and MSK (the “MSK License”), and the CD33 License Agreement, dated November 13, 2017,
between the Company and MSK (the “CD33 License”). Through the Settlement and Assumption and Assignment
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of the MSK License and Y-mAbs Sublicense Agreement, dated December 2, 2019, among MabVax Therapeutics Holdings,
Inc. and MabVax Therapeutics, Inc., (together “MabVax"), the Company and MSK (the “SAAA”), the Company has
established a direct license with MSK relating to the GD2-GD3 Vaccine, which was originally sublicensed by the Company
in 2018 from MabVax.
In addition, the Company entered into a license agreement, dated April 15, 2020, with MSK and Massachusetts
Institute of Technology (“MIT”) (the “SADA License Agreement”). These license agreements with MSK and MIT grant
the Company certain patent rights and intellectual property rights, and in consideration thereof, the Company agreed to
make certain payments and issue shares of the Company’s common stock to MSK and MIT. Certain payments are
contingent milestone and royalty payments, as disclosed in the table below. Amounts disclosed in NOTE 8—ACCRUED
LIABILITIES for accrued milestone and royalty payments are inclusive of obligations under the MSK License Agreement,
CD33 License Agreement, MabVax License Agreement and SADA License Agreement, collectively.
In the past, the Company had defined MSK as a related-party under the Company’s related-party policy. During
the year ended December 31, 2023, the Company updated the related-party policy to remove MSK as a related-party as
MSK does not participate on the Company’s Board of Directors, does not have a significant ownership in the Company,
and is not in a position to exert decision making power.
MSK License
The MSK License relates to intellectual property for DANYELZA and requires the Company to pay to MSK mid
to high single-digit royalties based on annual net sales of licensed products or the performance of licensed services by the
Company and the Company’s affiliates and sublicensees. The Company is required to pay annual minimum royalties of
$80,000 over the royalty term, which amounts are non-refundable but are creditable against royalty payments otherwise
due thereunder. The Company is also obligated to pay to MSK certain clinical, regulatory and sales-based milestone
payments under the MSK License, which payments become due at the earlier of completion of the related milestone
activity or the date indicated in the MSK License even if the related milestone activity is not achieved.
In addition, to the extent the Company enters into sublicense arrangements, the Company is required to pay to
MSK a percentage of certain payments that the Company receives from sublicensees of the rights licensed to the Company
by MSK, which percentage will be based upon the date the Company receives such payments or the achievement of certain
clinical milestones. The Company has entered into sublicenses and distribution agreements related to DANYELZA and
omburtamab under the MSK License with Takeda Israel, Swixx BioPharma AG and SciClone in 2020, with Adium in 2021
and WEP Clinical Ltd. In 2022.
The terms of the MSK License provide that MSK is entitled to receive 40% of the income generated from the sale
of first PRV, and 33% of any income generated from the sale of any subsequent PRV or the sale of other comparable
incentives provided by any non U.S. jurisdiction. The Company sold the first PRV in connection with DANYELZA, and
collected the proceeds in January 2021.
The MSK License will expire, on a country by country basis, and on a licensed product by licensed product or
licensed service by licensed service basis, on the later of (i) the expiration of the last to expire of the patents and patent
applications covering such licensed product or service in such country, (ii) the expiration of any market exclusivity period
granted by a regulatory authority for such licensed product or service in such country, or (iii) 15 years from the first
commercial sale of such licensed product or service in such country.
MSK may terminate the MSK License upon prior written notice in the event of our uncured material breach, or
upon prior written notice if such breach is of a payment obligation. MSK may also terminate the MSK License upon
written notice in the event of our bankruptcy or insolvency or our conviction of a felony relating to the licensed products,
or if the Company challenges the validity or enforceability of any licensed patent right. In addition, the Company has the
right to terminate the MSK License in its entirety at will upon prior written notice to MSK, but if the Company has
commenced the commercialization of licensed products and/or licensed services the Company can only terminate at will if
the Company ceases all development and commercialization of such licensed products and/or licensed services.
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The Company’s failure to meet certain conditions under the MSK License could cause the related license to such
licensed product to be canceled and could result in termination of the MSK License by MSK.
CD33 License
The CD33 License grants the Company a worldwide, sub licensable license to MSK’s rights in certain patent
rights and intellectual property rights related to certain know how to develop, make and commercialize licensed products
and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics in connection with certain
CD33 antibodies generated in a specific principal investigator’s laboratory at MSK and constructs thereof. The CD33
License is exclusive with respect to such patent rights and tangible materials within such know how, and nonexclusive with
respect to MSK’s rights in such know how and related intellectual property rights. As product candidates progress through
clinical development, regulatory approval and commercialization, certain milestone payments will come due either as a
result of the milestones having been met or the passage of time even if the milestones have not been met.
In addition, the CD33 License contains minimum royalty payments that become due beginning in year 10 of
$40,000 per year over the royalty term, increasing to $60,000 once a patent within the licensed rights is issued, subject to
increase and creditable against any royalty payments due based on sales in the future. The Company is required to pay mid
to high single digit royalties on sales of licensed products. Additionally, the terms of the CD33 License provide that MSK
is entitled to receive 25% of any income generated from the sale of any PRV or the sale of other comparable incentives
provided by any non U.S. jurisdiction.
The MSK CD33 License will expire, on a country by country basis, and on a licensed-product by licensed-product
or licensed service by licensed service basis, on the later of (i) the expiration of the last to expire of the patents and patent
applications covering such licensed product or service in such country, (ii) the expiration of any market exclusivity period
granted by a regulatory authority for such licensed product or service in such country, or (iii) 15 years from the first
commercial sale of such licensed product or service in such country.
MSK may terminate the CD33 License upon prior written notice in the event of our uncured material breach, or
upon prior written notice if such breach is of a payment obligation. MSK may also terminate the CD33 License upon
written notice in the event of the Company’s bankruptcy or insolvency or the Company’s conviction of a felony relating to
the licensed products, or if the Company challenges the validity or enforceability of any licensed patent right. In addition,
the Company has the right to terminate the CD33 License in its entirety at will upon prior written notice to MSK, but if the
Company has commenced the commercialization of licensed products and/or licensed services the Company can only
terminate at will if the Company ceases all development and commercialization of such licensed products and/or licensed
services.
MabVax/MSK License
Pursuant to the SAAA, the Company is granted certain patent rights and know-how for development and
commercialization of products for the prevention or treatment of NB by means of administering a bi-valent ganglioside
vaccine.
Pursuant to the SAAA, the Company is required to pay development milestones and mid-single digit royalty
payments to MSK. In addition, if the Company obtains FDA approval for the GD2-GD3 Vaccine, then the Company is
obligated to file with the FDA for a PRV. The SAAA stipulates that, if the Company is granted a PRV from the FDA
covering a licensed product under the MabVax/Y-mAbs Sublicense and the PRV is subsequently sold, the Company will
pay directly to MSK a total of 20% of the proceeds from the sale thereof. The MabVax License Agreement will expire with
effect for the Company, on a country-by-country basis, on the later of the expiration of (i) 10 years from the first
commercial sale of the licensed product in such country or (ii) the last to expire valid claim covering such licensed product
rights at the time of and in the country of sale.
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SADA License
Pursuant to the SADA License Agreement, the Company was granted an exclusive worldwide, sublicensable
license to MSK’s and MIT’s rights to certain patent and intellectual property to develop, make, and commercialize licensed
products and to perform services for all therapeutic and diagnostic uses in the field of cancer diagnostics and cancer
treatments using the Self-Assembly DisAssembly Pretargeted, or SADA PRIT, technology platform.
The SADA License Agreement requires the Company to pay MSK and MIT mid to high single-digit royalties
based on annual net sales of licensed products or the performance of licensed services by the Company and the Company’s
affiliates and sublicensees. The Company is obligated to pay non-refundable annual minimum royalties of $40,000,
increasing to $60,000 once a patent has been issued, over the royalty term, commencing on the tenth anniversary of the
license agreement.
The Company is also obligated to pay MSK and MIT certain clinical, regulatory and sales-based milestone
payments under the SADA License Agreement. Certain clinical and regulatory milestone payments become due at the
earlier of completion of the related milestone activity or the date indicated in the SADA License Agreement even if the
related milestone activity is not achieved.
In addition, to the extent the Company enters into sublicense arrangements, the Company is obligated to pay to
MSK and MIT a percentage of certain payments received from sublicensees of the rights licensed to us by MSK and MIT,
which percentage will be based upon the achievement of certain clinical milestones. The Company has not entered into any
sublicenses related to the SADA License Agreement. For each of the constructs previously generated by MSK using the
SADA PRIT Technology and sold for the Company by a sublicensee, the Company may pay sales milestones up to
$60,000,000, in total, based on the achievement of various levels of cumulative net sales made by the sublicensee.
The Company recognized an expense of $4,125,000 related to clinical milestones under the SADA License
Agreement during the year ended December 31, 2023, as the Company determined certain time-based clinical milestones
within the agreement are probable based on the availability of necessary data and the assessment of clinical progress. The
Company did not recognize any expenses related to milestones under the SADA License Agreement during the year ended
December 31, 2022. The Company made a final $1,000,000 license continuation payment under the SADA License
Agreement in the year ended December 31, 2022. The Company had current liabilities of $1,000,000 and $605,000 in
accrued liabilities as of December 31, 2023 and 2022, respectively. The Company had non-current liabilities of $3,125,000
in accrued milestone and royalty payments as of December 31, 2023. The Company made a payment of $605,000 in the
year ended December 31, 2023, related to achievement of the milestone for dosing the first patient in the Phase 1 trial of
GD2-SADA in April 2023.
Failure by the Company to meet certain conditions under the arrangement could cause the related license to such
licensed products to be canceled and could result in termination of the entire arrangement with MSK and MIT. In addition,
the Company may terminate the SADA License Agreement with prior written notice.
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Summary of Significant License Agreements and Related Commitments
The below table represents the maximum clinical, regulatory or sales-based milestones as reflected within the
significant license agreements, certain of which have been paid in prior periods or are accrued as presented in the table
below (in thousands):
Agreements
MSK
CD33
MabVax
SADA
Maximum
Clinical
Milestones
$ 2,450
550
200
4,730
Maximum
Regulatory
Milestones
$ 9,000
500
1,200
18,125
Maximum
Sales-based
Milestones
$ 20,000
7,500
—
23,750
The below table represents all obligations pertaining to the significant license agreements that have been paid,
expensed or accrued as of and for the years ended December 31, 2023 and 2022 (in thousands):
Cash paid Cash paid
Expense
Twelve
months
ended
December 31, December 31, December 31, December 31, December 31, December 31, December 31,
Accrued
liabilities
Non-current
as of
Accrued
liabilities
Current
as of
Accrued
liabilities
Current
as of
Expense
Twelve
months
ended
Twelve
months
ended
Twelve
months
ended
Accrued
liabilities
Non-current
as of
December 31,
Agreements
MSK
CD33
MabVax
SADA
2023
2022
2023
2022
2023
2023
2022
2022
$
6,027
$
2,871
$
5,158
$
3,582 $
2,452
$
1,950
$
3,397
$
—
10
605
150
10
1,000
—
10
4,125
—
10
—
—
—
1,000
300
—
3,125
—
—
605
1,950
300
—
—
Minimum royalties and certain clinical, regulatory and sales milestones that become due based upon the passage
of time under the MSK License Agreement, CD33 License Agreement, the MabVax Agreement, and the SADA License
Agreement are excluded from the above table as the Company does not consider such obligations to be probable as of
December 31, 2023 and December 31, 2022.
Research and development is inherently uncertain and should such research and development fail, the MSK
License Agreement, the CD33 License Agreement, the SADA License Agreement and the MabVax License Agreement as
well as the MabVax/Y-mAbs Sublicense are cancelable at the Company’s option. The Company will also consider the
development risk and each party’s termination rights under the respective agreement when considering whether any clinical
or regulatory-based milestone payments, certain of which also contain time-based payment requirements, are probable. The
Company records milestones in the period in which the contingent liability is probable and the amount is reasonably
estimable.
Other agreements
The Company has also entered into various other support agreements with MSK including a sponsored research
agreement to provide research services related to the intellectual property licensed under the MSK License Agreement; a
master data services agreement, for services provided up to approximately five full-time employees at MSK, who are
engaged in transferring clinical data, databases, regulatory files and other know-how included in the MSK License
Agreement to the Company; a master clinical trial agreement pursuant to which the Company committed to fund certain
clinical trials at MSK; two separate core facility service agreements pursuant to which the Company committed to
obtaining certain laboratory services from MSK; and in October 2020 the Company entered into a SADA sponsored
research agreement pursuant to which the Company agreed to pay MSK to provide research services over a period of three
years related to the intellectual property licensed under the SADA License Agreement. The scientific research took place
over a period that commenced in September 2020 and ended in February 2022.
For the years ended December 31, 2023 and 2022, the Company incurred research and development expenses of
$190,000 and $1,746,000, respectively, under these agreements.
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Lease Agreements
In February 2019, the Company entered into a lease agreement in connection with the Company’s 4,548 square
feet laboratory in New Jersey. In December 2019, the Company expanded the space with an additional 235 square feet. The
original term of the lease was three years from the date the Company occupied the premises, with an option to extend for
an additional two years which was to expire in January 2024, which the Company exercised and had included in the
determination of the related lease liability. In July 2023, the Company entered into a lease amendment to extend the term to
February 2025. Fixed rent payable under the lease is approximately $177,000 per annum and is payable in equal monthly
installments of approximately $15,000 per month.
In January 2018, the Company entered into a lease agreement in connection with the Company’s corporate
headquarters in New York. The term of the lease was six years from the date the Company began to occupy the premises
and the lease was to expire in April 2024. In August 2023, the Company entered into a lease amendment to extend the term
to April 2025. Fixed rent payable under the lease is approximately $408,000 per annum and is payable in equal monthly
installments of approximately $34,000.
In February 2018, the Company entered into a lease agreement for certain office space in Denmark, which has
been amended several times. The lease was renewed on November 1, 2021 with a four-year term that expires in November
2025. The lease is payable in monthly installments of approximately $41,000. In January 2023, the Company notified the
landlord of the intention to reduce the leased premise as a result of the Company’s strategic restructuring. The lease
modification resulted in an immaterial charge in the year ended December 31, 2023.
Total operating lease costs were $1,033,000 and $2,646,000 for the years ended December 31, 2023 and 2022,
respectively.
For the year ended December 31, 2023, the operating lease expenses were recorded as $780,000 in research and
development expense and $253,000 in selling, general and administrative expense. For the year ended December 31, 2022,
the expenses were recorded as $2,404,000 in research and development expense and $242,000 in selling, general and
administrative expense. Cash paid for amounts included in the measurement of lease liabilities was $1,057,000 and
$2,286,000 for the years ended December 31, 2023 and 2022, and were included in net cash used in operating activities in
the Company’s Consolidated Statements of Cash Flows.
Maturities of operating lease liabilities as of December 31, 2023 and 2022 were as follows (in thousands):
Years ending December 31,
2023
2024
2025
Total lease payments
Less: Imputed interest
Total operating lease liabilities as of period end
Operating Leases
as of December 31, 2023
Operating Leases
as of December 31, 2022
$
$
— $
996
526
1,522
(103)
1,419
$
997
490
419
1,906
(139)
1,767
Operating lease liabilities are based on the net present value of the remaining lease payments over the remaining
lease term. In determining the present value of lease payments, the Company estimates the incremental borrowing rate
based on the information available at the lease commencement date. As of December 31, 2023, the weighted average
remaining lease term is 1.61 years and the weighted average discount rate used to determine the operating lease liability is
8.3%. As of December 31, 2022, the weighted average remaining lease term was 2.36 years and the weighted average
discount rate used to determine the operating lease liability was 8.3%.
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Former Chief Executive Officer Contractual Severance Related Benefits
On April 27, 2022, the Company announced certain executive management changes. Effective April 22, 2022, Dr.
Claus Juan Møller San Pedro stepped down from his positions as Chief Executive Officer and as a member of the
Company’s Board of Directors. There were no disagreements with the Company expressed by Dr. Møller on any matters
relating to the Company’s operations, policies or practices. Dr. Møller’s contractual severance related benefits provided for
cash compensation of $1,589,000, which included salary and certain benefits continuation. All of the cash compensation
had been paid as of December 31, 2022. Also, under terms of the equity award agreement, Dr. Møller’s outstanding stock
option awards will continue to vest as scheduled and become exercisable when vested. This resulted in a non-cash share-
based compensation charge of $9,286,000 in the year ended December 31, 2022 as there was no longer a service condition
related to such awards. The total charge of $10,875,000 related to the executive management change was recorded in
selling, general and administrative expenses during the year ended December 31, 2022. There was no financial impact in
the year ended December 31, 2023.
Legal Matters
Donoghue vs. Y-mAbs Therapeutics, Inc., and Gad
The Company has been named a nominal defendant in a lawsuit filed in the U.S. District Court, Southern District
of New York, on August 25, 2021, by one of the Company’s stockholders, Deborah Donoghue (Case No. 1:21-cv-07182).
The suit names the Company’s Chief Business Officer, and Vice Chairman of the Company’s board of directors, Mr.
Thomas Gad as an additional defendant, and it seeks to compel Mr. Gad to disgorge alleged short swing profits stemming
from a certain transaction involving the Company’s common stock undertaken by Mr. Gad on March 10, 2021 together
with appropriate interest and costs of the lawsuit. On December 17, 2021, Mr. Gad filed a Motion to Dismiss the lawsuit.
On August 8, 2022, the Court denied Mr. Gad’s Motion to Dismiss the lawsuit. The parties have completed documentary
discovery and depositions. On February 1, 2024, both the Plaintiff and Mr. Gad filed their respective motions for summary
judgment. The Company is of the opinion that the claim is without merit and intends to maintain this position in the
proceedings. In addition, the Company has been informed by Mr. Gad that he also believes the claim is without merit, that
he has strong defenses against such claim and that he intends to vigorously defend the action. The Company has assessed
the proceedings and does not believe that it is probable that a gain or a liability will be realized by the Company. As a
result, the Company did not record any loss or gain contingencies for this matter.
In re Y-mAbs Therapeutics, Inc. Securities Litigation
On January 18, 2023, a putative class-action lawsuit was filed against the Company and certain of the Company’s
current and former officers for alleged violations of the U.S. federal securities laws in the United States District Court,
Southern District of New York (Case No.: 1:23-cv-00431). The amended complaint filed on May 23, 2023, asserts claims
under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, on behalf of a proposed class
consisting of those who acquired the Company’s common stock between October 6, 2020 and October 28, 2022. The
amended complaint alleges that there were material misrepresentations and/or omissions regarding the FDA’s consideration
of the Company’s BLA for omburtamab for the treatment of pediatric patients with CNS/leptomeningeal metastasis from
neuroblastoma firstly submitted in 2020 and resubmitted in 2022. The amended complaint seeks unspecified damages, and
costs and expenses, including attorneys’ fees. On September 29, 2023, the defendants’ motion to dismiss the amended
complaint was fully briefed. On February 5, 2024, the Court granted in part and denied in part the defendants’ motion to
dismiss. The Court dismissed the plaintiff’s claims relating to three of four categories of challenged statements and
dismissed in part plaintiff’s claims relating to the fourth category of challenged statements. The Court also dismissed one
of the individual defendants from the case. The Company believes that the remaining claims are without merit and intends
to vigorously defend against these claims. The Company has not established a liability for this claim as of December 31,
2023 as the Company does not consider a loss on the claim to be probable.
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Hazelton vs. Y-mAbs Therapeutics Inc., and Gad, et al.
The Company has been named a nominal defendant in a lawsuit filed in the Court of Chancery of the State of
Delaware, on February 8, 2023, by a purported stockholder, Jeffrey Hazelton (Case No. 2023-0147-LWW). The amended
complaint filed on May 12, 2023, purports to bring claims on behalf of the Company against current and former members
of the Company’s board of directors for allegedly awarding themselves excessive compensation for fiscal years 2020 and
2021. The amended complaint seeks, among other things, recovery of alleged excessive compensation, an order directing
the Company to undertake certain corporate governance reforms, and an award of costs and expenses, including attorneys’
fees. The Court has not yet issued its ruling on the defendants’ motion to dismiss the amended complaint, which was fully
briefed as of September 8, 2023. The Company is of the opinion that the claims are without merit and intends to maintain
this position in the proceedings. The Company has not established a liability for this claim as of December 31, 2023 as the
Company does not consider a loss on the claim to be probable.
NOTE 10—STOCKHOLDERS’ EQUITY
Authorized Stock
As of December 31, 2023 and 2022, the Company had authorized a total of 105,500,000 shares, 100,000,000 of
which are common stock, par value $0.0001 per share, and 5,500,000 of which are preferred stock, par value $0.0001 per
share.
Common Stock
Each share of common stock is entitled to one vote. Common stockholders are entitled to receive dividends, as
may be declared by the board of directors, if any, subject to preferential dividend rights of the preferred stock, none of
which have been issued. The Company had issued 43,672,112 shares and 43,670,109 shares of common stock as of
December 31, 2023 and 2022, respectively.
Preferred Stock
Preferred stock may be issued from time to time in one or more series with such designations, preferences and
relative participating, optional or other special rights and qualifications, limitations or restrictions as approved by the
Company’s Board of Directors. No preferred stock has been issued as of December 31, 2023 and 2022.
Stock Grant Agreements with Non-Employees
In April 2020, in connection with the SADA License Agreement, the Company entered into two stock grant
agreements pursuant to which the Company agreed to issue a total of 213,996 shares to two non-employee researchers who
were involved in the development of the SADA PRIT in consideration for their respective prior service. All 213,996 shares
were issued in April 2020 into escrow with 40% of the shares immediately vesting at the time of issuance and the
remaining 60% of the shares subject to vesting ratably over the next three years on the anniversary date of the agreement.
The remaining 20% of the award vested in April 2023 resulting in all 213,996 shares being vested as of December 31,
2023. There is no cash settlement feature, and no future service is required for the non-employee researchers to vest and
receive the shares on grant date. In April 2020, the Company recognized $7,376,000, the fair value of the issued shares on
the grant date, within research and development expense. There is no future expense related to these awards.
In July 2020, pursuant to the stock grant agreements, the Company also loaned the two researchers a total of
$2,610,000 related to their individual tax payments due in conjunction with the stock grants. Each of the loans are
evidenced by a Secured Promissory Note, which had respective maturity dates in April 2023 and June 2023. The
outstanding principal amount of each loan, together with all accrued interest thereon at the rate of 1% per annum, was due
and payable on the respective maturity dates of the loans. The loans were secured by Pledge and Security Agreements,
pursuant to which the researchers pledged the shares as security for repayment of the loans. In July 2022, one of the
researchers repaid their loan, which had a maturity date in April 2023, and accrued interest, which resulted in
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a de minimis loss compared to the amortized cost of the loan, in exchange for 57,887 shares that remained pledged as part
of its security. Upon receipt, the Company recorded treasury shares at an acquisition cost of $963,000, based on the share
price on the settlement date. The Company subsequently cancelled the acquired treasury shares resulting in a reduction of
outstanding common stock and a reduction of additional paid-in-capital totaling $963,000. During the fourth quarter of
2022, the Company concluded that the other loan receivable, with a maturity date of June 2023, was impaired, which
resulted in a $1,051,000 charge for the year ended December 31, 2022. In June 2023, the other researcher repaid his loan,
which resulted in a de minimis gain compared to the book value of the loan, which included the impact of the previous
impairment charge. The loan was repaid in exchange for 58,763 shares that remained pledged as part of its security. Upon
receipt, the Company recorded treasury shares at an acquisition cost of $480,000, based on the closing price of the
Company’s common stock on the settlement date. The Company subsequently cancelled the acquired treasury shares,
which resulted in a reduction of outstanding common stock and a reduction of additional paid-in-capital totaling $480,000.
There were no shares issued to non-employee researchers in 2023 and 2022.
NOTE 11—STOCK-BASED COMPENSATION
2015 Equity Incentive Plan
The Company’s board of directors and stockholders approved and adopted the Amended and Restated 2015
Equity Incentive Plan (the “2015 Plan”), which provided for the grant of incentive stock options, within the meaning of
Section 422 of the Code (the Internal Revenue Code), to the Company’s employees and any parent and subsidiary
corporations’ employees, and for the grant of incentive stock options, nonqualified stock options, stock appreciation rights,
restricted stock and restricted stock units to the Company’s employees, directors and consultants and the Company’s
subsidiary corporations’ employees and consultants. A total of 4,500,000 shares of the Company’s common stock were
reserved for issuance pursuant to the 2015 Plan. Options granted under the 2015 Plan vest according to the schedule
specified in the grant agreements, which is generally a four-year period and generally become immediately exercisable
upon the occurrence of a change in control, as defined. Upon the 2018 Equity Incentive Plan (the “2018 Plan”) becoming
effective in September 2018, no further grants are allowed under the 2015 Plan.
2018 Equity Incentive Plan
The Company’s board of directors and stockholders approved and adopted the 2018 Equity Incentive Plan (the
“2018 Plan”) in connection with the Company’s initial public offering in September 2018. However, options outstanding
under the 2015 Plan continue to be governed by the 2015 Plan. The 2018 Plan provides for the grant of incentive stock
options, within the meaning of Section 422 of the Code (the Internal Revenue Code), to the Company’s employees and any
parent and subsidiary corporations’ employees, and for the grant of incentive stock options, nonqualified stock options,
stock appreciation rights, restricted stock and restricted stock units to the Company’s employees, directors and consultants
and the Company’s parent and subsidiary corporations’ employees and consultants. A total of 5,500,000 shares of the
Company’s common stock, inclusive of the awards previously granted under the 2015 Equity Incentive Plan were initially
reserved for issuance pursuant to the 2018 Plan. In addition, the number of shares available for issuance under the 2018
Plan will also include an annual increase on the first day of each fiscal year beginning in 2019 through 2029, equal to 4%
of the outstanding shares of common stock as of the last day of the Company’s immediately preceding fiscal year or by a
lesser amount determined by the board of directors. As of December 31, 2023, the Company had 3,107,673 shares
available for grant under the 2018 Equity Incentive Plan.
The exercise price of options granted under the plans must at least be equal to the fair market value of the
Company’s common stock on the date of grant. The term of an incentive stock option may not exceed 10 years, except that
with respect to any participant who owns more than 10% of the voting power of all classes of the Company’s outstanding
stock, the term must not exceed five years and the exercise price must equal at least 110% of the fair market value on the
grant date. The administrator will determine the methods of payment of the exercise price of an option, which may include
cash, shares or other property acceptable to the administrator, as well as other types of consideration permitted by
applicable law. Options granted under the 2018 Plan vest according to the schedule specified in the grant
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agreements, which is generally between one and four years and generally become immediately exercisable upon the
occurrence of a change in control, as defined in the Plan Agreement.
Stock Options
During the years ended December 31, 2023 and 2022, stock-based compensation for stock option grants were
$13,757,000 and $25,274,000, respectively, for options granted to employees and directors. The expense for the year ended
December 31, 2023, was inclusive of an acceleration of stock-based compensation of $1,706,000, as described further in
NOTE 14— RESTRUCTURING CHARGE. Stock-based compensation during the year ended December 31, 2022 includes
$9,286,000 related to the departure of the former Chief Executive Officer, which was recorded upon his separation in the
second quarter of 2022 based on the terms of his service agreement and is further described in NOTE 9—LICENSE
AGREEMENTS AND COMMITMENTS. For the year ended December 31, 2023, the expenses were recorded as $8,000,000
in research and development expense and $5,757,000 in selling, general, and administrative expense. For the year ended
December 31, 2022, the expenses were recorded as $7,540,000 in research and development expense and $17,734,000 in
selling, general, and administrative expense.
The assumptions that the Company used to determine the fair value of the stock options granted to employees and
directors were as follows, presented on a weighted average basis:
Risk-free interest rate
Expected term (in years)
Expected volatility
Expected dividend yield
Year Ended
December 31, 2023
Year Ended
December 31, 2022
3.92 %
6.2
82.9 %
— %
3.12 %
5.9
73.6 %
— %
The following table summarizes common stock options issued and outstanding:
Outstanding and expected to vest at December 31, 2022
Granted
Exercised
Forfeited
Outstanding and expected to vest at December 31, 2023
Exercisable at December 31, 2023
Weighted
average
exercise
price
$ 21.27
5.25
2.00
11.10
$ 17.26
21.00
Options
7,079,767
2,586,040
(50,000)
(308,477)
9,307,330
5,958,167
Aggregate
intrinsic
value
(in thousands)
3,112
$
Weighted
average
remaining
contractual
life (years)
6.45
$
10,012
6,195
6.44
5.03
The weighted average fair value of stock options granted during the years ended December 31, 2023 and 2022
was $3.86 and $7.64, respectively. There were 2,586,040 and 653,000 stock options granted for the years ended December
31, 2023 and 2022, respectively.
Options granted during the years ended December 31, 2023 and 2022 have a maximum contractual term of ten
years.
There were 1,105,500 options granted in the year ended December 31, 2023 under the Company’s retention
program, which were granted to the continuing employees that were not subject to the Company’s strategic restructuring
plan. During the second quarter of 2023, 83,700 options were granted to non-executive directors, which will vest ratably on
a monthly basis over the next 12 months after the grant date, provided that in each case that the recipient remains as a non-
executive director through vesting date. The expected term for the options granted to certain non-executive directors was
5.5 years and the risk-free interest rate was approximately 3.9%. The remaining 1,396,840 options granted in the year
ended December 31, 2023, of which 690,240 options were granted in connection with the start of the Company’s
168
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new President and Chief Executive Officer and transition of the Company’s interim Chief Executive Officer to Chief
Business Officer, have a vesting schedule in which 25% vest on the first anniversary of the grant date and the remainder
vest ratably on a monthly basis over the next 36 months, provided in each case that the recipient remains an employee of
the Company through each vesting date. The expected term for these options granted in the year ended December 31, 2023
was 5.50 to 6.25 years, the volatility ranged 82.4% to 86.7%, and the risk-free interest rate ranged approximately 3.5% to
4.7%.
The aggregate intrinsic value of stock options is calculated as the difference between the exercise price of the
stock options and the fair value of the Company’s common stock for those stock options that had exercise prices lower than
the fair value of the Company’s common stock. The fair value of each stock option grant is estimated on the date of grant
using the Black-Scholes option pricing model. The Company’s public trading commenced in September 2018, and, as a
result, there is only limited available historical volatility experience. Therefore, the Company estimates expected share
price volatility based on a combination of the historical volatility of a group of publicly traded peer companies and the
historical volatility of the Y-mAbs share price, and the Company expects to continue to do so until such time as the
Company has adequate historical data regarding the volatility of the Company’s own traded share price. The expected term
of the Company’s stock options has been determined utilizing the “simplified” method for awards as the Company has
limited historical data to support the expected term assumption. The risk-free interest rate is determined by reference to the
U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected
term of the award. The expected dividend yield is based on the fact that the Company has never paid cash dividends on
shares of common stock and the Company does not expect to pay any cash dividends in the foreseeable future. There were
no significant changes to the inputs included in the Black-Scholes option pricing model during the year ended December
31, 2023.
As of December 31, 2023, the Company had $15,937,000 of unrecognized compensation expense related to
employee stock options that are expected to vest over a period of 2.75 years.
Restricted Stock Units
For the years ended December 31, 2023 and 2022, stock-based compensation for restricted stock unit grants was
$696,000 and $328,000, respectively. For the year ended December 31, 2023, the expenses were recorded as $410,000 in
research and development expense and $286,000 in selling, general, and administrative expense. For the year ended
December 31, 2022, the expenses were recorded as $289,000 in research and development expense and $39,000 in selling,
general, and administrative expense.
The following table summarizes restricted stock units issued and outstanding:
Outstanding and expected to vest at December 31, 2022
Granted
Vested
Forfeited
Outstanding and expected to vest at December 31, 2023
Restricted Stock Units
33,355
389,898
(10,766)
(61,080)
351,407
Weighted
average
grant
price
$ 17.77
4.84
18.90
8.12
$ 5.06
Weighted
average
remaining
vesting
life (years)
1.77
1.99
The table above includes 362,400 restricted stock units granted in the year ended December 31, 2023, under the
Company’s retention program, which were granted to the continuing employees that were not subject to the Company’s
strategic restructuring plan.
As of December 31, 2023, the Company had $1,338,000 of unrecognized compensation related to employee
restricted stock units that are expected to vest over a period of 1.99 years.
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NOTE 12—INCOME TAXES
Domestic and foreign loss before income taxes are as follows (in thousands):
United States
Foreign
Total
For The Year Ended December 31,
2023
(17,232)
(3,634)
(20,866)
$
$
2022
(87,827)
(7,741)
(95,568)
$
$
The Company's current income tax provision was $561,000 during the year ended December 31, 2023, and the
Company did not have a current income tax provision during the year ended December 31, 2022.
Current and deferred income taxes (tax benefits) are as follows (in thousands):
Current income tax
Federal
State
Foreign
Total current income taxes (tax benefits)
Deferred income tax
Federal
State
Foreign
Total deferred income taxes (tax benefits)
Total income taxes (tax benefits)
For The Year Ended December 31,
2023
2022
$
$
200
361
—
561
—
—
—
—
561
$
$
—
—
18
18
—
—
(18)
(18)
—
The difference between income taxes expected at the U.S. federal statutory income tax rate of 21% for tax years
ended December 31, 2023 and 2022, respectively, and income taxes provided are set forth below (in thousands):
Taxes on income at U.S. federal statutory rate
State and local taxes, net of federal tax effects
Effect of rate change
Foreign tax rate differential
Valuation allowance
Tax credits
Uncertain tax position
Deferred adjustments
Shared based compensation
Other
Total
170
For The Year Ended December 31,
2023
(4,382)
(411)
(2,127)
(110)
6,407
(135)
—
439
1,011
(131)
561
$
$
$
$
2022
(20,069)
(5,661)
861
(95)
25,116
(1,749)
18
969
1,265
(655)
—
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Significant components of the Company’s net deferred tax assets/(liabilities) are as follows (in thousands):
Deferred tax assets/(liabilities):
Acquired intangibles
Unrealized foreign exchange loss
Accrued royalty
Stock based compensation
Net operating loss carryforwards
Tax credit carryforwards
Right of use asset
Lease liability
Capitalized research and experimentation
Other
Total deferred tax assets/(liabilities)
Valuation allowance
Net deferred tax assets/(liabilities)
December 31, 2023 December 31, 2022
$
$
3,702
(87)
671
11,603
83,237
16,336
(507)
515
33,088
402
148,960
(148,960)
$
— $
2,657
263
914
13,353
86,072
16,799
(413)
435
21,902
572
142,554
(142,554)
—
The Company maintains a full valuation allowance on U.S. and foreign deferred tax assets. The assessment
regarding whether a valuation allowance is required considers both positive and negative evidence when determining
whether it is more likely than not that deferred tax assets are recoverable. In making this assessment, significant weight is
given to evidence that can be objectively verified. In the Company’s evaluation, the Company considered cumulative losses
historically and in recent years and its forecasted losses in the near term as significant negative evidence. Based upon
review of available positive and negative evidence, the Company determined that the negative evidence outweighed the
positive evidence and a full valuation allowance on the Company’s U.S. and foreign deferred tax assets will be maintained.
The Company will continue to assess the realizability of the Company’s deferred tax assets and will adjust the valuation
allowance as needed.
As of December 31, 2023, the Company had U.S. federal and various state net operating loss (“NOL”)
carryforwards of approximately $245,242,000 and $189,831,000, respectively. The Company also had U.S. federal tax
credit carryforwards of $16,336,000 as of December 31, 2023. The federal NOL of approximately $245,242,000 can be
carried forward indefinitely but is limited to offset 80% of taxable income. The state and local jurisdiction NOLs and tax
credit carryforwards will begin to expire in 2030. The NOL and tax credit carryforwards may become subject to an annual
limitation in the event of certain cumulative changes in the ownership interest of significant stockholders over a three-year
period in excess of 50%, as defined under Sections 382 and 383 of the Internal Revenue Code of 1986 (“IRC”). The
Company has performed an analysis of the Company’s Section 382 ownership changes through December 31, 2022. Due to
the large annual limitation, the Company believes that it is more likely than not that none of the net operating loss
carryforwards will expire as a result of the limitation from the ownership change under Section 382. The Company also has
Danish NOL carryforwards of $21,628,000 which have an indefinite carryforward period.
The Company recognizes income tax benefits for tax positions determined more likely than not to be sustained
upon examination, based on the technical merits of the positions.
Changes in the Company’s unrecognized tax benefits, excluding the related accrual of interest and penalties, from
January 1 through December 31 are set forth below (in thousands):
Beginning balance
Additions for prior year tax positions
Settlements
Ending balance
171
Year Ended
December 31,
2023
2022
— $
—
—
— $
304
18
(322)
—
$
$
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The Company’s tax returns for the years 2017 to 2022 are all open for tax examination by U.S. federal and state,
and the Danish tax authorities. During 2022, the review of the Company’s transfer pricing policies by the Danish Tax
Authorities for tax years 2016 through 2020 was completed resulting in the release of the corresponding reserve. The
release did not have a material impact on the Company’s income tax accounts.
The Company classifies interest and penalty expense related to income tax expense as components of the tax
provision for income taxes. As of December 31, 2023, the Company does not have any interest or penalties accrued related
to the total amount of unrecognized tax benefits.
NOTE 13—OTHER BENEFITS
The Company has adopted a defined contribution 401(k) savings plan (the “401(k) plan”) covering all U.S.
employees. Participants may elect to defer a percentage of their pretax or after-tax compensation to the 401(k) plan, subject
to defined limitations. The plan allows for a discretionary match by the Company. The Company made no matching
contributions to the plan for the years ended December 31, 2023 and 2022.
The Company has established a retirement program for employees of the Danish subsidiary pursuant to which all
such employees can contribute an amount at their election from their base compensation and may receive contributions
from our Danish subsidiary. The Danish subsidiary made no contributions during the years ended December 31, 2023 and
2022. In addition, health insurance benefits for our Danish employees are fully paid for by such employees. The
Company’s Danish subsidiary does not incur any costs for these health insurance benefits.
NOTE 14 — RESTRUCTURING CHARGE
On January 4, 2023, following Board approval, the Company announced a strategic restructuring plan designed to
extend cash resources and prioritize resources for the commercialization and potential label extension of DANYELZA and
the development of the SADA PRIT technology platform. The Company completed the restructuring in May 2023, which
resulted in an approximately 35% reduction to the Company’s workforce. Affected employees were offered separation
benefits, including severance and outplacement services along with temporary healthcare coverage assistance. As a result,
during the year ended December 31, 2023, the Company recognized restructuring expenses of $4,482,000, based on the
currency rate for the period. For the year ended December 31, 2023, the Company recorded $3,346,000 and $1,136,000,
respectively, within research and development and selling, general, and administrative, on the Consolidated Statements of
Net Loss and Comprehensive Loss. The restructuring expenses primarily related to severance benefits of $2,776,000,
which were paid as of December 31, 2023, and acceleration of stock-based compensation of $1,706,000 which was
recognized in the year ended December 31, 2023 as there is no longer a service condition related to such awards.
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, evaluated, as
of the end of the period covered by this Annual Report, the effectiveness of our disclosure controls and procedures (as
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defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act).
Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls
and procedures were effective at the reasonable assurance level as of December 31, 2023.
In designing and evaluating the disclosure controls and procedures, management recognized that controls and
procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired
control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide
absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if
any, within the Company will be detected.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting
(as defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act). Under the supervision of and with the participation of
our Chief Executive Officer and our Chief Financial Officer, our management conducted an assessment of the effectiveness
of our internal control over financial reporting as of December 31, 2023, using the criteria described in Internal Control –
Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based
on this assessment, management has concluded that as of December 31, 2023, our internal control over financial reporting
was effective.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting, (as defined in Rules 13a-15(f) and 15d-
15(f) under the Exchange Act) during the fourth quarter of the year ended December 31, 2023 that has materially affected,
or is reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
OTHER INFORMATION.
None.
ITEM 9C.
DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.
Not applicable.
PART III
ITEM 10.
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information required by this Item 10 is incorporated by reference to the information set forth in the sections
titled “Proposal 1 – Election of Directors,” “Executive Officers of the Company,” and “Information Regarding the Board
and Corporate Governance” in our Definitive Proxy Statement to be filed with the SEC with respect to our 2024 Annual
Meeting of Stockholders.
ITEM 11.
EXECUTIVE COMPENSATION
The information required by this Item 11 is incorporated by reference to the information set forth in the section
titled “Executive Compensation” in our Definitive Proxy Statement to be filed with the SEC with respect to our 2024
Annual Meeting of Stockholders.
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ITEM 12.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS.
The information required by this Item 12 is incorporated by reference to the information set forth in the sections
titled “Security Ownership of Certain Beneficial Owners and Management” and “Executive Compensation” in our
Definitive Proxy Statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders.
ITEM 13.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE.
The information required by this Item 13 is incorporated by reference to the information set forth in the sections
titled “Transactions with Related Persons” and “Information regarding the Board of Directors and Corporate Governance”
in our Definitive Proxy Statement to be filed with the SEC with respect to our 2024 Annual Meeting of Stockholders.
ITEM 14.
PRINCIPAL ACCOUNTANT FEES AND SERVICES.
The information required by this Item 14 is incorporated by reference to the information set forth in the section
titled “Principal Accountant Fees and Services” in our Definitive Proxy Statement to be filed with the SEC with respect to
our 2024 Annual Meeting of Stockholders.
ITEM 15.
EXHIBITS, FINANCIAL STATEMENT SCHEDULES.
PART IV
(a)1.
(a)2.
Financial Statements:
The financial statements listed in the Index to Financial Statements beginning on page 141 are filed as part of
this Annual Report on Form 10-K.
Financial Statement Schedules:
There are no Financial Statement Schedules included with this filing for the reason that they are not applicable
or are not required or the required information is included in the Financial Statements or Notes listed in the
Index to Financial Statements beginning on page 141.
(a)3.
Exhibits
EXHIBIT INDEX
Exhibit No.
3.3
3.4
4.1
Amended and Restated Certificate of Incorporation of the Registrant (incorporated by reference to Exhibit 3.3
to the Form S-1 filed August 24, 2018).
Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 3.4 to the Form S-1
filed August 24, 2018).
Specimen stock certificate evidencing the shares of common stock (incorporated by reference to Exhibit 4.1
to the Form S-1/A filed September 7, 2018).
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4.2
10.1+
10.2+
10.3+
10.4+
10.5+
10.6+
10.7†
10.8†
Description of the registrant’s securities registered pursuant to section 12 of the Securities Exchange Act of
1934.
License Agreement, dated as of August 20, 2015, by and between the Registrant and Memorial Sloan Kettering
Cancer Center (incorporated by reference to Exhibit 10.1 to the Form S-1 filed August 24, 2018).
License Agreement, dated as of November 13, 2017, by and between the Registrant and Memorial Sloan
Kettering Cancer Center (incorporated by reference to Exhibit 10.2 to the Form S-1 filed August 24, 2018).
Sponsored Research Agreement, effective as of November 10, 2015, by and between the Registrant and
Memorial Sloan Kettering Cancer Center Registrant (incorporated by reference to Exhibit 10.3 to the Form S-1
filed August 24, 2018).
Sponsored Research Agreement, dated November 13, 2017, by and between the Registrant and Memorial
Sloan Kettering Cancer Center (incorporated by reference to Exhibit 10.4 to the Form S-1 filed August 24,
2018).
Investigator-Sponsored Master Clinical Trial Agreement, dated as of June 21, 2017, as amended on October 11,
2017, by and between the Registrant and Memorial Sloan Kettering Cancer Center (incorporated by reference
to Exhibit 10.5 to the Form S-1 filed August 24, 2018).
Master Data Services Agreement, dated as of September 23, 2016, as amended on October 11, 2017, by and
between the Registrant and Memorial Sloan Kettering Cancer Center (incorporated by reference to Exhibit 10.6
to the Form S-1 filed August 24, 2018).
Amended and Restated 2015 Equity Incentive Plan (incorporated by reference to Exhibit 10.7 to the Form S-1
filed August 24, 2018).
Form of Notice of Grant and Stock Option Agreement under the Amended and Restated 2015 Equity Incentive
Plan (incorporated by reference to Exhibit 10.8 to the Form S-1 filed August 24, 2018).
10.9†
2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.9 to the Form S-1 filed August 24, 2018).
10.10†
10.11†
10.12†
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan
(incorporated by reference to Exhibit 10.10 to the Form S-1 filed August 24, 2018).
Form of Officers and Directors Indemnification Agreement (incorporated by reference to Exhibit 10.11 to the
Form S-1 filed August 24, 2018).
Service Agreement, effective as of April 1, 2016 between the Registrant and Thomas Gad (incorporated by
reference to Exhibit 10.12 to the Form S-1 filed August 24, 2018).
10. 13†
Service Agreement, effective as of October 1, 2016 between Y-mAbs Therapeutics A/S and Bo Kruse
(incorporated by reference to Exhibit 10.14 to the Form S-1 filed August 24, 2018).
10.14
Lease Agreement dated January 10, 2018, by and between the Registrant and RXR HB Owner LLC
(incorporated by reference to Exhibit 10.15 to the Form S-1 filed August 24, 2018).
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10.15†
10.16†
10.17†
10.18†
10.19+
10.20+
10.21+
Form of Restricted Stock Award Grant Notice and Restricted Stock Award Agreement under the 2018 Equity
Incentive Plan (incorporated by reference to Exhibit 10.16 to the Form S-1 filed August 24, 2018).
Form of Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement under the
2018 Equity Incentive Plan (incorporated by reference to Exhibit 10.17 to the Form S-1 filed August 24, 2018).
Non-Employee Director Compensation Policy, adopted on January 17, 2023 (incorporated by reference to
Exhibit 10.41 to Registrant’s Form 10-K filed March 30, 2023).
Employee Stock Purchase Plan (incorporated by reference to Exhibit 10.19 to the Form S-1 filed August 24,
2018).
Amended and Restated Sponsored Research Agreement by and between the Registrant and Memorial Sloan
Kettering Cancer Center effective September 13, 2019 (incorporated by reference to Exhibit 10.1 to Form 8-K
filed September 19, 2019).
Sublicense Agreement by and between the Registrant and MabVax Therapeutics Holdings, Inc. effective June
28, 2018 (incorporated by reference to Exhibit 10.1 to Form 8-K filed December 19, 2019).
Settlement and Assumption and Assignment Agreement of MSK License Agreement and Y-mAbs Sublicense
Agreement by and among the Registrant, MabVax Therapeutics Holdings, Inc. MabVax Therapeutics, Inc. and
Sloan Kettering Institute for Cancer Research effective December 2, 2019 (incorporated by reference to Exhibit
10.2 to Form 8-K filed December 19, 2019).
10.22++
License Agreement effective as of April 15, 2020, by and among the Registrant, Memorial Sloan Kettering
Cancer Center and Massachusetts Institute of Technology (incorporated by reference to Exhibit 10.1 to the
Registrant’s Form 8-K filed April 21, 2020).
10.23++ Master Sponsored Research Agreement by and between the Registrant and Memorial Sloan Kettering Cancer
Center, effective October 7, 2020 (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed
October 8, 2020).
10.24
10.25†
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan (as
amended, employees, consultants and service providers other than directors) (incorporated by reference to
Exhibit 10.8 to Registrant’s Form 10-Q filed November 5, 2020).
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan (as
amended, directors) (incorporated by reference to Exhibit 10.9 to Registrant’s Form 10-Q filed November 5,
2020).
10.26 ++ License Agreement dated December 17, 2020 by and between the Registrant and SciClone Pharmaceuticals
International Ltd. (incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed December 22,
2020).
10.27
Asset Purchase Agreement by and between the Registrant and United Therapeutics Corporation, dated
December 24, 2020 (incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed February 19,
2021).
10.28++ Amendment No. 1, dated March 18, 2021 to License Agreement, dated as of August 20, 2015 between
Registrant and Memorial Sloan Kettering Cancer Center (incorporated by reference to Exhibit 10.7 to
Registrant’s Form 10-Q filed May 6, 2021).
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Table of Contents
10.29++ Amendment No. 2, dated March 18, 2021 to License Agreement, dated as of August 20, 2015 between
Registrant and Memorial Sloan Kettering Cancer Center (incorporated by reference to Exhibit 10.7 to
Registrant’s Form 10-Q filed, May 6, 2022).
10.30†
10.31†
10.32†
10.33†
Employment Agreement for Dr. Steen Lisby, effective as of August 1, 2017 (incorporated by reference to
Exhibit 10.8 to Registrant’s Form 10-Q filed, May 9, 2022).
Amendment to Employment Agreement for Dr. Steen Lisby, effective as of June 1, 2020 (incorporated by
reference to Exhibit 10.9 to Registrant’s Form 10-Q filed, May 9, 2022).
Employment Agreement for Dr. Vignesh Rajah, effective as of June 2, 2020 (incorporated by reference to
Exhibit 10.10 to Registrant’s Form 10-Q filed, May 9, 2022).
Amendment to Employment Agreement for Dr. Vignesh Rajah, effective as of March 1, 2021 (incorporated by
reference to Exhibit 10.11 to Registrant’s Form 10-Q filed, May 9, 2022).
10.34†*
Amendment to Employment Agreement for Dr. Vignesh Rajah, effective as of January 1, 2024 (filed herewith)
10.35†
10.36†
10.37†
10.38†
10.39†
10.40†
10.41†
10.42†
10.43†
10.44†
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed August 8, 2022).
Retention Bonus Agreement, dated May 30, 2022 by and between EVP and Chief Financial Officer, Bo Kruse
and Y-mAbs Therapeutics A/S (incorporated by reference to Exhibit 10.2 to Registrant’s Form 10-Q filed
August 8, 2022).
Form of Retention Bonus Agreement of Y-mAbs Therapeutics A/S (incorporated by reference to Exhibit 10.3
to Registrant’s Form 10-Q filed August 8, 2022).
Form of Retention Bonus Agreement of Y-mAbs Therapeutics, Inc. (incorporated by reference to Exhibit 10.4
to Registrant’s Form 10-Q filed August 8, 2022).
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan
(incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed November 7, 2022).
Form of Stock Option Grant Notice and Stock Option Agreement under the 2018 Equity Incentive Plan for
directors (incorporated by reference to Exhibit 10.2 to Registrant’s Form 10-Q filed November 7, 2022).
Separation Agreement and General Release, effective as of September 22, 2022, between Y-mAbs
Therapeutics, Inc. and Claus Juan Møller San Pedro (incorporated by reference to Exhibit 10.3 to Registrant’s
Form 10-Q filed November 7, 2022).
Employment Agreement for Ms. Susan Smith, effective as of January 1, 2022 (incorporated by reference to
Exhibit 10.42 to Registrant’s Form 10-K filed March 30, 2023).
Employment Agreement entered into on October 17, 2023, between Michael Rossi and the Company
(incorporated by reference to Exhibit 10.1 to Registrant’s Form 8-K filed October 18, 2023).
Employee Confidential Information and Inventions Assignment Agreement, dated October 17, 2023, between
Michael Rossi and the Company (incorporated by reference to Exhibit 10.2 to Registrant’s Form 8-K filed
October 18, 2023)
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10.45
Amendment, dated August 16, 2023, to Lease Agreement dated January 10, 2018, by and between the
Company and RXR HB Owner LLC (incorporated by reference to Exhibit 10.1 to Registrant’s Form 10-Q filed
November 13, 2023)
10.46†*
Form of Performance Restricted Stock Unit Award Grant Notice and Restricted Stock Unit Award Agreement
under the 2018 Equity Incentive Plan (filed herewith)
21.1*
Subsidiary of the Registrant.
23*
Consent of Pricewaterhouse Coopers LLP, Independent Registered Public Accounting Firm.
31.1*#
Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
31.2*#
Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act.
32.1*
Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
32.2*
Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act.
97.1*
Y-mAbs Therapeutics, Inc. Executive Compensation Recoupment Policy (filed herewith)
101.INS
Inline XBRL Instance Document.
101.SCH Inline XBRL Taxonomy Extension Schema Document.
101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB Inline XBRL Taxonomy Extension Label Linkbase Document.
101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document.
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).
*
Filed herewith.
# The certifications attached as Exhibits 32.1 and 32.2 that accompany this Annual Report on Form 10-K are deemed furnished and not filed with the
Securities and Exchange Commission and are not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as
amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Annual Report on Form 10-K,
irrespective of any general incorporation language contained in such filing.
†
Indicates management contract or compensatory plan.
+ Portions of the exhibit have been omitted pursuant to an order granted by the Securities and Exchange Commission for confidential treatment.
++ Portions of the exhibit have been omitted because the identified confidential portions (i) are not material and (ii) would be competitively harmful if
publicly disclosed.
ITEM 16.
FORM 10-K SUMMARY.
None.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
Y-MABS THERAPEUTICS, INC.
Dated: February 29, 2024
By:
/s/ Michael Rossi
Michael Rossi
President, Chief Executive Officer
(Principal Executive Officer)
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Michael Rossi, acting individually, as his or
her true and lawful attorney-in-fact and agent, with full power of substitution and resubstitution, for him or her and in his
or her name, place and stead, in any and all capacities, to sign 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 requisite and necessary to be done in connection therewith, as fully to all intents
and purposes as he or she might or could do in person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them, or their or his substitutes, may lawfully do or cause to be done by virtue thereof.
179
Table of Contents
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 indicated on the February 29, 2024.
/s/ MICHAEL ROSSI
Michael Rossi
Director, President, Chief Executive Officer
(Principal Executive Officer)
/s/ BO KRUSE
Executive Vice President, Chief Financial Officer, Secretary
Bo Kruse
/s/ THOMAS GAD
Thomas Gad
/s/ JOHAN WEDELL-WEDELLSBORG
Johan Wedell-Wedellsborg
/s/ LAURA J. HAMILL
Laura J. Hamill
/s/ GÉRARD BER
Gérard Ber
/s/ ASHUTOSH TYAGI
Ashutosh Tyagi
/s/ JAMES I. HEALY
James I. Healy
/s/ DAVID N. GILL
David N. Gill
and Treasurer
(Principal Financial and Accounting Officer)
Director
Director
Director
Director
Director
Director
Director
180
EXHIBIT 4.2
DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE
SECURITIES EXCHANGE ACT OF 1934
As of February 22, 2024, Y-mAbs Therapeutics, Inc. (“Y-mAbs,” “we,” “our” or “us”), had one class of securities registered
under Section 12 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”): our common stock, par value
$0.0001 per share.
The following summary describes our common stock and the material provisions of our amended and restated certificate of
incorporation, our amended and restated bylaws and of the Delaware General Corporation Law (the “DGCL”). Because the
following is only a summary, it does not contain all of the information that may be important to you. For a complete
description, you should refer to our certificate of incorporation and bylaws, filed as Exhibits 3.3 and 3.4, respectively, to our
Annual Report on Form 10-K filed with the Securities Exchange Commission, of which this Exhibit 4.2 is a part. We
encourage you to read those documents and the DGCL carefully.
Authorized capital stock
Our authorized capital stock consists of 100,000,000 shares of common stock, par value $0.0001 per share, and
5,500,000 shares of preferred stock, par value $0.0001 per share.
Common Stock
Outstanding shares
As of February 22, 2024, there were 43,777,105 shares of our common stock outstanding and no shares of preferred
stock outstanding. As of February 22, 2024, we had 6 record holders of our common stock.
Voting Rights
Each holder of common stock is entitled to one vote for each share on all matters submitted to a vote of the stockholders,
including the election of directors. Our amended and restated certificate of incorporation and amended and restated bylaws do
not provide for cumulative voting rights. Because of this, the holders of a plurality of the shares of common stock entitled to
vote in any election of directors can elect all of the directors standing for election, if they should so choose. At any meeting of
the stockholders at which a quorum is present, any matter other than the election of directors to be voted upon by the
stockholders at such meeting shall be decided by the vote of the holders of shares of stock having a majority in voting power
of the votes cast by the holders of all of the shares of stock present or represented at the meeting and voting affirmatively or
negatively on such matter (or if there are two or more classes or series of stock entitled to vote as separate classes, then in the
case of each such class or series, the holders of a majority in voting power of the shares of stock of that class or series present
or represented at the meeting and voting affirmatively or negatively on such matter), except when a different vote is required
by law, our certificate of incorporate or our bylaws.. The holders of a majority of the stock issued and outstanding and entitled
to vote, present in person or represented by proxy, shall constitute a quorum for the transaction of business at all meetings of
the stockholders.
Dividends
Subject to preferences that may be applicable to any then-outstanding preferred stock, holders of common stock are
entitled to receive dividends, if any, as may be declared from time to time by our board of directors out of legally available
funds.
Liquidation
In the event of our liquidation, dissolution or winding up, holders of common stock will be entitled to share ratably in the
net assets legally available for distribution to stockholders after the payment of all of our debts and other liabilities and the
satisfaction of any liquidation preference granted to the holders of any then-outstanding shares of preferred stock.
Rights and Preferences
Holders of common stock have no preemptive, conversion, subscription or other rights, and there are no redemption or
sinking fund provisions applicable to the common stock. The rights, preferences and privileges of the holders of common
stock are subject to and may be adversely affected by, the rights of the holders of shares of any series of preferred stock that
we may designate in the future.
Fully Paid and Nonassessable
All of our outstanding shares of common stock are fully paid and nonassessable.
Preferred Stock
Our board of directors has the authority, without further action by the stockholders, to issue up to 5,500,000 shares of
preferred stock in one or more series and to fix the rights, preferences, privileges and restrictions thereof. These rights,
preferences and privileges could include dividend rights, conversion rights, voting rights, redemption rights, liquidation
preferences, sinking fund terms and the number of shares constituting any series or the designation of such series, any or all
of which may be greater than the rights of common stock. The issuance of preferred stock could adversely affect the voting
power of holders of common stock and the likelihood that such holders will receive dividend payments and payments upon
liquidation. In addition, the issuance of preferred stock could have the effect of delaying, deferring or preventing change in
our control or other corporate action. As of February 22, 2024, no shares of preferred stock were outstanding.
Anti-Takeover Provisions
Our amended and restated certificate of incorporation and amended and restated bylaws contain certain provisions that
are intended to enhance the likelihood of continuity and stability in the composition of our board of directors but which may
have the effect of delaying, deferring or preventing a future takeover or change in control of us unless such takeover or
change in control is approved by our board of directors.
Staggered Board; Removal of Directors
Our amended and restated certificate of incorporation and amended and restated bylaws divide our board of directors
into three classes with staggered three-year terms. In addition, our amended and restated certificate of incorporation and
amended and restated bylaws provide that directors may be removed only for cause and only by the affirmative vote of the
holders of 662/3% of our shares of capital stock present in person or by proxy and entitled to vote. Under our amended and
restated certificate of incorporation and bylaws, any vacancy on our board of directors, including a vacancy resulting from an
enlargement of our board of directors, may be filled only by vote of a majority of our directors then in office, although less
than a quorum, or by a sole remaining director and shall not be filled by the stockholders. Furthermore, our amended and
restated certificate of incorporation provides that the authorized number of directors may be changed only by the resolution of
our board of directors. The classification of our board of directors and the limitations on the ability of our stockholders to
remove directors, change the authorized number of directors and fill vacancies could make it more difficult for a third party to
acquire, or discourage a third party from seeking to acquire, control of our company.
Stockholder Action; Special Meeting of Stockholders; Advance Notice Requirements for Stockholder Proposals and
Director Nominations
Our amended and restated certificate of incorporation and our amended and restated bylaws provide that any action
required or permitted to be taken by our stockholders at an annual meeting or special meeting of stockholders may only be
taken if it is properly brought before such meeting and may not be taken by written action in lieu of a meeting. Our amended
and restated certificate of incorporation and amended and restated bylaws also provide that, except as otherwise required by
law, special meetings of the stockholders can only be called by the chairman of our board of directors, our chief executive
officer or our board of directors. In addition, our amended and restated bylaws establish an advance notice procedure for
stockholder proposals to be brought before an annual meeting of stockholders, including proposed nominations of candidates
for election to our board of directors. Stockholders at an annual meeting may only consider proposals or nominations
specified in the notice of meeting or brought before the meeting by or at the direction of our board of directors, or by a
stockholder of record on the record date for the meeting who is entitled to vote at the meeting and who has delivered timely
written notice in proper form to our secretary of the stockholder's intention to bring such business before the meeting. These
provisions could have the effect of delaying until the next stockholder meeting stockholder actions that are favored by the
holders of a majority of our outstanding voting securities. These provisions also could discourage a third party from making a
tender offer for our common stock because even if the third party acquired a majority of our outstanding voting stock, it
would be able to take action as a stockholder, such as electing new directors or approving a merger, only at a duly called
stockholders meeting and not by written consent.
Super-Majority Voting
The DGCL provides generally that the affirmative vote of a majority of the shares entitled to vote on any matter is
required to amend a corporation's certificate of incorporation or bylaws unless a corporation's certificate of incorporation or
bylaws, as the case may be, requires a greater percentage. Our amended and restated bylaws may be amended or repealed by a
majority vote of our board of directors or the affirmative vote of the holders of at least 662/3% of the votes that all our
stockholders would be entitled to cast in any annual election of directors. In addition, the affirmative vote of the holders of at
least 662/3% of the votes that all our stockholders would be entitled to cast in any election of directors is required to amend or
repeal or to adopt any provisions inconsistent with any of the provisions of our amended and restated certificate of
incorporation described above.
Section 203 of the Delaware General Corporation Law
We are subject to the provisions of Section 203 of the DGCL. In general, Section 203 prohibits a publicly-held Delaware
corporation from engaging in a "business combination" with an "interested stockholder" for a three-year period following the
time that this stockholder becomes an interested stockholder, unless the business combination is approved in a prescribed
manner. A "business combination" includes, among other things, a merger, asset or stock sale or other transaction resulting in
a financial benefit to the interested stockholder. An "interested stockholder" is a person who, together with affiliates and
associates, owns, or did own within three years prior to the determination of interested stockholder status, 15% or more of the
corporation's voting stock.
Under Section 203, a business combination between a corporation and an interested stockholder is prohibited unless it
satisfies one of the following conditions: before the stockholder became interested, our board of directors approved either the
business combination or the transaction which resulted in the stockholder becoming an interested stockholder; upon
consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested
stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced,
excluding for purposes of determining the voting stock outstanding, shares owned by persons who are directors and also
officers, and employee stock plans, in some instances; or at or after the time the stockholder became interested, the business
combination was approved by our board of directors of the corporation and authorized at an annual or special meeting of the
stockholders by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested
stockholder.
Exclusive Forum Selection
Our amended and restated certificate of incorporation provides that, unless we consent in writing to the selection of an
alternative forum, the Court of Chancery of the State of Delaware shall be the sole and exclusive forum for (1) any
derivative action or proceeding brought on behalf of our company, (2) any action asserting a claim of breach of a fiduciary
duty owed by any of our directors, officers, employees or stockholders to our company or our stockholders, (3) any action
asserting a claim arising pursuant to any provision of the DGCL or as to which the DGCL confers jurisdiction on the Court of
Chancery of the State of Delaware, or (4) any action asserting a claim arising pursuant to any provision of our amended and
restated certificate of incorporation or amended and restated bylaws (in each case, as they may be amended from time to time)
or governed by the internal affairs doctrine. This exclusive forum provision would not apply to suits brought to enforce any
liability or duty created by the Securities Act or the Exchange Act or any other claim for which the federal courts have
exclusive jurisdiction. To the extent that any such claims may be based upon federal law claims, Section 27 of the Exchange
Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or
the rules and regulations thereunder. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal
and state courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations
thereunder. Although our amended and restated certificate of incorporation contains the choice of forum provision described
above, it is possible that a court could rule that such a provision is inapplicable for a particular claim or action or that such
provision is unenforceable.
Authorized but Unissued Shares
The authorized but unissued shares of common stock and preferred stock are available for future issuance without
stockholder approval, subject to any limitations imposed by the listing requirements of the Nasdaq Global Select Market.
These additional shares may be used for a variety of corporate finance transactions, acquisitions and employee benefit plans.
The existence of authorized but unissued and unreserved common stock and preferred stock could make it more difficult or
discourage an attempt to obtain control of us by means of a proxy contest, tender offer, merger or otherwise.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is American Stock Transfer & Trust Company, LLC. The transfer
agent and registrar's address is 6201 15th Avenue, Brooklyn, NY 11219.
Nasdaq Global Select Market
Our common stock is listed on the Nasdaq Global Select Market under the symbol "YMAB."
EMPLOYMENT AGREEMENT
for
Vignesh Rajah
Exhibit 10.34
This Employment Agreement (the “Agreement”) is made between Y-mAbs Therapeutics, Inc.
(the “Company”) and Vignesh Rajah (the “Executive”) (collectively, the “Parties”).
WHEREAS, the Company desires for Executive to provide services to the Company as well
as its subsidiaries (together with the Company, the “Group”), and wishes to provide Executive with
certain compensation and benefits in return for such employment services; and
WHEREAS, Executive wishes to be employed by the Company and to provide personal
services to the Company in return for certain compensation and benefits;
NOW, THEREFORE, in consideration of the mutual promises and covenants contained
herein and for other good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto agree as follows:
1.
Employment by the Company.
1.1
Position. Executive has been employed by the Company’s subsidiary Y-mAbs
Therapeutics A/S (“Y-mAbs A/S”) as the Company’s Senior Vice President and Chief Medical Officer
since June 2, 2020 pursuant to the Employment Contract between Executive and Y-mAbs A/S, dated
March 2, 2020 (the “Prior Agreement”). By this Agreement, Executive’s employment with Y-mAbs
A/S will terminate, and starting on 1st January 2024 (the “Start Date”), Executive shall be employed
by the Company pursuant to the terms of this Agreement. Accordingly, the parties agree that this
Agreement supersedes and replaces in its entirety the Prior Agreement, and that any obligations under
the Prior Agreement shall terminate. Following the Start Date, Executive shall serve as the
Company’s Senior Vice President and Chief Medical Officer, during Executive’s employment with the
Company, Executive will devote Executive’s best efforts and substantially all of Executive’s business
time and attention to the business of the Company, except for approved time off permitted by the
Company’s general employment policies.
1.2
Duties. Executive shall perform such duties as are required by Company’s Chief
Executive Officer (the “CEO”), to whom Executive will report. Subject to the terms of this
Agreement, the Company may modify Executive’s job title, duties, and reporting relationship as it
deems necessary and appropriate in light of the Company’s needs and interests from time to time.
1.3
Location. Other than when traveling on business, Executive shall work from the
Company’s corporate headquarters, which is currently in New York, New York but may be relocated
to New Jersey (other than when traveling on business). The Company reserves the right to reasonably
require Executive to perform Executive’s duties at places other than
1.
Executive’s primary office location from time to time, and to require reasonable business travel.
1.4
Policies and Procedures. The employment relationship between the Parties shall be
governed by the general employment policies and practices of the Company as they may interpreted,
adopted, revised or deleted from time to time in the Company’s sole discretion. Notwithstanding the
foregoing, in the event the terms of this Agreement differ from or are in conflict with the Company’s
general employment policies or practices, this Agreement shall control. Executive agrees to abide by
such policies and practices.
2.
2.
Compensation.
2.1
Salary. For services to be rendered hereunder, Executive shall receive an initial base
salary at the rate of $405,000 per year, subject to review and adjustment by the Company in its sole
discretion from time to time (as so adjusted from to time, the “Base Salary”), and payable subject to
standard payroll deductions and withholdings and payable in accordance with the Company’s regular
payroll practices.
2.2
Equity Compensation. Executive was previously granted certain equity awards in the
Company and those awards remain governed by the terms of the applicable equity plan document(s)
and option agreement(s) Executive may be eligible for grants of equity awards, subject to approval by
the Company’s Board of Directors (the “Board”) or a committee thereof. Each such award will be
governed by the terms of the Company’s equity incentive plan and form of award agreement pursuant
to which it is granted.
2.3
Annual Cash Bonus. Executive will be eligible for an annual discretionary cash bonus
of up to 35% of Executive’s Base Salary (the “Annual Bonus”) for each calendar year. The Annual
Bonus target shall be subject to review and adjustment by the Company in its sole discretion from time
to time. Whether Executive earns an Annual Bonus for any given year, and the amount of any such
Annual Bonus, will be determined by the Company in its sole discretion based upon Executive’s
achievement of objectives and milestones to be established and determined on an annual basis. Any
Annual Bonus that is awarded will be paid no later than the date that is 2½ months following the end
of the applicable year. Executive must be employed on the day that Executive’s bonus (if any) is paid
in order to earn the bonus (except as otherwise provided in Section 5 hereof). Executive will not be
eligible for, and will not earn, any Annual Bonus (including a prorated bonus) if Executive’s
employment terminates for any reason before the payment date (except as otherwise provided in
Section 5 hereof).
2.4
Housing Allowance. Executive will receive a monthly housing allowance stipend of
$6,500 subject to review and adjustment by the Company in its sole discretion from time to time, and
payable subject to standard payroll deductions and withholdings and payable in accordance with the
Company’s regular payroll practices. This will be reviewed on an annual basis and the Company
reserves the right to amend or terminate this during the annual review.
3.
Standard Company Benefits. Executive shall be entitled to participate in all employee benefit
programs for which Executive is eligible under the terms and conditions of the benefit plans that may
be in effect from time to time and provided by the Company to its employees. The Company reserves
the right to cancel or change the benefit plans or programs it offers to its employees at any time.
Expenses. The Company will reimburse Executive for reasonable travel or other expenses
4.
incurred by Executive in furtherance or in connection with the performance of Executive’s duties
hereunder, in accordance with the Company’s expense reimbursement policy as in effect from time to
time.
3.
5.
Termination of Employment; Severance
5.1
At-Will Employment. Executive’s employment relationship is at-will. Either
Executive or the Company may terminate the employment relationship at any time, with or without
cause or advance notice.
5.2
Termination Without Cause; Resignation for Good Reason.
(i)
The Company may terminate Executive’s employment with the Company at any
time without Cause (as defined below). Further, Executive may resign at any time for Good Reason
(as defined below). Such involuntary termination of Executive’s employment by the Company without
Cause, or voluntary resignation for Good Reason, shall be referred to herein as an “Involuntary
Termination,” provided such termination must also constitute a “separation from service” (as defined
under Treasury Regulation Section 1.409A-1(h), without regard to any alternative definition
thereunder, a “Separation from Service”).
(ii)
In the event Executive is subject to an Involuntary Termination , and provided
that Executive remains in compliance with the terms of this Agreement, the Company shall provide
Executive with the following severance benefits (collectively, the “Severance Benefits”):
(a)
The Company shall pay Executive, as severance, 12 months of
Executive’s then-current Base Salary (for the avoidance of doubt, prior to any reduction that would
give rise to a resignation for Good Reason), subject to standard payroll deductions and withholdings
(the “Severance”). The Severance will be paid in equal installments on the Company’s regular payroll
schedule over the 12 month period following Executive’s Separation from Service; provided, however,
that no payments will be made prior to the 60th day following Executive’s Separation from Service.
On the 60th day following Executive’s Separation from Service, the Company will pay Executive in a
lump sum the Severance that Executive would have received on or prior to such date under the
standard payroll schedule but for the delay while waiting for the 60th day in compliance with Code
Section 409A, with the balance of the Severance being paid as originally scheduled.
(b)
Provided Executive timely elects continued coverage under COBRA, the
Company shall pay Executive’s COBRA premiums to continue Executive’s coverage (including
coverage for eligible dependents, if applicable) (“COBRA Premiums”) through the period (the
“COBRA Premium Period”) starting on Executive’s Separation from Service and ending on the
earliest to occur of: (i) 12 months following Executive’s Separation from Service; (ii) the date
Executive becomes eligible for group health insurance coverage through a new employer; or (iii) the
date Executive ceases to be eligible for COBRA continuation coverage for any reason, including plan
termination. In the event Executive becomes covered under another employer’s group health plan or
otherwise ceases to be eligible for COBRA during the COBRA Premium Period, Executive must
immediately notify the Company of such event. Notwithstanding the foregoing, if the Company
determines, in its sole discretion, that it cannot pay the COBRA Premiums without a
4.
substantial risk of violating applicable law (including, without limitation, Section 2716 of the Public
Health Service Act), the Company instead shall pay to Executive, on the first day of each calendar
month, a fully taxable cash payment equal to the applicable COBRA premiums for that month
(including premiums for Executive and Executive’s eligible dependents who have elected and remain
enrolled in such COBRA coverage), subject to applicable tax withholdings (such amount, the “Special
Cash Payment”), for the remainder of the COBRA Premium Period. Executive may, but is not
obligated to, use such Special Cash Payments toward the cost of COBRA premiums.
5.3
Termination Without Cause and Resignation for Good Reason In Connection
With a Change in Control.
(i)
In the event Executive is subject to an Involuntary Termination that occurs upon
or within twelve (12) months following a Change in Control (as defined in 2018 Equity Incentive
Plan) (each a “Change in Control Termination”) and provided that Executive remains in compliance
with the terms of this Agreement, in lieu of the Severance Benefits pursuant to Section 5.2 above, the
Company shall provide Executive with the following severance benefit (collectively, the “CIC
Severance Benefits”):
(a)
The Company shall pay Executive, as severance, 6 months of
Executive’s then-current Base Salary (for the avoidance of doubt, prior to any reduction that would
give rise to a resignation for Good Reason), subject to standard payroll deductions and withholdings
(the “CIC Severance”). The CIC Severance will be paid in equal installments on the Company’s
regular payroll schedule over the 6 month period following Executive’s Separation from Service;
provided, however, that no payments will be made prior to the 60th day following Executive’s
Separation from Service. On the 60th day following Executive’s Separation from Service, the
Company will pay Executive in a lump sum the Severance that Executive would have received on or
prior to such date under the standard payroll schedule but for the delay while waiting for the 60th day
in compliance with Code Section 409A, with the balance of the Severance being paid as originally
scheduled.
(b)
The Company shall pay Executive a payment equivalent to the amount
of the annual bonus received by the Executive during the preceding year, subject to any standard
deductions and withholdings (collectively, the “CIC Severance Bonus”). The CIC Severance Bonus
will be paid in a lump sum payment within thirty (30) days following the Effective Date.
(c)
The Company will fully accelerate, effective as of the Separation from
Service date, the vesting of any equity awards which vest solely based on the Executive’s continued
service with the Company which were granted to the Executive before September 28, 2022 (the “CIC
Accelerated Vesting”). For the avoidance of doubt, any equity awards that were granted on or after
September 28, 2022 or that do not vest solely based on the Executive’s continued service will not be
subject to the Accelerated Vesting benefit.
5.
5.4
Termination for Cause; Resignation Without Good Reason; Death or Disability.
(i)
The Company may terminate Executive’s employment with the Company at any
time for Cause. Further, Executive may resign at any time without Good Reason. Executive’s
employment with the Company may also be terminated due to Executive’s death or disability. Any
such termination shall be referred to herein as a “Non-Qualifying Termination.”
(ii)
If Executive is subject to a Non-Qualifying Termination, (a) Executive will
cease vesting in all equity awards, (b) all payments of compensation by the Company to Executive
hereunder will terminate immediately (except as to amounts already earned), and (c) Executive will
not be entitled to any severance benefits, including (without limitation) the Severance Benefits or CIC
Severance Benefits, unless required by law.
6.
Conditions to Receipt of Severance Benefits or CIC Benefits. The receipt of any Severance
Benefits or CIC Severance Benefits in the event of an Involuntary Termination or a Change in Control
Termination will be subject to Executive signing and allowing to become effective a separation
agreement and release of claims in a form satisfactory to the Company (the “Separation Agreement”)
within a time period specified by the Company (which shall be not later than 60 days following
Executive’s Separation from Service). No Severance Benefits or CIC Severance Benefits, as
applicable, will be paid or provided until the Separation Agreement becomes effective. Executive
shall also resign from all positions and terminate any relationships as an employee, advisor, officer or
director with the Company and any of its affiliates, each effective on the date of termination.
7.
Section 409A. It is intended that all of the severance benefits and other payments payable
under this Agreement satisfy, to the greatest extent possible, the exemptions from the application of
Code Section 409A provided under Treasury Regulations 1.409A-1(b)(4), 1.409A-1(b)(5) and 1.409A-
1(b)(9), and this Agreement will be construed to the greatest extent possible as consistent with those
provisions, and to the extent not so exempt, this Agreement (and any definitions hereunder) will be
construed in a manner that complies with Section 409A. For purposes of Code Section 409A
(including, without limitation, for purposes of Treasury Regulation Section 1.409A-2(b)(2)(iii)),
Executive’s right to receive any installment payments under this Agreement (whether severance
payments, reimbursements or otherwise) shall be treated as a right to receive a series of separate
payments and, accordingly, each installment payment hereunder shall at all times be considered a
separate and distinct payment. Notwithstanding any provision to the contrary in this Agreement, if
Executive is deemed by the Company at the time of Executive’s Separation from Service to be a
“specified employee” for purposes of Code Section 409A(a)(2)(B)(i), and if any of the payments upon
Separation from Service set forth herein and/or under any other agreement with the Company are
deemed to be “deferred compensation”, then to the extent delayed commencement of any portion of
such payments is required in order to avoid a prohibited distribution under Code Section 409A(a)(2)
(B)(i) and the related adverse taxation under Section 409A, such payments shall not be provided to
Executive prior to the earliest of (i) the expiration of the six-month period measured from
6.
the date of Executive’s Separation from Service with the Company, (ii) the date of Executive’s death
or (iii) such earlier date as permitted under Section 409A without the imposition of adverse taxation.
Upon the first business day following the expiration of such applicable Code Section 409A(a)(2)(B)(i)
period, all payments deferred pursuant to this Paragraph shall be paid in a lump sum to Executive, and
any remaining payments due shall be paid as otherwise provided herein or in the applicable agreement.
No interest shall be due on any amounts so deferred. With respect to reimbursements or in-kind
benefits provided to Executive hereunder (or otherwise) that are not exempt from Code Section 409A,
the following rules shall apply: (i) the amount of expenses eligible for reimbursement, or in-kind
benefits provided, during any one of Executive’s taxable years shall not affect the expenses eligible for
reimbursement, or in-kind benefit to be provided in any other taxable year, (ii) in the case of any
reimbursements of eligible expenses, reimbursement shall be made on or before the last day of
Executive’s taxable year following the taxable year in which the expense was incurred, (iii) the right to
reimbursement or in-kind benefits shall not be subject to liquidation or exchange for another benefit.
8.
Definitions.
8.1
Cause. For purposes of this Agreement, “Cause” for termination will mean: (a)
commission of any felony or crime involving dishonesty; (b) participation in any fraud against the
Company; (c) material breach of Executive’s duties to the Company; (d) persistent unsatisfactory
performance of job duties after written notice from the Company and at least fifteen (15) days
opportunity to cure (if deemed curable in the discretion of the Company); (e) intentional damage to
any property of the Company; (f) misconduct, or other violation of Company policy that causes harm;
(g) breach of any written agreement with the Company; (h) conduct by Executive which in the good
faith and reasonable determination of the Company demonstrates gross unfitness to serve; and (i) the
Company’s severe financial distress.
8.2
Good Reason. For purposes of this Agreement, Executive shall have “Good Reason”
for resignation from employment with the Company if any of the following actions are taken by the
Company without Executive’s consent: (a) a material reduction in Executive’s base salary, which the
parties agree is a reduction of at least 10% of Executive’s base salary (unless pursuant to a salary
reduction applicable generally to the Company’s similarly situated employees); or (b) a material
reduction in Executive’s duties (including responsibilities and/or authorities), provided, however, that a
change in job position shall not be deemed a “material reduction” in and of itself unless Executive’s
new duties are materially reduced from the prior duties; and provided further that a change in duties
due to the Company becoming a division, subsidiary or other similar part of a larger organization shall
not be deemed a “material reduction” in and of itself unless such new duties are materially reduced
from the prior duties; or (c) relocation of Executive’s principal place of employment to a place that
increases Executive’s one-way commute by more than fifty (50) miles as compared to Executive’s
then-current principal place of employment immediately prior to such relocation. In order to resign
for Good Reason, Executive must provide written notice to the Company within 30 days after the first
occurrence of the event giving rise to Good Reason setting forth the basis for Executive’s resignation,
allow the Company at least
7.
30 days from receipt of such written notice to cure such event, and if such event is not reasonably
cured within such period, Executive must resign from all positions Executive then holds with the
Company not later than 90 days after the expiration of the cure period.
8.3
Change in Control. For purposes of this Agreement, “Change in Control” shall have
the definition assigned to such term in the Company’s 2018 Equity Incentive Plan (but excluding
subsection (d) of such definition).
9.
Proprietary Information Obligations.
9.1
Confidential Information Agreement. In connection with Executive’s employment
with the Company, Executive will receive and have access to Company confidential information and
trade secrets. Accordingly, enclosed with this Agreement is an Employee Confidential Information
and Inventions Assignment Agreement (the “Confidentiality Agreement”) which contains restrictive
covenants and prohibits unauthorized use or disclosure of the Company’s confidential information and
trade secrets, among other obligations. Executive agrees to review the Confidentiality Agreement and
only sign it after careful consideration.
9.2
Third-Party Agreements and Information. Executive represents and warrants that
Executive’s employment with the Company does not conflict with any prior employment or consulting
agreement or other agreement with any third party, and that Executive will perform Executive’s duties
to the Company without violating any such agreement. Executive represents and warrants that
Executive does not possess confidential information arising out of prior employment, consulting, or
other third party relationships, that would be used in connection with Executive’s employment with
the Company, except as expressly authorized by that third party. During Executive’s employment with
the Company, Executive will use in the performance of Executive’s duties only information which is
generally known and used by persons with training and experience comparable to Executive’s own,
common knowledge in the industry, otherwise legally in the public domain, or obtained or developed
by the Company or by Executive in the course of Executive’s work for the Company.
10.
Outside Activities During Employment. Executive will not during Executive’s employment
with the Company undertake or engage in any other employment, occupation or business enterprise,
provided, however, that, Executive may engage in civic and not-for-profit activities so long as such
activities do not materially interfere with the performance of Executive’s duties hereunder.
Dispute Resolution. To ensure the timely and economical resolution of disputes that may
11.
arise in connection with Executive’s employment with the Company, Executive and the Company
agree that any and all disputes, claims, or causes of action arising from or relating to the enforcement,
breach, performance, negotiation, execution, or interpretation of this Agreement, the Confidentiality
Agreement, or Executive’s employment, or the termination of Executive’s employment, including but
not limited to all statutory claims, with the exception of discrimination and harassment claims, will be
resolved pursuant to the
8.
(i)
and
https://www.jamsadr.com/rules-employment-arbitration/
Federal Arbitration Act, 9 U.S.C. §1-16 (the “FAA”), and to the fullest extent permitted by law, by
final, binding and confidential arbitration by a single arbitrator conducted in New York, New York by
Judicial Arbitration and Mediation Services Inc. (“JAMS”) under the then applicable JAMS rules
appropriate to the relief being sought (the applicable rules are available at the following web
addresses:
(ii)
https://www.jamsadr.com/rules-comprehensive-arbitration/); provided, however,
this arbitration
provision not apply to any action or claim that cannot be subject to mandatory arbitration as a matter
of law, including, without limitation, claims involving allegations of sexual harassment and
discrimination, to the extent such claims are not permitted by applicable law(s) to be submitted to
mandatory arbitration and the applicable law(s) are not preempted by the FAA or otherwise invalid
(collectively, the “Excluded Claims”). A hard copy of the rules will be provided to Executive upon
request. A hard copy of the rules will be provided to Executive upon request. By agreeing to this
arbitration procedure, both Executive and the Company waive the right to resolve any such
dispute through a trial by jury or judge or administrative proceeding. In addition, all claims,
disputes, or causes of action under this section, whether by Executive or the Company, must be
brought in an individual capacity, and shall not be brought as a plaintiff (or claimant) or class member
in any purported class or representative proceeding, nor joined or consolidated with the claims of any
other person or entity. The Arbitrator may not consolidate the claims of more than one person or
entity, and may not preside over any form of representative or class proceeding. To the extent that the
preceding sentences regarding class claims or proceedings are found to violate applicable law or are
otherwise found unenforceable, any claim(s) alleged or brought on behalf of a class shall proceed in a
court of law rather than by arbitration. The Company acknowledges that Executive will have the right
to be represented by legal counsel at any arbitration proceeding. Questions of whether a claim is
subject to arbitration under this Agreement) shall be decided by a federal court in the State of New
York. However, procedural questions which grow out of the dispute and bear on the final disposition
are matters for the arbitrator. The arbitrator shall: (a) have the authority to compel adequate discovery
for the resolution of the dispute and to award such relief as would otherwise be permitted by law; (b)
issue a written arbitration decision, to include the arbitrator’s essential findings and conclusions and a
statement of the award; and (c) be authorized to award any or all remedies that Executive or the
Company would be entitled to seek in a court of law. Executive and the Company shall equally share
all JAMS’ arbitration fees. To the extent JAMS does not collect or Executive otherwise does not pay
to JAMS an equal share of all JAMS’ arbitration fees for any reason, and the Company pays JAMS
Executive’s share, Executive acknowledges and agrees that the Company shall be entitled to recover
from Executive half of the JAMS arbitration fees invoiced to the parties (less any amounts Executive
paid to JAMS) in a federal or state court of competent jurisdiction. Except as modified in the
Confidential Information Agreement, each party is responsible for its own attorneys’ fees. Nothing in
this Agreement is intended to prevent either Executive or the Company from obtaining injunctive
relief in court to prevent irreparable harm pending the conclusion of any such arbitration. Any awards
or orders in such arbitrations may be entered and enforced as judgments in the federal and state courts
of any competent jurisdiction. To the extent a New York federal court determines that any applicable
law prohibits mandatory arbitration of Excluded Claims, if Executive intends to
9.
bring multiple claims, including one or more Excluded Claims, the Excluded Claim(s) may be publicly
filed with a court, while any other claims will remain subject to mandatory arbitration.
12.
General Provisions.
12.1 Employment Contingencies. Executive’s employment is contingent upon satisfactory
proof of Executive’s right to work in the United States.
12.2 Notices. Any notices provided must be in writing and will be deemed effective upon
the earlier of personal delivery (including personal delivery by fax) or the next day after sending by
overnight carrier, to the Company at its primary office location and to Executive at the address as
listed on the Company payroll.
12.3
Severability. Whenever possible, each provision of this Agreement will be interpreted
in such manner as to be effective and valid under applicable law, but if any provision of this
Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or
rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other
provision or any other jurisdiction, but this Agreement will be reformed, construed and enforced in
such jurisdiction to the extent possible in keeping with the intent of the parties.
12.4 Waiver. Any waiver of any breach of any provisions of this Agreement must be in
writing to be effective, and it shall not thereby be deemed to have waived any preceding or succeeding
breach of the same or any other provision of this Agreement.
12.5 Complete Agreement. This Agreement, together with the Confidentiality Agreement,
constitutes the entire agreement between Executive and the Company with regard to this subject
matter and is the complete, final, and exclusive embodiment of the Parties’ agreement with regard to
this subject matter. This Agreement is entered into without reliance on any promise or representation,
written or oral, other than those expressly contained herein, and it supersedes any other such promises,
agreements (including but not limited to the Prior Agreement), warranties or representations. For the
avoidance of doubt, this Agreement supersedes and replaces the Prior Agreement, which shall be null
and void. It cannot be modified or amended except in a writing signed by a duly authorized officer of
the Company.
12.6 Counterparts. This Agreement may be executed in separate counterparts, any one of
which need not contain signatures of more than one party, but all of which taken together will
constitute one and the same Agreement.
12.7 Headings. The headings of the paragraphs hereof are inserted for convenience only
and shall not be deemed to constitute a part hereof nor to affect the meaning thereof.
12.8
Successors and Assigns. This Agreement is intended to bind and inure to the benefit
of and be enforceable by Executive and the Company, and their respective
10.
successors, assigns, heirs, executors and administrators, except that Executive may not assign any of
his duties hereunder and he may not assign any of his rights hereunder without the written consent of
the Company, which shall not be withheld unreasonably.
12.9 Tax Withholding and Indemnification. All payments and awards contemplated or
made pursuant to this Agreement will be subject to withholdings of applicable taxes in compliance
with all relevant laws and regulations of all appropriate government authorities. Executive
acknowledges and agrees that the Company has neither made any assurances nor any guarantees
concerning the tax treatment of any payments or awards contemplated by or made pursuant to this
Agreement. Executive has had the opportunity to retain a tax and financial advisor and fully
understands the tax and economic consequences of all payments and awards made pursuant to the
Agreement.
12.10 Choice of Law. All questions concerning the construction, validity and interpretation
of this Agreement will be governed by the laws of the State of New York.
11.
IN WITNESS WHEREOF, the Parties have executed this Agreement on the day and year
written below.
Y-mAbs Therapeutics, Inc.
/s/ Thomas Gad
By:
Thomas Gad
Founder, Interim CEO, President & Head of
Business Development
Date: October 21, 2023
/s/ Vignesh Rajah
Vignesh Rajah
Date: October 19, 2023
12.
Y-MABS THERAPEUTICS, INC.
2018 EQUITY INCENTIVE PLAN
Exhibit 10.46
PERRFORMANCE-BASED RESTRICTED STOCK UNIT AWARD GRANT NOTICE
Y-mAbs Therapeutics, Inc., a Delaware corporation, (the “Company”), pursuant to its 2018 Equity Incentive Plan, as
amended from time to time (the “Plan”), hereby grants to the holder listed below (the “Participant”), an award of
performance-based restricted stock units (“Performance-based Restricted Stock Units” or “PRSUs”). Each vested
Performance-based Restricted Stock Unit represents the right to receive, in accordance with the Performance-Based
Restricted Stock Unit Award Agreement attached hereto as Exhibit A (the “Agreement”), one share of Common Stock
(“Share”). This award of Performance-based Restricted Stock Units is subject to all of the terms and conditions set forth
herein and in the Agreement and the Plan, each of which are incorporated herein by reference. Unless otherwise defined
herein, the terms defined in the Plan shall have the same defined meanings in this Restricted Stock Unit Award Grant Notice
(the “Grant Notice”) and the Agreement.
Participant:
[ ]
Grant Date:
[ ]
Total Number of PRSUs:
[ ]
Vesting Commencement Date:
[ ]
Vesting Schedule:
The PRSUs shall vest in three equal installments as follows:
·
·
·
Tranche 1 ([ ] PRSUs) will vest on the first anniversary of the Vesting
Commencement Date if the Average Closing Price (as defined below),
determined as of such vesting date, is greater or equal to $[ ] per share;
Tranche 2 ([ ] PRSUs) will vest on the second anniversary of the Vesting
Commencement Date if the Average Closing Price, determined as of such
vesting date, is greater or equal to $[ ] per share; and
Tranche 3 ([ ] PRSUs) will vest on the third anniversary of the Vesting
Commencement Date if the Average Closing Price, determined as of such
vesting date, is greater or equal to $[ ] per share.
“Average Closing Price” means, as of any date, the average of the closing prices per
Share as quoted on Nasdaq, as reported in The Wall Street Journal or another source the
Administrator deems reliable, for the thirty (30) trading day period immediately
preceding the date for which the Average Closing Price is being determined hereunder.
Termination/Forfeiture:
Vesting of the PRSUs is subject to the Participant’s continued employment with the Company
through each applicable vesting date. To the extent that the applicable Average Closing Price
hurdle is not met as of a vesting date, the corresponding PRSUs will be automatically forfeited
by the Participant without payment of any consideration therefor. If the Participant experiences a
Termination of Service, all PRSUs that have not become vested on or prior to the date of such
Termination of Service will thereupon be automatically forfeited by the Participant without
payment of any consideration therefor.
By his or her signature and the Company’s signature below, the Participant agrees to be bound by the terms and
conditions of the Plan, the Agreement and this Grant Notice. The Participant has reviewed the Agreement, the Plan and this
Grant Notice in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Grant Notice and
fully understands all provisions of this Grant Notice, the Agreement and the Plan. The Participant hereby agrees to accept as
binding, conclusive and final all decisions or interpretations of the Administrator upon any questions arising under the Plan,
this Grant Notice or the Agreement. In addition, by signing below, but subject to section 3.18 below applicable to DK
Participants, the Participant also agrees that the Company, in its sole discretion, may satisfy any withholding obligations in
accordance with Section 2.6(b) of the Agreement by (i) withholding shares of Common Stock otherwise issuable to the
Participant upon vesting of the PRSUs, (ii) instructing a broker on the Participant’s behalf to sell shares of Common Stock
otherwise issuable to the Participant upon vesting of the PRSUs and submit the proceeds of such sale to the Company, or
(iii) using any other method permitted by Section 2.6(b) of the Agreement or the Plan.
Y-MABS THERAPEUTICS, INC.:
PARTICIPANT:
By:
Print
Name:
Title:
Address:
By:
Print Name:
Address:
EXHIBIT A
PERRFORMANCE-BASED RESTRICTED STOCK UNIT AWARD AGREEMENT
Pursuant to the Performance-based Restricted Stock Unit Award Grant Notice (the “Grant Notice”) to which this
Restricted Stock Unit Award Agreement (this “Agreement”) is attached, Y-mAbs Therapeutics, Inc., a Delaware corporation
(the “Company”), has granted to the Participant the number of performance-based restricted stock units (“Performance-
based Restricted Stock Units” or “PRSUs”) set forth in the Grant Notice under the Company’s 2018 Equity Incentive Plan,
as amended from time to time (the “Plan”). Each Performance-based Restricted Stock Unit represents the right to receive
one share of Common Stock (a “Share”) upon vesting. Capitalized terms not specifically defined herein shall have the
meanings specified in the Plan and Grant Notice.
ARTICLE I.
GENERAL
1.1 Incorporation of Terms of Plan. The PRSUs are subject to the terms and conditions of the Plan, which are
incorporated herein by reference. In the event of any inconsistency between the Plan and this Agreement, the terms of the
Plan shall control.
GRANT OF PREFORMANCE-BASED RESTRICTED STOCK UNITS
ARTICLE II.
2.1 Grant of PRSUs. Pursuant to the Grant Notice and upon the terms and conditions set forth in the Plan and this
Agreement, effective as of the Grant Date set forth in the Grant Notice, the Company hereby grants to the Participant an
award of PRSUs under the Plan in consideration of the Participant’s past and/or continued employment with or service to the
Company or any Subsidiaries and for other good and valuable consideration.
2.2 Unsecured Obligation to PRSUs. Unless and until the PRSUs have vested in the manner set forth in Article 2
hereof, the Participant will have no right to receive Common Stock under any such PRSUs. Prior to actual payment of any
vested PRSUs, such PRSUs will represent an unsecured obligation of the Company, payable (if at all) only from the general
assets of the Company.
2.3 Vesting Schedule. Subject to Section 2.5 hereof, the PRSUs shall vest and become nonforfeitable with respect to
the applicable portion thereof according to the vesting schedule set forth in the Grant Notice (rounding down to the nearest
whole Share).
2.4 Consideration to the Company. In consideration of the grant of the award of PRSUs pursuant hereto, the Participant
agrees to render faithful and efficient services to the Company or any Subsidiary.
2.5 Forfeiture, Termination and Cancellation upon Termination of Service. Notwithstanding any contrary provision of
this Agreement or the Plan, upon the Participant’s Termination of Service for any or no reason, all Performance-based
Restricted Stock Units which have not vested prior to or in connection with such Termination of Service shall thereupon
automatically be forfeited, terminated and cancelled as of the applicable termination date without payment of any
consideration by the Company, and the Participant, or the Participant’s beneficiary or personal representative, as the case
may be, shall have no further rights hereunder. No portion of the PRSUs which has not become vested as of the date on
which the Participant incurs a Termination of Service shall thereafter become vested.
2.6 Issuance of Common Stock upon Vesting.
(a) As soon as administratively practicable following the vesting of any Performance-based Restricted Stock
Units pursuant to Section 2.3 hereof, but in no event later than thirty (30) days after such vesting date (for the avoidance of
doubt, this deadline is intended to comply with the “short term deferral” exemption from Section 409A of the Code), the
Company shall deliver to the Participant (or any transferee permitted under Section 3.2 hereof) a number of Shares equal to
the number of PRSUs subject to this Award that vest on the applicable vesting date. Notwithstanding the foregoing, in the
event Shares cannot be issued pursuant to Section 10.7 of the Plan, the Shares shall be issued pursuant to
A-1
the preceding sentence as soon as administratively practicable after the Administrator determines that Shares can again be
issued in accordance with such Section.
(b) As set forth in Section 10.5 of the Plan, the Company shall have the authority and the right to deduct or
withhold, or to require the Participant to remit to the Company, an amount sufficient to satisfy all applicable federal, state
and local taxes required by law to be withheld with respect to any taxable event arising in connection with the Performance-
based Restricted Stock Units. The Company shall not be obligated to deliver any Shares to the Participant or the
Participant’s legal representative unless and until the Participant or the Participant’s legal representative shall have paid or
otherwise satisfied in full the amount of all federal, state and local taxes applicable to the taxable income of the Participant
resulting from the grant or vesting of the Performance-based Restricted Stock Units or the issuance of Shares.
2.7 Conditions to Delivery of Shares. The Shares deliverable hereunder may be either previously authorized but
unissued Shares, treasury Shares or issued Shares which have then been reacquired by the Company. Such Shares shall be
fully paid and nonassessable. The Company shall not be required to issue Shares deliverable hereunder prior to fulfillment of
the conditions set forth in Section 10.4 of the Plan.
2.8 Rights as Stockholder. The holder of the RSUs shall not be, nor have any of the rights or privileges of, a
stockholder of the Company, including, without limitation, voting rights and rights to dividends, in respect of the PRSUs and
any Shares underlying the PRSUs and deliverable hereunder unless and until such Shares shall have been issued by the
Company and held of record by such holder (as evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment shall be made for a dividend or other right for which the record
date is prior to the date the Shares are issued, except as provided in Article IX of the Plan.
ARTICLE III.
OTHER PROVISIONS
3.1 Administration. The Administrator shall have the power to interpret the Plan and this Agreement and to adopt such
rules for the administration, interpretation and application of the Plan as are consistent therewith and to interpret, amend or
revoke any such rules. All actions taken and all interpretations and determinations made by the Administrator in good faith
shall be final and binding upon the Participant, the Company and all other interested persons. No member of the
Administrator or the Board shall be personally liable for any action, determination or interpretation made in good faith with
respect to the Plan, this Agreement or the PRSUs.
3.2 PRSUs Not Transferable. The PRSUs shall be subject to the restrictions on transferability set forth in Section 10.1
of the Plan.
3.3 Tax Consultation. The Participant understands that the Participant may suffer adverse tax consequences in
connection with the PRSUs granted pursuant to this Agreement (and the Shares issuable with respect thereto). The
Participant represents that the Participant has consulted with any tax consultants the Participant deems advisable in
connection with the PRSUs and the issuance of Shares with respect thereto and that the Participant is not relying on the
Company for any tax advice.
3.4 Binding Agreement. Subject to the limitation on the transferability of the PRSUs contained herein, this Agreement
will be binding upon and inure to the benefit of the heirs, legatees, legal representatives, successors and assigns of the parties
hereto.
3.5 Adjustments Upon Specified Events. The Administrator may accelerate the vesting of the PRSUs in such
circumstances as it, in its sole discretion, may determine. The Participant acknowledges that the PRSUs are subject to
adjustment, modification and termination in certain events as provided in this Agreement and Article IX of the Plan.
3.6 Notices. Any notice to be given under the terms of this Agreement to the Company shall be addressed to the
Company in care of the Secretary of the Company at the Company’s principal office, and any notice to be given to the
Participant shall be addressed to the Participant at the Participant’s last address reflected on the Company’s records. By a
notice given pursuant to this Section 3.6, either party may hereafter designate a different address for notices to be given to
that party. Any notice shall be deemed duly given when sent via email or when sent by certified mail (return receipt
A-2
requested) and deposited (with postage prepaid) in a post office or branch post office regularly maintained by the United
States Postal Service.
3.7 Participant’s Representations. If the Shares issuable hereunder have not been registered under the Securities Act or
any applicable state laws on an effective registration statement at the time of such issuance, the Participant shall, if required
by the Company, concurrently with such issuance, make such written representations as are deemed necessary or appropriate
by the Company and/or its counsel.
3.8 Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or
construction of this Agreement.
3.9 Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration,
enforcement and performance of the terms of this Agreement regardless of the law that might be applied under principles of
conflicts of laws.
3.10 Conformity to Securities Laws. The Participant acknowledges that the Plan and this Agreement are intended to
conform to the extent necessary with all provisions of the Securities Act and the Exchange Act and any other Applicable
Law. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the PRSUs are granted, only in
such a manner as to conform to Applicable Law. To the extent permitted by Applicable Law, the Plan and this Agreement
shall be deemed amended to the extent necessary to conform to such Applicable Law.
3.11 Amendment, Suspension and Termination. To the extent permitted by the Plan, this Agreement may be wholly or
partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Administrator or
the Board; provided, however, that, except as may otherwise be provided by the Plan, no amendment, modification,
suspension or termination of this Agreement shall adversely affect the PRSUs in any material way without the prior written
consent of the Participant.
3.12 Successors and Assigns. The Company may assign any of its rights under this Agreement to single or multiple
assignees, and this Agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the
restrictions on transfer herein set forth in Section 3.2 hereof, this Agreement shall be binding upon the Participant and his or
her heirs, executors, administrators, successors and assigns.
3.13 Limitations Applicable to Section 16 Persons. Notwithstanding any other provision of the Plan or this Agreement,
if the Participant is subject to Section 16 of the Exchange Act, then the Plan, the PRSUs and this Agreement shall be subject
to any additional limitations set forth in any applicable exemptive rule under Section 16 of the Exchange Act (including any
amendment to Rule 16b-3 of the Exchange Act) that are requirements for the application of such exemptive rule. To the
extent permitted by Applicable Law, this Agreement shall be deemed amended to the extent necessary to conform to such
applicable exemptive rule.
3.14 Not a Contract of Service Relationship. Nothing in this Agreement or in the Plan shall confer upon Participant any
right to continue to serve as an employee or other service provider of the Company or any of its Subsidiaries or interfere
with or restrict in any way with the right of the Company or any of its Subsidiaries, which rights are hereby expressly
reserved, to discharge or to terminate for any reason whatsoever, with or without cause, the services of the Participant’s at
any time.
3.15 Entire Agreement. The Plan, the Grant Notice and this Agreement (including all Exhibits thereto, if any)
constitute the entire agreement of the parties and supersede in their entirety all prior undertakings and agreements of the
Company and the Participant with respect to the subject matter hereof.
3.16 Section 409A. This Award is not intended to constitute “nonqualified deferred compensation” within the meaning
of Section 409A of the Code (together with any Department of Treasury regulations and other interpretive guidance issued
thereunder, including without limitation any such regulations or other guidance that may be issued after the date hereof,
“Section 409A”). However, notwithstanding any other provision of the Plan, the Grant Notice or this Agreement, if at any
time the Administrator determines that this Award (or any portion thereof) may be subject to Section 409A, the
Administrator shall have the right in its sole discretion (without any obligation to do so or to indemnify Participant or any
other person for failure to do so) to adopt such amendments to the Plan, the Grant Notice or this
A-3
Agreement, or adopt other policies and procedures (including amendments, policies and procedures with retroactive effect),
or take any other actions, as the Administrator determines are necessary or appropriate for this Award either to be exempt
from the application of Section 409A or to comply with the requirements of Section 409A.
3.17 Limitation on Participant’s Rights. Participation in the Plan confers no rights or interests other than as herein
provided. This Agreement creates only a contractual obligation on the part of the Company as to amounts payable and shall
not be construed as creating a trust. Neither the Plan nor any underlying program, in and of itself, has any assets. The
Participant shall have only the rights of a general unsecured creditor of the Company and its Subsidiaries with respect to
amounts credited and benefits payable, if any, with respect to the PRSUs, and rights no greater than the right to receive the
Common Stock as a general unsecured creditor with respect to PRSUs, as and when payable hereunder.
3.18. Special Provisions relating to Danish Law. Pursuant to Section 11.5 of the Plan (Provisions for Foreign
Participants), the Administrator has the determined that the following shall apply to Performance-based Restricted Stock
Units awarded to persons who are employed by Y-mAbs Therapeutics A/S and subject to Danish income taxation (“DK
Participants”):
3.18.1. Right for Participant to Refuse Cash and other Differential Settlement. Irrespective of Sections 9.2(a) and 9.2
(e), 9.3(a)(i), 9.3(b),10.6 of the Plan or any other provision of the Plan, the Administrator may only settle PRSUs other
than by delivery of the number of Shares equal to the number of PRSUs subject to this Award with the prior written
approval of the DK Participant (who thus has the right to demand delivery of Shares (gross amount before taxes) as
settlement).
3.18.2. Restrictions on Transferability. Irrespective of Section 10.1 or any other provision of the Plan, RSUs issued to
DK Participants cannot be transferred even in connection with domestic relations orders.
3.18.3. Applicability of laws. It is emphasized that the Plan is finally decided and established after 1 January 2019 for
PRSUs to Participants.
A-4
Y-mAbs Therapeutics A/S (Denmark)
Subsidiary of the Registrant
Exhibit 21.1
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (Nos.
333-271007 and 333-230455) and Form S-3 (No. 333-271006) of Y-mAbs Therapeutics, Inc. of our report
dated February 29, 2024 relating to the financial statements which appears in this Form 10-K.
EXHIBIT 23
/s/ PricewaterhouseCoopers LLP
Florham Park, NJ
February 29, 2024
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Michael Rossi certify that:
1.
I have reviewed this Annual Report on Form 10-K of Y-mAbs Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c.
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of
the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a.
b.
All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 29, 2024
/s/ Michael Rossi
Name: Michael Rossi
Title: President, Chief Executive Officer
(Principal Executive Officer)
1
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Bo Kruse, certify that:
1.
I have reviewed this Annual Report on Form 10-K of Y-mAbs Therapeutics, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant as of,
and for, the periods presented in this report;
4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over
financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to
be designed under our supervision, to ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by others within those entities, particularly
during the period in which this report is being prepared;
b. Designed such internal control over financial reporting, or caused such internal control over financial
reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles;
c. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this
report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end
of the period covered by this report based on such evaluation; and
d. Disclosed in this report any change in the registrant’s internal control over financial reporting that
occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the
case of an annual report) that has materially affected, or is reasonably likely to materially affect, the
registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal
control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of
directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over
financial reporting which are reasonably likely to adversely affect the registrant’s ability to record,
process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a
significant role in the registrant’s internal control over financial reporting.
Date: February 29, 2024
/s/ Bo Kruse
Name: Bo Kruse
Title: EVP, Chief Financial Officer
(Principal Financial Officer)
1
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Y-
mAbs Therapeutics, Inc. (the “Company”) hereby certifies, to his knowledge, that:
(i)
the accompanying Annual Report on Form 10-K of the Company for the fiscal year ended December
31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as
applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Dated: February 29, 2024
/s/ Michael Rossi
Name: Michael Rossi
Title: President, Chief Executive Officer
(Principal Executive Officer)
1
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Y-
mAbs Therapeutics, Inc. (the “Company”) hereby certifies, to his knowledge, that:
(i)
the accompanying Annual Report on Form 10-K of the Company for the fiscal year ended December
31, 2023 (the “Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as
applicable, of the Securities Exchange Act of 1934, as amended; and
(ii)
the information contained in the Report fairly presents, in all material respects, the financial condition
and results of operations of the Company.
Dated: February 29, 2024
/s/ Bo Kruse
Name: Bo Kruse
Title: EVP and Chief Financial Officer
(Principal Financial Officer)
1
Y-MABS THERAPEUTICS, INC.
INCENTIVE COMPENSATION RECOUPMENT POLICY
Exhibit 97.1
1.
INTRODUCTION
The Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of Y-
mAbs Therapeutics, Inc. a Delaware corporation (the “Company”), has determined that it is in the best interests of the
Company and its stockholders to adopt this Incentive Compensation Recoupment Policy (this “Policy”) providing for the
Company’s recoupment of Recoverable Incentive Compensation that is received by Covered Officers of the Company under
certain circumstances. Certain capitalized terms used in this Policy have the meanings given to such terms in Section 3
below.
This Policy is designed to comply with, and shall be interpreted to be consistent with, Section 10D of the Exchange
Act, Rule 10D-1 promulgated thereunder (“Rule 10D-1”) and Nasdaq Listing Rule 5608 (the “Listing Standards”).
2.
EFFECTIVE DATE
This Policy shall apply to all Incentive Compensation that is received by a Covered Officer on or after October 2,
2023 (the “Effective Date”). Incentive Compensation is deemed “received” in the Company’s fiscal period in which the
Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment or grant of such
Incentive Compensation occurs after the end of that period.
3.
DEFINITIONS
“Accounting Restatement” means an accounting restatement that the Company is required to prepare due to the
material noncompliance of the Company with any financial reporting requirement under the securities laws, including any
required accounting restatement to correct an error in previously issued financial statements that is material to the previously
issued financial statements, or that would result in a material misstatement if the error were corrected in the current period or
left uncorrected in the current period.
“Accounting Restatement Date” means the earlier to occur of (a) the date that the Board, a committee of the Board
authorized to take such action, or the officer or officers of the Company authorized to take such action if Board action is not
required, concludes, or reasonably should have concluded, that the Company is required to prepare an Accounting
Restatement, or (b) the date that a court, regulator or other legally authorized body directs the Company to prepare an
Accounting Restatement.
“Administrator” means the Compensation Committee or, in the absence of such committee, the Board.
“Code” means the U.S. Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.
“Covered Officer” means each current and former Executive Officer.
“Exchange” means the Nasdaq Stock Market.
“Exchange Act” means the U.S. Securities Exchange Act of 1934, as amended.
“Executive Officer” means the Company’s president, principal financial officer, principal accounting officer (or if
there is no such accounting officer, the controller), senior and chief officers (commercial, medical affairs, research &
development, manufacturing, regulatory and clinical operations), vice-president of the Company in charge of a principal
business unit, division, or function (such as sales, medical, clinical, manufacturing, regulatory, quality, research &
development, investor relations, administration, or finance), any other officer who performs a policy-making function, or any
other person who performs similar policy-making functions for the Company. Executive officers of the Company’s parent(s)
or subsidiaries are deemed executive officers of the Company if they perform such policy-making functions for the
Company. Policy-making function is not intended to include policy-making functions that are not significant. Identification
of an executive officer for purposes of this Policy would include at a minimum executive officers identified pursuant to Item
401(b) of Regulation S-K promulgated under the Exchange Act.
“Financial Reporting Measures” means measures that are determined and presented in accordance with the
accounting principles used in preparing the Company’s financial statements, and any measures derived wholly or in part
from such measures, including Company stock price and total stockholder return (“TSR”). A measure need not be presented
in the Company’s financial statements or included in a filing with the SEC in order to be a Financial Reporting Measure.
“Incentive Compensation” means any compensation that is granted, earned or vested based wholly or in part upon
the attainment of a Financial Reporting Measure.
“Lookback Period” means the three completed fiscal years immediately preceding the Accounting Restatement
Date, as well as any transition period (resulting from a change in the Company’s fiscal year) within or immediately
following those three completed fiscal years (except that a transition period of at least nine months shall count as a
completed fiscal year). Notwithstanding the foregoing, the Lookback Period shall not include fiscal years completed prior to
the Effective Date.
“Recoverable Incentive Compensation” means Incentive Compensation received by a Covered Officer during the
Lookback Period that exceeds the amount of Incentive Compensation that would have been received had such amount been
determined based on the Accounting Restatement, computed without regard to any taxes paid (i.e., on a gross basis without
regarding to tax withholdings and other deductions). For any compensation plans or programs that take into account
Incentive Compensation, the amount of Recoverable Incentive Compensation for purposes of this Policy shall include,
without limitation, the amount contributed to any notional account based on Recoverable Incentive Compensation and any
earnings to date on that notional amount. For any Incentive Compensation that is based on stock price or TSR, where the
Recoverable Incentive Compensation is not subject to mathematical recalculation directly from the information in an
Accounting Restatement, the Administrator will determine the amount of Recoverable Incentive Compensation based on a
reasonable estimate of the effect of the Accounting Restatement on the stock price or TSR upon which the Incentive
Compensation was received. The Company shall maintain documentation of the determination of that reasonable estimate
and provide such documentation to the Exchange in accordance with the Listing Standards.
“SEC” means the U.S. Securities and Exchange Commission.
4.
RECOUPMENT
(a)
Applicability of Policy. This Policy applies to Incentive Compensation received by a Covered Officer (i)
after beginning services as an Executive Officer, (ii) who served as an Executive Officer at any time during the performance
period for such Incentive Compensation, (iii) while the Company had a class of securities listed on a national securities
exchange or a national securities association, and (iv) during the Lookback Period.
(b)
Recoupment Generally. Pursuant to the provisions of this Policy, if there is an Accounting Restatement,
the Company must reasonably promptly recoup the full amount of the Recoverable Incentive Compensation, unless the
conditions of one or more subsections of Section 4(c) of this Policy are met and the Compensation Committee, or, if such
committee does not consist solely of independent directors, a majority of the independent directors serving on the Board, has
made a determination that recoupment would be impracticable. Recoupment is required regardless of whether the Covered
Officer engaged in any misconduct and regardless of fault, and the Company’s obligation to recoup Recoverable Incentive
Compensation is not dependent on whether or when any restated financial statements are filed.
(c)
Impracticability of Recovery. Recoupment may be determined to be impracticable if, and only if:
(i)
the direct expense paid to a third party to assist in enforcing this Policy would exceed the amount of
the applicable Recoverable Incentive Compensation; provided that, before concluding that it would be impracticable
to recover any amount of Recoverable Incentive Compensation based on expense of enforcement, the Company
shall make a reasonable attempt to recover such Recoverable Incentive Compensation, document such reasonable
attempt(s) to recover, and provide that documentation to the Exchange in accordance with the Listing Standards; or
(ii)
recoupment of the applicable Recoverable Incentive Compensation would likely cause an otherwise
tax-qualified retirement plan, under which benefits are broadly available to employees of the Company, to fail to
meet the requirements of Code Section 401(a)(13) or Code Section 411(a) and regulations thereunder.
(d)
Sources of Recoupment. To the extent permitted by applicable law, the Administrator shall, in its sole
discretion, determine the timing and method for recouping Recoverable Incentive Compensation hereunder, provided that
such recoupment is undertaken reasonably promptly. The Administrator may, in its discretion, seek recoupment from a
Covered Officer from any of the following sources or a combination thereof, whether the applicable compensation was
approved, awarded, granted, payable or paid to the Covered Officer prior to, on or after the Effective Date: (i) direct
repayment of Recoverable Incentive Compensation previously paid to the Covered Officer; (ii) cancelling prior cash or
equity-based awards (whether vested or unvested and whether paid or unpaid); (iii) cancelling or offsetting against any
planned future cash or equity-based awards; (iv) forfeiture of deferred compensation, subject to compliance with Code
Section 409A; and (v) any other method authorized by applicable law or contract. Subject to compliance with any applicable
law, the Administrator may effectuate recoupment under this Policy from any amount otherwise payable to the Covered
Officer, including amounts payable to such individual under any otherwise applicable Company plan or program, e.g., base
salary, bonuses or commissions and compensation previously deferred by the Covered Officer. The Administrator need not
utilize the same method of recovery for all Covered Officers or with respect to all types of Recoverable Incentive
Compensation.
(e)
No Indemnification of Covered Officers. Notwithstanding any indemnification agreement, applicable
insurance policy or any other agreement or provision of the Company’s certificate of incorporation or bylaws to the contrary,
no Covered Officer shall be entitled to indemnification or advancement of expenses in connection with any enforcement of
this Policy by the Company, including, without limitation, paying or reimbursing such Covered Officer for insurance
premiums to cover potential obligations to the Company under this Policy or the cost of tax, legal and other advisors.
(f)
Indemnification of Administrator. Any members of the Administrator, and any other members of the
Board who assist in the administration of this Policy, shall not be personally liable for any
action, determination or interpretation made with respect to this Policy and shall be indemnified by the Company to the
fullest extent under applicable law and Company policy with respect to any such action, determination or interpretation. The
foregoing sentence shall not limit any other rights to indemnification of the members of the Board under applicable law or
Company policy.
(g)
No “Good Reason” for Covered Officers. Any action by the Company to recoup or any recoupment of
Recoverable Incentive Compensation under this Policy from a Covered Officer shall not be deemed (i) “good reason” for
resignation or to serve as a basis for a claim of constructive termination under any benefits or compensation arrangement
applicable to such Covered Officer, or (ii) to constitute a breach of a contract or other arrangement to which such Covered
Officer is party.
5.
ADMINISTRATION
Except as specifically set forth herein, this Policy shall be administered by the Administrator. The Administrator
shall have full and final authority to make any and all determinations required under this Policy. Any determination by the
Administrator with respect to this Policy shall be final, conclusive and binding on all interested parties and need not be
uniform with respect to each individual covered by this Policy. In carrying out the administration of this Policy, the
Administrator is authorized and directed to consult with the full Board or such other committees of the Board as may be
necessary or appropriate as to matters within the scope of such other committee’s responsibility and authority. Subject to
applicable law, the Administrator may authorize and empower any officer or employee of the Company to take any and all
actions that the Administrator, in its sole discretion, deems necessary or appropriate to carry out the purpose and intent of
this Policy (other than with respect to any recovery under this Policy involving such officer or employee).
6.
SEVERABILITY
If any provision of this Policy or the application of any such provision to a Covered Officer shall be adjudicated to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other
provisions of this Policy, and the invalid, illegal or unenforceable provisions shall be deemed amended to the minimum
extent necessary to render any such provision or application enforceable.
7.
NO IMPAIRMENT OF OTHER REMEDIES
Nothing contained in this Policy, and no recoupment or recovery as contemplated herein, shall limit any claims,
damages or other legal remedies the Company or any of its affiliates may have against a Covered Officer arising out of or
resulting from any actions or omissions by the Covered Officer. This Policy does not preclude the Company from taking any
other action to enforce a Covered Officer’s obligations to the Company, including, without limitation, termination of
employment and/or institution of civil proceedings. This Policy is in addition to the requirements of Section 304 of the
Sarbanes-Oxley Act of 2002 (“SOX 304”) that are applicable to the Company’s Chief Executive Officer and Chief Financial
Officer and to any other compensation recoupment policy and/or similar provisions in any employment, equity plan, equity
award, or other individual agreement, to which the Company is a party or which the Company has adopted or may adopt and
maintain from time to time; provided, however, that compensation recouped pursuant to this policy shall not be duplicative
of compensation recouped pursuant to SOX 304 or any such compensation recoupment policy and/or similar provisions in
any such employment, equity plan, equity award, or other individual agreement except as may be required by law.
8.
AMENDMENT; TERMINATION
The Administrator may amend, terminate or replace this Policy or any portion of this Policy at any time and from
time to time in its sole discretion. The Administrator shall amend this Policy as it deems necessary to comply with applicable
law or any Listing Standard.
9.
SUCCESSORS
This Policy shall be binding and enforceable against all Covered Officers and, to the extent required by Rule 10D-1
and/or the applicable Listing Standards, their beneficiaries, heirs, executors, administrators or other legal representatives.
10.
REQUIRED FILINGS
The Company shall make any disclosures and filings with respect to this Policy that are required by law, including as
required by the SEC.
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