ITEM 1. BUSINESS
Overview
We are a biopharmaceutical company focused on the development and commercialization of novel therapeutics in the areas of thrombosis, other hematologic disorders and inflammation for patients who currently have limited or no approved treatment options. We are advancing our three wholly-owned compounds using novel biomarker and genetic approaches that may increase the likelihood of clinical, regulatory and commercial success of our potentially life-saving therapies. Two of these compounds were discovered through our internal research efforts and one was discovered by Portola scientists during their time at a prior company.
Our late stage development programs address significant unmet medical needs in the area of thrombosis, or blood clots. Betrixaban, a U.S. Food and Drug Administration, or FDA,-designated Fast Track novel oral once-daily inhibitor of Factor Xa, or fXa, is being developed for extended duration prophylaxis, or preventive treatment, of a form of thrombosis known as venous thromboembolism, or VTE, in acute medically ill patients for 35 days of in-hospital and post-discharge use. Fast Track is a process designed to facilitate the development, and expedite the review of drugs to treat serious conditions and fill an unmet medical need. Currently, there is no anticoagulant approved for extended duration VTE prophylaxis in the acute medically ill population. Acute medically ill patients are those who are hospitalized for serious non-surgical conditions, such as heart failure, stroke, infection, rheumatic disorders and pulmonary disorders. Our pivotal Phase 3 APEX Study enrolled 7,513 patients at more than 450 clinical sites worldwide and assessed the superiority of extended-duration anticoagulation with oral betrixaban for 35 to 42 days compared with standard-duration injectable enoxaparin for 10+4 days in preventing VTE in high-risk acute medically ill patients.
Our second lead compound, andexanet alfa, an FDA-designated breakthrough therapy and orphan drug, is a recombinant protein designed to reverse anticoagulant activity in patients treated with a fXa inhibitor. Breaththrough Therapy designation is a process designed by the FDA to expedite the development and review of drugs which may demonstrate substantial improvement over available therapy. Andexanet alfa has potential indications for patients anticoagulated with a direct or indirect fXa inhibitor when reversal of anticoagulation is needed, such as in life-threatening or uncontrolled bleeding or for emergency surgery or urgent procedures. We have completed Phase 3 registration studies in healthy volunteers and are conducting a Phase 4 confirmatory trial in patients.
Our third product candidate, cerdulatinib, is an orally available dual kinase inhibitor that inhibits spleen tyrosine kinase, or Syk, and Janus kinases, or JAK, enzymes that regulate important signaling pathways. Cerdulatinib is being developed for hematologic, or blood, cancers and inflammatory disorders. We are currently conducting a Phase 2a proof-of-concept study for cerdulatinib in patients with non-Hodgkin’s lymphoma, or NHL, or chronic lymphocytic leukemia, or CLL, who have failed or relapsed on existing marketed therapies or products in development, including patients with identified mutations.
We have full worldwide commercial rights to betrixaban. We have full worldwide commercial rights to cerdulatinib, excluding topical indications, and we have full worldwide commercial rights to andexanet alfa outside of Japan. We believe we can maximize the value of our company by retaining substantial commercialization rights to these three product candidates and, where appropriate, entering into additional partnerships to develop and commercialize these product candidates. We plan on building a successful enterprise to commercialize betrixaban and andexanet alfa, using a hospital-based sales team in the United States and possibly other major markets and with additional partners in other territories.
In addition to our three lead product candidates, we have other early research and development programs including a collaboration with Ora Inc. for the development of Syk-selective inhibitors for allergic conjunctivitis and an exclusive in-license agreement with SRX Cardio LLC to explore a novel approach to develop a drug in the field of hypercholesterolemia.
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Betrixaban
Betrixaban is a novel oral once-daily inhibitor of fXa in development for extended duration VTE prophylaxis in acute medically ill patients for 35 days of in-hospital and post-discharge use. Acute medically ill patients are those who are hospitalized for serious non-surgical conditions, such as heart failure, stroke, infection, rheumatic disorders and pulmonary disorders. We estimate that in the G7 countries in 2016 there were 22.5 million acute medically ill patients for whom VTE prophylaxis was recommended by medical treatment guidelines. The current standard of care for VTE prophylaxis in this population is enoxaparin, an injectable low molecular weight heparin, marketed as Lovenox® and also available in generic form, that is approved for deep vein thrombosis, or DVT, prophylaxis in medical patients who are at risk for thromboembolic complications due to severely restricted mobility during acute illness. The usual duration of administration of enoxaparin is 6 to 11 days. According to IMS Health Incorporated, or IMS, a healthcare industry information provider, worldwide sales of enoxaparin for 2015 were $2.9 billion. The use of enoxaparin in acute medically ill patients accounted for approximately $1.4 billion of these sales.
Multiple large, global trials have demonstrated that there is substantial risk of VTE in acute medically ill patients with restricted mobility and other risk factors beyond the standard course of enoxaparin. Our Phase 3 APEX study was designed to use biomarkers to identify and enroll patients most likely to benefit from therapy with betrixaban. Specifically, these patients had elevated blood levels of D-dimer or were over age 75. There have been numerous publications highlighting the role of these two prognostic markers in identifying patients at extended risk of VTE. The MAGELLAN trial sponsored by Bayer Pharma AG, or Bayer, and Janssen Pharmaceuticals, Inc., or Janssen, which evaluated administration of rivaroxaban for an extended period, demonstrated that the incidence of VTE-related death rose four-fold over several weeks after hospital discharge and the discontinuation of treatment. However, there are no therapies approved for use beyond 14 days despite the ongoing risk of VTE faced by these patients for 35 days or more following hospital admission. We are developing betrixaban to be the first oral fXa inhibitor approved for use in acute medically ill patients and the first anticoagulant approved for extended period hospital-to-home VTE prophylaxis in these patients. We believe the addressable market opportunity for betrixaban could range from $3.0 billion to $4.0 billion, annually, by 2020.
In 2012, we initiated our pivotal biomarker-based Phase 3 APEX study, a randomized, double-blind, double dummy, active-controlled, multicenter, multinational study to evaluate a once-daily dose of betrixaban for 35 days for superiority as compared to in-hospital administration of enoxaparin once daily for 6 to 14 days followed by placebo for the remainder of the study period. Our APEX study was conducted in 35 countries worldwide.
Our New Drug Application, or NDA, was accepted by the FDA in December 2016 with a priority review Prescription Drug User Fee Act, or PDUFA, date of June 24, 2017. The PDUFA date is the goal date for the FDA to complete its review of the NDA. The evidence for the basis of approval submitted in the NDA is based on the Phase 3 APEX trial primary efficacy and safety outcomes in the total study population of 7,513 patients. In the overall population, for the combined 80 mg and 40 mg doses, 35 to 42 days extended-duration betrixaban compared to 10 days (+/- 4) standard duration Lovenox followed by placebo demonstrated a 24% relative risk reduction, or RRR, in the composite efficacy endpoint of asymptomatic VTE, symptomatic VTE and VTE related death (p-value 0.006), a 36% RRR in symptomatic VTE (p-value 0.039), and a 41% RRR in stroke (p-value 0.034). These efficacy results were achieved without a significant increase in major bleeding (p-value 0.55), the primary safety endpoint in the trial. An even greater 30% RRR in the composite primary efficacy outcome favoring betrixaban was seen in 4,937 patients in the overall population stratified to the higher 80 mg dose (p-value 0.002) without an increase in major bleeding (p-value 0.86).
We highlighted in the NDA that the study’s primary efficacy endpoint in the D-dimer subpopulation of 3,870 patients narrowly missed statistical significance (p-value 0.054) according to the interpretation of the statistical analysis plan, or SAP, by Portola and its CRO, and that the primary efficacy endpoint achieved statistical significance in the D-dimer cohort (p-value 0.048) according to the interpretation of the SAP by the academic groups involved in the conduct of the study. The academic groups determined that one additional patient, who had an event in the enoxaparin arm, should be included in the primary efficacy analysis, whereas Portola included this patient only in the secondary analysis. Additional pre-specified analyses to support formal testing of the overall study population in the NDA were the following: D-dimer cohort by central lab D-dimer, patients stratified to the 80 mg dose, and modified intent-to-treat analysis. All achieved a p-value of <0.05.
We were informed in February 2017, as part of our mid-cycle review meeting that the FDA does not plan to hold an Advisory Committee to facilitate their evaluation of betrixaban. Also, our Marketing Authorization Application or MAA, to the European Medicines Agency or EMA’s, Committee for Medicinal Products for Human Use, or CHMP, was accepted in December 2016 under a standard review period.
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We believe betrixaban has the potential to succeed in the targeted patient population, in part due to its validated mechanism of action, but also most importantly, due to its properties that differentiate it from other anticoagulants. First, it has the lo
ngest half-life of all the fXa inhibitors, making it a true, once-daily therapy allowing for a narrow peak-to-trough concentration ratio that helps maintain a less variable anticoagulant effect over the course of a day. Second, it has the lowest renal cle
arance of all of the fXa inhibitors, which may result in a lower rate of bleeding. Finally, it is not metabolized in the liver by an enzyme called CYP 3A4, which may result in reduced potential for drug-on-drug interactions. These properties are critically
important for acute medically ill patients who are often renally compromised and on multiple concomitant medications.
Andexanet alfa
Andexanet alfa, an FDA-designated breakthrough therapy and orphan drug, is a recombinant protein designed to reverse anticoagulant activity in patients treated with a fXa inhibitor and is the first therapy to demonstrate reversal as measured by anti-fXa levels. Andexanet alfa has potential indications for patients anticoagulated with a direct or indirect fXa inhibitor when reversal of anticoagulation is needed, such as in life-threatening or uncontrolled bleeding or for emergency surgery or urgent procedures. Currently, there is no antidote or reversal agent approved for use against fXa inhibitors. Leading clinicians have identified, and the FDA has recognized, the lack of an effective reversal agent for fXa inhibitors as a significant unmet clinical need. Based on industry data, we estimate that in 2020, between 23 million and 36 million patients will be treated with fXa inhibitors, including low molecular weight heparins, for short-term use or chronic conditions. Clinical trial results suggest that, depending on their underlying medical condition, annually between 1% and 4% of these patients may experience a major bleeding event and an additional 1% may require emergency surgery. In 2015, more than 80,000 patients were admitted to U.S. hospitals with a primary diagnosis of bleeding on an oral fXa inhibitor. We believe that andexanet alfa, if approved, has the long-term potential to address a total worldwide market in excess of $2.0 billion.
We have completed a series of Phase 2 proof-of-concept studies evaluating the safety and activity of andexanet alfa in healthy volunteers who were administered one of several fXa inhibitors. Analysis of anticoagulation markers in blood samples taken from the subjects in these studies demonstrated that andexanet alfa produced immediate reversal of anticoagulant activity of the fXa inhibitors apixaban, rivaroxaban, edoxaban and enoxaparin and that the reversal could be sustained.
We have also completed two Phase 3 ANNEXA
®
(Andexanet Alfa a Novel Antidote to the Anticoagulant Effects of fXa Inhibitors) studies – one with Bristol-Myers Squibb Company, or BMS, and Pfizer Inc.’s, or Pfizer’s, fXa inhibitor, apixaban and one with Bayer Pharma AG, or Bayer, and Janssen Pharmaceuticals, Inc., or Janssen’s, fXa inhibitor, rivaroxaban. Our Phase 3 studies each consisted of two parts. In the first part of each study, the effect of a single bolus of andexanet alfa was evaluated in healthy volunteers who had been given apixaban or rivaroxaban. In the second part of each study, the ability of andexanet alfa to sustain reversal of the anticoagulant effects of apixaban and rivaroxaban was evaluated by administering a bolus plus infusion of andexanet alfa to healthy volunteers who had been given apixaban or rivaroxaban. The first part of our Phase 3 ANNEXA studies of a single bolus of andexanet alfa with apixaban and with rivaroxaban met their primary and secondary endpoints with high statistical significance (p-values of less than 0.0001).The second part of our Phase 3 ANNEXA studies of a bolus plus infusion of andexanet alfa with apixaban and with rivaroxaban both also met their primary and secondary endpoints with high statistical significance (p-value of less than 0.0001). In November 2015, the data from the Phase 3 studies was published in the New England Journal of Medicine.
In early 2015, we initiated a Phase 4 ANNEXA confirmatory patient study, as agreed to by the FDA and European Medicines Agency, or EMA. This study is part of an accelerated approval pathway in the United States for andexanet alfa. This multi-center open-label, single-arm study is being conducted in patients receiving apixaban, rivaroxaban, edoxaban or enoxaparin (a low molecular weight heparin) who present with certain acute major bleeds. For ethical reasons, this study is not randomized and all participants receive andexanet alfa given as a bolus dose over 30 minutes followed by a two-hour infusion. Patients receive a low or high dose depending on which fXa inhibitor they have received and the time they received it. Patients are evaluated for 30 days following andexanet alfa administration. The co-primary efficacy endpoints are the percent change in anti-Factor Xa activity at two hours and assessment of hemostasis over 12 hours following the infusion. Hemostatic efficacy is assessed by an independent endpoint adjudication committee as either excellent, good or poor/none. To date, ANNEXA-4 has enrolled more than 170 patients of the approximately 350 patients targeted for inclusion.
In August 2016, we announced interim results from the ANNEXA-4 study. These interim results were presented at the European Society of Cardiology (ESC) 2016 Congress in Rome. The interim results were published simultaneously online by The New England Journal of Medicine (NEJM).
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We filed a Biologics License Application, or BLA,
for andexa
net alfa
with the FDA in the first quarter of 2016 and a MAA with the EMA in the third quarter of 2016 which has been accepted and is currently under review.
On August 17
,
2016, we received a Complete Response Letter, or CRL, regarding our BLA for andexane
t alfa from the FDA. Our BLA was based on clinical drug product from a manufacturing line at CMC Biologics that we have been using since inception of the
program,
that we refer to as
Line A/B. Since the amount of drug substance yielded by Line A/B will sup
port only a limited launch, we have been developing two commercial scale manufacturing solutions since 2014 in parallel: (i) the generation 1 manufacturing process at CMC on a 6x2,000 liter scale,
that we refer to as
Line C; and (ii) the generation 2 manuf
acturing process at Lonza
Group Ltd, or Lonza,
on a 10,000 liter scale. Our intent was to seek approval for Line C subsequent to the approval of Line A/B in an effort to bridge the supply gap until the generation 2 process at Lonza was approved. Given the
time and effort required to address the deficiencies raised in the CRL and re-submit the BLA, we deci
ded
to suspend manufacturing activities on Line C in order to focus on getting
andexanet alfa
approved using Line A/B and transitioning commercial manufact
uring to generation 2 as quickly as possible.
Cerdulatinib
In addition to our thrombosis compounds, we are developing orally available kinase inhibitors to treat hematologic disorders and inflammation. Cerdulatinib is an orally available dual kinase inhibitor that inhibits spleen tyrosine kinase, or Syk, and Janus kinases, or JAK, enzymes that regulate important signaling pathways. Cerdulatinib is being developed for hematologic, or blood, cancers and inflammatory disorders. We are currently conducting a Phase 2a proof-of-concept study for cerdulatinib in patients with non-Hodgkin’s lymphoma, or NHL, or chronic lymphocytic leukemia, or CLL, who have failed or relapsed on existing marketed therapies or products in development, including patients with identified mutations. We are currently enrolling patients in the Phase 2a study evaluating the safety and efficacy of cerdulatinib in patients with relapsed/refractory B-cell malignancies who have failed multiple therapies.
Syk-selective inhibitors
Syk is an important mediator of immune response in a number of different types of immune cells. We have a program of highly selective Syk inhibitors, one of which is partnered with Ora. Ora is leading the pre-clinical study of a selective Syk inhibitor for allergic conjunctivitis.
Our strategy
Our goal is to build an enduring biopharmaceutical company with a foundation of products and product candidates that significantly advance patient care in the areas of thrombosis, other hematologic disorders and inflammation. We have a clear strategy focused on biomarker or genetic approaches to clinical development that we believe will increase the probability of clinical, regulatory and commercial success of our first-in-class therapies.
Key elements of our strategy are as follows:
Advance betrixaban through a Priority Review approval process
. Our NDA was accepted by the FDA in December 2016 and received Priority Review designation, meaning the FDA’s goal is to take action on our application within an accelerated review period of six months. Our Phase 3 APEX clinical study evaluated the efficacy and safety of betrixaban for extended duration VTE prophylaxis during a hospital stay as well as post-discharge for 35 days in acute medically ill patients with restricted mobility and other risk factors. If we receive regulatory approval, betrixaban will be the first anticoagulant approved based on a biomarker approach for the multi-billion dollar market for extended VTE prophylaxis in acute medically ill patients, both in the hospital and after discharge.
Advance andexanet alfa through an expedited development and approval process
. We are pursuing an Accelerated Approval pathway for our FDA-designated breakthrough therapy and orphan drug, andexanet alfa. We filed a BLA with the FDA in the first quarter of 2016 and an MAA with the EMA in the third quarter of 2016 which has been accepted and is currently under review. We are in the process of responding to a Complete Response Letter received from the FDA in August 2016 in order to re-submit our BLA.
Commercialize betrixaban and andexanet alfa, if approved, in the United States using a hospital-focused sales force
. We plan to commercialize both of our thrombosis product candidates with a U.S. hospital-based sales force of approximately 100 to 150 sales representatives. We believe we will be able to address the multi-billion dollar markets for our thrombosis products with a targeted sales and marketing effort because hospitals represent a concentrated customer base as compared to primary care or specialty physicians. We have licensed commercial rights to andexanet alfa in Japan to BMS and Pfizer. Outside the United States, we are evaluating our commercial strategy.
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Advance
c
erdulatinib for treatment of hematologic cancers
. We are currently evaluating Cerdulatinib in a Phase 2a proof-of-concept study in NHL and CLL
.
Cerdulatinib targets two key signaling pathways that can promote cancer cell growth. This product candidate has the potential for broad activity in hematologic
cancers because it blocks the B-cell receptor pathway via Syk and key cytokine receptors via JAK. Our strategy for
c
erdulatinib is to focus on patients that have shown limited response to other therapies or have relapsed or do not respond due to mutations.
Deploy capital strategically to develop our portfolio of product candidates and create value
. We expect to continue to deploy most of our capital resources to develop and commercialize betrixaban and andexanet alfa and to a lesser extent, advance cerdulatinib into clinical expansion cohorts. It is our strategy to leverage established clinical trial design principles as well as proactive engagement with relevant regulatory authorities to advance these candidates towards key value inflection points in a capital-efficient manner. In parallel with these efforts, we have entered into and anticipate that we will continue to seek and evaluate partnerships that provide support for the further development of our product candidates while retaining significant economic and commercial rights. We believe that this combination of independent development and partnering activity may allow us to realize the substantial potential value of our product candidates while reducing our capital requirements.
Product candidates
Our development pipeline, summarized in the table below, includes three wholly owned compounds and one partnered program.
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Development pipeline
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Product
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Description
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Stage
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Indication
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Worldwide
commercial rights
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Betrixaban
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Oral fXa
inhibitor
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Phase 3
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Extended duration VTE prophylaxis in acute medically ill patients in-hospital and post discharge for 35 days
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Portola
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Andexanet alfa
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Antidote for
fXa inhibitors
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Phase 3 and Phase 4
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Reversal of fXa inhibitor anticoagulation
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Portola
(excluding Japan)
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Cerdulatinib
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Oral Dual Syk and
JAK inhibitor
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Phase 2a
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B-cell hematologic cancers
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Portola
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Syk-selective inhibitors
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Syk inhibitor
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Pre-clinical
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Allergic conjunctivitis
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Ora
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Betrixaban
We are developing betrixaban to be the first anticoagulant approved for extended duration VTE prophylaxis in acute medically ill patients both in-hospital and after discharge for 35 days. Acute medically ill patients are patients hospitalized for non-surgical conditions, such as heart failure, stroke, infection, rheumatic disorders and pulmonary disorders. Acute medically ill patients with restricted mobility and other risk factors are known to be at increased risk for VTE, both in the hospital and after discharge. Each year, more than 150,000 acute medically ill patients worldwide die of VTE and not from their underlying medical condition. Pulmonary embolism is the most common preventable cause of hospital death and a leading cause of increased length of hospital stay. The average annual direct medical cost of treating VTE in a hospital setting in the United States is between $7,500 and $16,500 per patient and is even greater for elderly, higher risk patients. Both the National Quality Forum and the Joint Commission on Accreditation of Healthcare Organizations include the utilization of VTE prevention measures as a leading indicator of quality of patient care.
While there are a number of anticoagulants approved for short-duration VTE prophylaxis in acute medically ill patients during the typical hospitalization period, there is no anticoagulant approved for extended duration VTE prophylaxis in this population. Acute medically ill patients at risk for VTE are typically treated with intravenous or injectable heparin or an injectable low molecular weight heparin, such as enoxaparin, marketed as Lovenox® and also available in generic form, while in the hospital but are often either not used, or are used only for a short period following discharge. Multiple large regional and global studies have demonstrated that there is a substantial risk of VTE after hospital discharge in acute medically ill patients with restricted mobility and other risk factors. For example, the MAGELLAN trial of 8,101 patients showed that the rate of VTE-related death for the 10-day period while the patients were in the hospital receiving anticoagulation therapy was 0.2%, while the rate of VTE-related death for the 25-day post-discharge period when the patient did not receive anticoagulation treatment, was 0.8%, a four-fold increase. One academic study examined the medical records of approximately 11,000 acute medically ill patients for a period of 180 days after hospital admission and determined that 56.6% of VTE events in this population occurred after discharge. These studies highlight the need for more effective extended duration prophylaxis therapies.
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We are developing
b
etrixaban to be the first oral fXa inhibitor approved for use in acute medically ill patients and the first anticoag
ulant approved for extended duration VTE prophylaxis in those patients. We are evaluating
b
etrixaban in APEX, a global Phase 3 clinical study using a biomarker approach by focusing on patients that are most likely to benefit, specifically those with elevat
ed D-dimer blood levels or those over the age of 75. In the field of thrombosis, it is well established that the outcomes of Phase 3 trials are significantly influenced by three factors: drug properties, dose selection and selection of the patients who wil
l benefit most from treatment. Applying our knowledge of
b
etrixaban’s properties, our clinical experience with
b
etrixaban and learnings from fXa inhibitor clinical trials conducted by other companies, we believe we designed the APEX study to enhance the li
kelihood of its success, despite the lack of success of other fXa inhibitors in this indication, based on the following factors:
Drug properties
. Betrixaban’s unique pharmacodynamic and pharmacokinetic properties compared to other oral fXa inhibitors include a long half-life suitable for once-daily dosing, low renal clearance, which reduces the risk of drug accumulation, and low drug-drug interaction potential due to lack of metabolism by the CYP3A4 pathway, a key metabolic route for many other drugs.
Dosing
. The dosing regimen in our APEX study is designed to provide immediate anticoagulation for patients in the hospital and to maintain a therapeutic level of anticoagulation over 24 hours with each oral once-daily dose for 35 days to reduce variability and potential for increased bleeding risk from supratherapeutic drug levels or increased VTE risk from subtherapeutic drug levels. We chose the dosing regimen of betrixaban administered in APEX based on extensive modeling from our preclinical and clinical experience with betrixaban and analysis of efficacy, safety and pharmacokinetic data from clinical trials of other fXa inhibitors.
Patient population
. The APEX patient population, which is based on extensive review of epidemiologic studies and data from multiple large trials in acute medically ill patients, targets the specific patients with certain risk factors who are at an increased risk for VTE and can potentially benefit from extended duration VTE prophylaxis both during a hospital stay and post-discharge for 35 days, while excluding those at increased risk of bleeding, the main side effect of all anticoagulants.
Overview of thrombosis
Thrombosis is the leading cause of mortality and morbidity in the western world. Thrombosis arises from an abnormal or excessive activation of the body’s natural clotting process, resulting in the formation of a clot inside a blood vessel that disrupts normal blood flow. If the clot detaches from the blood vessel wall and travels through the body, known as thromboembolism, it can damage vital organs, such as the brain, heart and lungs. Clots that block arteries can lead to myocardial infarctions, more commonly referred to as heart attacks, or a form of stroke known as ischemic strokes. Our betrixaban development efforts are currently focused on VTE, with the two most common conditions being deep vein thrombosis, or DVT, which typically leads to pain and swelling in the leg, and pulmonary embolism, which occurs when a clot disrupts blood flow to the lungs, leading to lung damage or even death. In the United States, on an annual basis, 1.2 million people have a new or recurrent heart attack, 700,000 people suffer an ischemic stroke and 350,000 to 600,000 people have a VTE.
Thrombosis is generally prevented or treated using either anticoagulants, commonly known as blood thinners, or another class of drugs known as antiplatelet agents. The specific drug, dose and dosing frequency and duration of treatment depends on a patient’s underlying disease and treatment setting, such as during surgery, in the hospital or at home. In some cases, these agents may be used in sequence or combination.
Prophylaxis against all forms of thrombosis is a major medical need throughout the developed world. For example, in the G7 countries, the United States, Japan, France, Germany, Italy, Spain and the United Kingdom, existing medical guidelines recommend that a population of approximately 46.4 million patients receive some form of anticoagulation drug therapy to reduce their risk of thrombosis. The largest category of patients at risk for thrombosis is the acute medically ill, whose risk is increased for those patients immobilized for more than a few days or with other risk factors. In addition to acute medically ill patients, populations at risk for thrombosis include patients with atrial fibrillation, acute coronary syndrome, recent VTE and certain genetic mutations, as well as surgical patients undergoing orthopedic or abdominal procedures.
The table below shows our estimate of the number of patients in the G7 countries, categorized by medical condition or procedure, for whom a Class I medical guideline recommendation of anticoagulation drug therapy would apply. A Class I medical guideline recommendation represents the highest level of recommendation that patients receive specified medical treatment based on the evidence of the relative risks and benefits of such treatment.
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Patients
with Class I medical guideline recommendation to receive anticoagulation drug therapy
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Population
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Number of G7 patients
(in millions)
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Acute medically ill patients
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22.3
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Moderate to high risk surgery (including orthopedic surgery)
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12.3
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Atrial fibrillation
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6.6
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Acute coronary syndrome
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3.5
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VTE treatment and secondary prophylaxis
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1.7
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Total
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46.4
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The population of acute medically ill patients represents the largest patient segment in the anticoagulant market, accounting for nearly half of patients in the G7 countries. Despite the short duration of current VTE prophylaxis for the acute medically ill, typically 6 to 11 days, we believe that at its peak, annual worldwide sales of enoxaparin for use in acute medically ill patients were at least $1.4 billion.
VTE in acute medically ill patients
The standard of care for VTE prophylaxis in acute medically ill patients is to treat those patients who have certain risk factors with an anticoagulant, such as heparin or enoxaparin, for 6 to 14 days, primarily while the patient is in the hospital. Factors that have been identified as increasing the risk of VTE include several days of restricted mobility, age, an elevated blood marker known as D-dimer, previous VTE event, family history of VTE, smoking, hormonal therapy and others. Almost all hospitalized non-surgical patients have at least one of these risk factors, and approximately two-thirds have two or more risk factors. In-hospital use of anticoagulation has been shown to reduce the incidence of VTEs by approximately 63% and have a net clinical benefit; however, recent registry studies and clinical trials have shown that acute medically ill patients remain at a high risk of VTE for an extended period after discharge.
For example, one academic study examined the medical records of approximately 11,000 acute medically ill patients for a period of 180 days after hospital admission and determined that 56.6% of VTE events in this population occurred after discharge. In the MAGELLAN trial sponsored by Bayer and Janssen, 5.7% of enoxaparin-treated patients experienced a significant thrombotic event during the trial period, and, in higher risk sub-populations, such event rate was 7% to 9%. In the ADOPT trial sponsored by BMS, the combined incidence of symptomatic VTE and VTE-related death was twice as high during the period after cessation of enoxaparin treatment as it was during the treatment period.
Currently, there are no anticoagulants approved for extended duration VTE prophylaxis in acute medically ill patients for more than a 14-day period, and most patients receive anticoagulation therapy only while in the hospital. Heparin and enoxaparin are generally not often used after hospital discharge due to the difficulty of administering the therapies and lack of data showing a benefit beyond the currently approved duration of therapy. Warfarin has not been studied in a large randomized trial and is not indicated for VTE prophylaxis in acute medically ill patients. Both rivaroxaban and apixaban have been evaluated in large Phase 3 trials of VTE prophylaxis in acute medically ill patients, both in the hospital and after discharge. The MAGELLAN trial, which evaluated rivaroxaban, demonstrated efficacy but failed to demonstrate an acceptable benefit-to-risk profile due to increased bleeding, and the ADOPT trial, which evaluated apixaban, showed a reduction in VTE events, but failed to demonstrate statistically significant efficacy. Importantly, the results of these trials showed that acute medically ill patients with restricted mobility and other risk factors treated with standard duration enoxaparin therapy for 6 to 14 days continue to be at increased risk of VTE post-hospital discharge for at least 35 days.
Leading clinicians have identified the lack of an appropriate therapy to prevent VTE in acute medically ill patients after discharge as a significant unmet clinical need. Such a therapy should be easy to administer both within and outside of the hospital setting and would need to show a robust reduction in the incidence of VTE and an acceptable bleeding profile compared to the current standard of care. The therapy would also need to have other properties appropriate for use in acute medically ill patients. These patients are typically frail and elderly and often cannot tolerate drugs that are significantly cleared through the kidneys. Moreover, they are often taking multiple medications for concomitant conditions and need a therapy that has a low potential to interact with other medications and a simple dosing regimen.
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Betrixaban for extended duration VTE prophylaxis in acute medically ill patients
We believe that betrixaban is well suited for use in extended duration VTE prophylaxis in acute medically ill patients, both in the hospital and after discharge. Our preclinical and clinical studies suggest that it has antithrombotic activity similar to that of enoxaparin and certain other anticoagulants (dabigatran, an anti-thrombin drug and fXa inhibitors; rivaroxaban, apixaban and edoxaban). In addition, it has a number of characteristics that differentiate it from these compounds that we believe are particularly relevant to acute medically ill patients, including:
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Orally active with 19-23 hour half-life
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Ideal for once-daily dosing.
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Ease of administration compared to therapies which require multiple doses over a 24 hour period or injections.
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Potential for lower peak concentration while still maintaining effective anticoagulation, which could reduce bleeding and VTE risk.
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Lower renal clearance compared to other fXa inhibitors
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Potentially allows for more predictable dosing concentrations in the blood of patients with reduced kidney function.
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Potentially decreases the risk of bleeding associated with anticoagulants.
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Low potential for drug-drug interaction
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•
Unlike all currently approved direct fXa inhibitors, betrixaban is not metabolized through the CYP3A4 pathway, a key metabolic route for many approved drugs for a wide range of conditions.
•
Many acute medically ill patients suffer from a significant underlying illness or one or more chronic conditions and are taking multiple therapies. The concurrent use of multiple CYP3A4 metabolized drugs can result in unpredictable drug levels and other undesirable drug-drug interactions.
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Betrixaban clinical experience
Betrixaban has been evaluated in 22 Phase 1 and Phase 2 clinical studies involving 1,411 human subjects, 1,200 of whom received betrixaban, including more than 100 subjects for six months or more. A series of 19 Phase 1 and clinical pharmacology studies provided substantial information regarding its safety, dosage and use in specific sub-populations. In three Phase 2 studies, betrixaban was evaluated in specific patient populations relative to commonly used anticoagulants. Consistent with the development of other antithrombotic agents, these studies were not designed to demonstrate a statistically significant difference between groups for the studied outcomes. The betrixaban Phase 2 studies were instead designed to demonstrate evidence of an anticoagulant effect and relative safety compared to an established comparator. In these clinical studies:
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•
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Betrixaban was well tolerated in diverse patient populations with comparable or better tolerability as compared to warfarin and enoxaparin;
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•
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Betrixaban achieved clinically relevant anticoagulant activity with comparable or less bleeding risk than existing agents; and
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•
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Betrixaban demonstrated predictable pharmacokinetic and pharmacodynamic activity.
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As is typical in the development of anticoagulants, our initial Phase 2 study was conducted in patients undergoing elective total knee replacement surgery. This patient population has a very high incidence of VTE, making it an excellent population in which to evaluate the relative effectiveness and safety of different doses as compared to the standard of care. In our 215-patient EXPERT study, two different doses of betrixaban, 15 mg and 40 mg each given twice daily, were evaluated against a U.S. standard twice-daily dose of 30 mg of enoxaparin in patients undergoing this surgery. The incidence of VTE in the betrixaban groups was comparable to that in the enoxaparin group and lower than the rates historically observed in placebo groups, although these results were not statistically significant. In addition, the only incidence of major bleeding seen in the study was in the enoxaparin group.
10
In our 508-patient Phase 2 EXPLORE-Xa study, we evaluated the use of
b
etrixaban for ischemic stroke prevention in elderly patients with nonvalvular atrial fibrillation. Three different once
-daily doses of
b
etrixaban, 40 mg, 60 mg and 80 mg, were evaluated against dose-adjusted warfarin. Patients with a median age of 74 years received treatment for at least 90 days and as long as 12 months. The incidence of ischemic stroke, as well as major b
leeds and clinically relevant non-major bleeds, was comparable across the warfarin and
b
etrixaban treatment groups, suggesting similar anticoagulant activity and bleeding risk across all groups. In addition, we measured D-dimer levels. D-dimer is a byproduct of coagulation, and elevated levels have been shown to be indicative of an increased
risk of thromboembolism. In those patients receiving
b
etrixaban who had not previously been taking warfarin, we observed a dose-related decrease in D-dimer levels. We believe the results of the EXPLORE-Xa study, although not statistically significant, prov
ide evidence of the anticoagulant activity of
b
etrixaban and indicate that the long-term use of
b
etrixaban is well tolerated in an elderly population, including those with moderate to severe kidney disease.
Our Phase 2 DEC study evaluated the utility of adjusting the dose of betrixaban based on a patient’s weight. The study indicated that making such adjustments is not necessary and it provided additional evidence of the safety and activity of betrixaban.
All of our clinical studies to date have indicated that betrixaban is well tolerated. Subjects taking betrixaban had an increased rate of gastrointestinal issues, such as diarrhea, nausea and vomiting, as compared to subjects taking placebo, but these increased rates appear to be similar to those of patients taking other fXa inhibitors. Patients taking betrixaban also had an increased incidence of other side effects such as back pain, dizziness, headaches, rashes and insomnia as compared with patients taking a placebo or an active comparator. These side effects do not appear to have a substantial impact on patients’ tolerance of betrixaban. There is no evidence that betrixaban has negative effects on heart rhythm or liver function. As discussed earlier, the most significant side effect of all anticoagulants is major bleeding. While definitive conclusions cannot be drawn from our Phase 2 studies, it does not appear from the study results that patients taking betrixaban experienced a greater risk of major bleeding than patients taking warfarin or enoxaparin.
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Betrixaban clinical development
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Phase of study
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Number of
studies
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Subjects
receiving
betrixaban
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Objective
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Selected results
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Phase 1
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19
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459
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Safety, tolerability, pharmacokinetic, pharmacodynamics
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Single doses up to 550 mg well tolerated with predictable drug properties
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Phase 2
(EXPLORE-Xa
and DEC)
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2
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570
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Safety/efficacy in atrial fibrillation patients; safety compared to warfarin
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Prophylaxis and bleeding risk comparable to warfarin
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Phase 2
(EXPERT)
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1
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171
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Safety/efficacy in knee replacement compared to enoxaparin
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Prophylaxis and bleeding risk comparable to enoxaparin
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Clinical experience of fXa inhibitors in acute medically ill patients
Direct fXa inhibitors rivaroxaban and apixaban have been studied in large Phase 3 trials for VTE prophylaxis in acute medically ill patients. Neither trial was successful in showing a balanced result of VTE reduction relative to major bleeding events, referred to as net clinical benefit. The MAGELLAN trial, which evaluated rivaroxaban, met its primary efficacy endpoint of decreased VTE in acute medically ill patients but achieved this result with an unfavorable bleeding risk. By comparison, the ADOPT trial, which evaluated apixaban, did not demonstrate significant clinical efficacy, although the rates of VTE in its study population were significantly lower than those observed in MAGELLAN, which we believe reflects the lower risk patient population enrolled in ADOPT. Despite the lack of efficacy observed in ADOPT, the incidence of major bleeding was lower than that observed in MAGELLAN. Although neither MAGELLAN nor ADOPT was successful, both highlighted the continuing risk of VTE after hospital discharge and illustrated two major lessons that have informed the clinical development plan for betrixaban for acute medically ill patients.
Dose selection
: In the MAGELLAN trial, rivaroxaban was dosed once daily despite having a half-life of only between 5 to 9 hours. To achieve adequate therapeutic coverage in a once-daily regimen, MAGELLAN may have studied a rivaroxaban dose that produced supratherapeutic drug levels for a period after dosing, possibly explaining the unfavorable bleeding risk observed in that trial. In the ADOPT trial, apixaban with a half-life of 12 hours, was dosed twice daily in order to maintain more consistent drug levels, which may have been responsible for its relatively lower rate of bleeding than was seen in MAGELLAN.
11
Patient selection
: Multiple studies of the acute medically ill have
demonstrated that VTE incidence increases as the number of risk factors that a patient has increases. In the ADOPT trial, where enrollment was open to a broad set of acute medically ill patients, including a large number of subjects who were not at high ri
sk of VTE, there were too few VTE events to create a statistically significant separation between the control and treatment arms. In contrast to ADOPT, MAGELLAN enrolled patients with higher levels of VTE risk and treatment with rivaroxaban produced a sign
ificant reduction in the 35-day incidence of VTE compared to standard of care treatment with enoxaparin. Neither MAGELLAN nor ADOPT excluded patients whose medical history or concurrent use of anti-platelet therapy placed them at a substantially higher ris
k of severe bleeding. In MAGELLAN, this failure to exclude certain high risk patients combined with the dosing regimen used may have contributed to the relatively high level of bleeding events observed in the trial and the lack of net clinical benefit.
Phase 3 APEX study
We believe that for an anticoagulant to demonstrate efficacy and safety for extended duration VTE prophylaxis in acute medically ill patients, it must have the right drug properties, be dosed at appropriate levels and target the right patient population. As discussed above, we believe that betrixaban has a number of key pharmacokinetic and pharmacodynamic properties that make it well suited for use with the frail and elderly patients that comprise a significant portion of the acute medically ill patient population. In addition, using the data from our extensive clinical and preclinical studies of betrixaban and learnings from ADOPT and MAGELLAN, we believe that we have designed APEX with a dosing regimen for a study population focused on patients with certain biomarkers, that we believe will increase the probability that Apex will demonstrate both safety and efficacy in VTE prophylaxis in acute medically ill patients both in the hospital and after discharge.
Dose selection
. Based on standard pharmacometric modeling that integrated preclinical and clinical studies of fXa inhibitors, we believe that we have identified a dosing regimen (80 mg oral once-daily dose for 35 days following a 160 mg oral loading dose on day one; 40mg dose for patients with severe renal impairment) that will produce clinically meaningful anticoagulant effects. In our clinical studies, we measured the concentration of betrixaban achieved at different dose levels and observed in Phase 2 studies that at total daily doses of 30 mg and 80 mg betrixaban had anticoagulant activity, measured by standard imaging tests to detect VTE, comparable to standard of care enoxaparin. We also observed that bleeding and anticoagulant activity, as measured by a common blood marker D-dimer, of once-daily 40 mg, 60 mg and 80 mg doses of betrixaban were comparable to standard doses of warfarin in patients with non-valvular atrial fibrillation. We correlated those doses with levels of thrombin generation inhibition, a common pharmacodynamic measurement used to compare anticoagulant activity of different drugs, and compared those levels with those produced by other fXa inhibitors, including enoxaparin, rivaroxaban and apixaban. For patients with severe renal impairment and those taking agents that are strong inhibitors of PGP enzymes, the dose of betrixaban will be reduced to 40 mg daily, which targets a level of anticoagulant activity consistent with the overall patient population.
The following diagram depicts pharmacometric modeling of thrombin generation inhibition over time for rivaroxaban, apixaban and betrixaban, reflecting the dosing regimen used in MAGELLAN, ADOPT and APEX, respectively:
12
Patient selection: efficacy
.
We used the findings of MAGELLAN, ADOPT and other trials to help defi
ne the population of patients that are more likely to demonstrate clinical benefit from extended duration VTE prophylaxis to be included in APEX. APEX enrolled patients
had
a combination of specific medical conditions and risk factors that put them at an e
levated risk of VTE for post-hospital discharge and thus a need for VTE prophylaxis during this period. The APEX inclusion criteria specif
ied
that patients must be admitted to the hospital with one of five categories of acute medical illness: heart failure, respiratory failure, infection, rheumatic disease or stroke. The inclusion criteria also require
d
that patients have a high degree of immob
ilization. Further, a patient
was required to meet
one of the following three additional criteria: be over 75 years of age, be over 60 years of age and have a D-dimer level of at least twice the upper limit of normal, or be over 40 years of age
and have el
evated D-dimer blood levels of at least twice the upper limit of normal and have at least one additional major risk factor for VTE.
Patient selection: safety
. Consistent with our approach to enroll patients into the APEX study that are at an elevated risk for VTE for 35 days or more, we likewise designed the trial to exclude patients at high risk for bleeding. For example, we exclude patients with a historian admitting diagnosis which will likely require major surgery, gastrointestinal bleeding, hemorrhagic stroke or bleeding pulmonary lesions. In addition, patients taking daily doses of aspirin were limited to low doses and were also required to take a proton-pump inhibitor to reduce the risk of gastrointestinal bleeding.
Other study design features and operations measures.
We also implemented various measures to improve data quality, ensure we maintained a high degree of statistical power and reduce confounding clinical and statistical issues compared to MAGELLAN and ADOPT. For example, we transmitted ultrasound images electronically rather than by mail so that quality could be assessed in real time. We did not require an ultrasound at day 10, which was required in an earlier study and that we believe led to patients failing to return for a second ultrasound at day 35. We also instituted patient outreach measures intended to increase patient compliance with follow-up appointments after hospital discharge.
We designed our Phase 3 APEX study to demonstrate the safety and efficacy of betrixaban for extended duration VTE prophylaxis during a hospital stay and post-discharge for 35 days in acute medically ill patients with restricted mobility and certain biomarkers and additional risk factors. APEX was a randomized, double-blind, double-dummy, active-controlled, multicenter, multinational study comparing a once-daily dose of 80 mg of betrixaban for 35 days (including both in the hospital and after discharge) with in-hospital administration of 40 mg of enoxaparin once daily for 6 to 14 days followed by placebo for the remainder of the study period.
The primary APEX study objective was to demonstrate superiority of inpatient followed by post-hospitalization VTE prophylaxis with betrixaban as compared to a current standard of care (enoxaparin given for VTE prophylaxis only during hospitalization) in the reduction of VTE-related events at 35 days while maintaining a favorable benefit to risk profile.
The following schematic depicts the APEX study design:
13
We believe that
b
etrixaban’s
unique pharmacological profile combined with APEX’s study design positions
b
etrixaban to be the first novel anticoagulant approved for use in acute medically ill patient who require extended duration VTE prophylaxis. We anticipate that such an approval, i
f obtained, would be for the use of
b
etrixaban in those acute medically ill patients with medical profiles consistent with those of patients enrolled in APEX. Based upon a review of epidemiological data, we believe that such patients constitute approximate
ly two thirds of the acute medically ill patient population subject to a medical guideline recommendation to receive pharmacological VTE prophylaxis, or approximately 14 million patients in the G7 countries.
Betrixaban pharmacoeconomics
VTE prophylaxis in the hospitalized acute medically ill patients is well established. Betrixaban is the first oral fXa inhibitor to demonstrate the net clinical benefit of extended therapy 35 to 42 days, in-hospital and posy-discharge, in randomized controlled clinical trial. In the APEX study betrixaban demonstrated reduced VTE with no increase in major bleeding and fewer all cause stroke events. If approved, based on the APEX data and current cost estimates of VTE events, major bleeds and strokes, we believe that betrixaban (35 to 42 days) will be cost effective when compared to enoxaparin and unfractionated heparin. We estimate that in 2016, the total potential market for VTE prophylaxis in the acute medically ill population, including extended duration VTE prophylaxis, was $3 billion to $4 billion.
Andexanet alfa
Major bleeding is the most clinically meaningful side effect of oral and injectable fXa inhibitors, including apixaban, rivaroxaban, edoxaban, betrixaban and enoxaparin. Andexanet alfa is a recombinant protein designed to reverse anticoagulant activity in patients treated with a fXa inhibitor. Andexanet alfa has potential indications to treat patients’ anticoagulated with a direct or indirect fXa inhibitor when reversal of anticoagulation is needed, such as in life-threatening or uncontrolled bleeding or for emergency surgery/urgent procedures.
Overview of anticoagulant-related bleeding
In patients using anticoagulation therapy, there is an increased risk of major bleeding, which is common across all anticoagulants regardless of the reason for anticoagulation therapy, the patient setting or the duration of therapy. For patients at an elevated risk of thrombosis, the benefits provided by anticoagulation products generally outweigh the related risk of bleeding, however, major bleeding remains a significant cause of morbidity and mortality in these patients. For example, atrial fibrillation patients taking fXa inhibitors on a chronic basis had a 1% to 4% annual rate of a major bleed in the Phase 3 ARISTOTLE trial of apixaban, sponsored by BMS and Pfizer, and the Phase 3 ROCKET trial of rivaroxaban, sponsored by Bayer and Janssen. Based on other clinical trials, we believe that annually an additional 1% of patients taking fXa inhibitors will require emergency surgery. Patients on anticoagulation who suffer trauma have a higher risk of death than similar patients not on anticoagulation. The cost of treating a major bleed may exceed $100,000 in direct medical expenses. In 2015, more than 80,000 patients were admitted to U.S. hospitals with a primary diagnosis of bleeding on an oral fXa inhibitor.
The current standard treatment for patients taking established anticoagulants who experience major bleeding is to administer products that directly or indirectly support clotting, such as Vitamin K; fresh frozen plasma, or FFP; prothrombin complex concentrates, or PCCs; protamine; and recombinant Factor VIIa, or rFVIIa. Which of these approaches is used for a given patient depends on the particular anticoagulant being taken. For example, common treatments for warfarin reversal are Vitamin K, FFP and, more recently, PCCs, while low molecular weight heparin patients needing reversal are often managed with FFP or protamine. These treatments can have potentially serious side effects, including in some cases increased risk of prothrombotic effects such as ischemic stroke and myocardial infarction.
There are, however, no approved antidotes or reversal agents for the new oral fXa inhibitors. Moreover, the reversal agents used for established anticoagulants have not been extensively studied in clinical trials of oral fXa inhibitor treated patients, and preliminary data suggest that they may not be effective to treat major bleeding in these patients. The existing reversal agents work mostly in the early steps of the coagulation cascade prior to the involvement of fXa and simply supplement the factor deficiency caused by established anticoagulants. For the reversal agents to affect bleeding in patients taking oral fXa inhibitors, sufficiently large quantities would need to be given to overwhelm the inhibitor, an approach that we believe could lead to dangerous prothrombotic effects. As there are no currently approved therapies designed to reverse or overcome fXa inhibitors, patients taking those therapies face a risk of major bleeding. Leading clinicians have identified, and the FDA has recognized, the lack of a reversal agent for fXa inhibitors as a significant unmet clinical need.
14
The following diagr
am depicts where the existing reversal agents and novel oral anticoagulants interact with the coagulation cascade:
Despite the risk of major bleeding, sales of fXa inhibitors are expected to increase dramatically in the coming years as they have significant clinical benefits over standard products for preventing thrombosis, such as warfarin or enoxaparin. Based on our research and relevant market data, we estimate that by 2020, fXa inhibitors will have a majority share of the market in each major anti-coagulation indication. As sales of fXa inhibitors increase, the need for an effective antidote or reversal agent will correspondingly increase. We estimate that by 2020, over 500,000 patients annually in the G7 will need a fXa reversal agent, with approximately 300,000 of these cases arising from a major bleeding episode, approximately 100,000 of these cases arising from emergency surgery and approximately 100,000 of those cases arising from traumatic injury.
Andexanet alfa — a universal antidote for fXa inhibitors
Building on the insights gained during the development of betrixaban, we designed andexanet alfa as a universal reversal agent for direct fXa inhibitors, such as rivaroxaban, apixaban, edoxaban and betrixaban, as well as indirect fXa inhibitors, such as enoxaparin. Andexanet alfa is structurally very similar to native fXa, but it has a number of limited modifications intended to restrict its biological activity to reversing the effects of fXa inhibitors. Andexanet alfa acts as a fXa decoy that binds to fXa inhibitors in the blood. Once bound to andexanet alfa, the inhibitors are unable to bind to and inhibit native fXa. The native fXa then becomes available to participate in the coagulation process and restore hemostasis, or normal clotting.
In designing andexanet alfa, we started with native fXa protein and used our knowledge of its functional domains to make three changes by protein engineering. First, we made a small modification to the active site, or catalytic pocket, of native fXa so that andexanet alfa cannot drive the coagulation process but still binds to fXa inhibitors with high affinity. Second, we removed most of the section of the native fXa that facilitates binding to the thrombin activating complex to reduce the risk that andexanet alfa would interfere with the activity of native fXa. Importantly, while removing this section we retained a small portion at the end so that andexanet alfa looks more like native fXa to the immune system, thereby decreasing the likelihood of an immune system response against andexanet alfa. Third, we made a minor modification in the peptide section that links the two parts of fXa to facilitate andexanet alfa’s manufacture using standard processes. The end result is a recombinant protein that we believe can bind with and sequesters any direct or indirect fXa inhibitor, thereby allowing native fXa to drive coagulation and restore hemostasis.
15
Andexanet alfa preclinical results
We have evaluated andexanet alfa in numerous in-vitro and animal studies and have developed substantial evidence regarding the safety, efficacy and rapid activity of andexanet alfa. Key findings from this preclinical program include:
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In isolated human plasma, we have measured multiple pharmacodynamic measures of coagulation, such as anti-fXa units, prothrombin time and activated partial thromboplastin time as well as key pharmacokinetic measures and have shown that andexanet alfa reverses the effects of all fXa inhibitors we have studied, including rivaroxaban, betrixaban, apixaban, enoxaparin and fondaparinux.
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In tail transection blood loss models in rats and mice, we have shown that andexanet alfa significantly reduces the amount of blood loss compared to placebo in animals treated with enoxaparin, fondaparinux, or rivaroxaban plus aspirin. In studies where andexanet alfa was given five or ten minutes after the transection, blood loss was significantly reduced compared to animals not given andexanet alfa.
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In a rabbit liver laceration model, we have shown that andexanet alfa reduces the level of bleeding in rivaroxaban-treated rabbits to levels comparable to those of rabbits not anticoagulated with rivaroxaban whether given before or after the liver incisions. We have also shown that administration of pro-thrombotic agents, rFVIIa and prothrombin complex concentrates, fails to decrease the amount of blood loss in rabbits treated with rivaroxaban. In addition, we have shown that in rabbits treated with andexanet alfa, but without rivaroxaban, bleeding levels were comparable to those of untreated rabbits, suggesting that andexanet alfa alone does not have significant pro-coagulative effects.
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In a cynomolgus monkey safety study, animals were dosed multiple times with andexanet alfa, both alone and in the presence of several fXa inhibitors, without any evidence of significant toxicity.
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•
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In a cynomolgus monkey study, administration of andexanet alfa alone was associated with a transient increase in certain coagulation markers consistent with a known interaction between andexanet alfa and tissue factor pathway inhibitor, or TFPI, another element in the coagulation process. These blood markers, which are indicative of increased thrombin generation, were not associated, however, with any evidence of clot formation or fibrin deposition in detailed histopathological examination of the monkeys at necropsy.
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Taken together, these and other studies suggest, but do not prove, that andexanet alfa will be a safe and effective fXa reversal agent.
Andexanet alfa clinical results and development strategy
In November 2013, the FDA granted breakthrough therapy designation for andexanet alfa and we are pursuing an Accelerated Approval pathway for andexanet alfa. Typically the FDA requires at least one large-scale, randomized, placebo controlled study for the approval of a new therapeutic. However, under the FDA’s Accelerated Approval pathway, therapies targeting a significant unmet clinical need may be approved based upon their showing adequate safety as well as efficacy against a surrogate biomarker endpoint in a clinical trial. In February 2015, the FDA granted orphan drug designation to andexanet alfa.
We have completed a series of Phase 2 studies and two Phase 3 studies
(ANNEXA - Andexanet Alfa a Novel Antidote to the Anticoagulant Effects of fXa Inhibitors)
studies using biomarker endpoints for Andexanet alfa. These biomarkers include anti-fXa levels, plasma free fraction of the anticoagulant and thrombin generation. We are evaluating andexanet alfa in a Phase 2 proof-of-concept study with betrixaban and a Phase 4 confirmatory study. We entered into a collaboration and license agreement with BMS and Pfizer in 2016, providing them the right to pursue final regulatory approval and commercialize andexanet alfa in Japan.
Andexanet alfa Phase 2 studies
We have completed a series of Phase 2 proof-of-concept studies evaluating the safety and activity of andexanet alfa in healthy volunteers who were administered one of several fXa inhibitors. The purpose of these studies was to evaluate the safety of andexanet alfa and to determine the dose of andexanet alfa required to reverse the effect of each anticoagulant as measured by multiple pharmacokinetic and pharmacodynamic endpoints. Results from our Phase 2 studies with apixaban, rivaroxaban, edoxaban and enoxaparin, demonstrated a bolus of andexanet alfa immediately reversed the anticoagulation activity of each fXa inhibitor and that the reversal could be sustained with a continued infusion of andexanet alfa. Andexanet alfa was shown to be well tolerated with no thrombotic events or antibodies to fXa or Factor X detected.
In these studies the fXa inhibitor was dosed in healthy volunteers for five or six days to achieve steady-state drug levels. Andexanet alfa was then administered intravenously in a range of bolus only and bolus plus infusion dose regimens. Pharmacodynamic and safety data were collected through Day 48 with pharmacokinetic data through Day 10. The primary endpoint for each of these studies is the percent reversal of anti-fXa activity after dosing.
16
In the Phase 2 studies
a
ndexanet alfa was generally well tolerated with no apparent safety signals. Importantly, none of the subjects receiving
a
ndexanet alfa generated detectable levels of antibodies against either F
actor X or fXa and no neutralizing antibodies against
a
ndexanet alfa
were
detected. The most common drug-related side effect was mild infusion-related reactions, which are not unexpected for a biological agent, such as
a
ndexanet alfa. In the Phase 2 studie
s, there was also a dose-dependent restoration of thrombin generation with no clinical evidence of thrombosis.
Phase 3 ANNEXA-A (Andexanet Alfa a Novel Antidote to the Anticoagulant Effects of fXA Inhibitors – Apixaban) Study Design and Results
The randomized, double-blind, placebo-controlled Phase 3 ANNEXA-A study evaluated the safety and efficacy of andexanet alfa in reversing apixaban-induced anticoagulation in older healthy volunteers. Efficacy was evaluated using biomarker endpoints, including anti-fXa levels as the primary endpoint. Secondary endpoints included levels of plasma unbound (free fraction) of apixaban and thrombin generation.
In the first part of the Phase 3 ANNEXA-A trial, 33 healthy volunteers (ages 50 to 73) were given apixaban 5 mg twice daily for 3.5 days and then randomized in a 3:1 ratio to andexanet alfa administered as a 400 mg IV bolus (n=24) or to placebo (n=9). The study achieved all of its primary and secondary endpoints with statistical significance (p value <0.0001). In the study, two to five minutes after completion of a bolus dose of andexanet alfa, the anticoagulant activity of apixaban was reversed by approximately 94 percent (p value <0.0001) compared with placebo as measured by anti-fXa activity. Every subject treated with andexanet alfa had between 90 and 96 percent reversal of the anticoagulant activity of apixaban. The reversal of anti-fXa activity correlated with a significant reduction in the level of free, unbound apixaban in the plasma, consistent with the mechanism of action of andexanet alfa. Additionally, andexanet alfa restored thrombin generation to baseline normal levels (prior to apixaban therapy) in 100 percent of subjects (p<0.0001 vs. placebo). In this study, no serious adverse events, thrombotic events, or antibodies to Factor X or Xa were reported following andexanet alfa administration. Mild infusion reaction was reported in three subjects.
In the second part of the ANNEXA-A study, 31 healthy volunteers were given apixaban 5 mg twice daily for four days and then randomized in a 3:1 ratio to receive either andexanet alfa administered as a 400 mg IV bolus followed by a continuous infusion of 4 mg/min for 120 minutes (n=24) or placebo (n=8). Andexanet alfa significantly reduced anti-fXa activity by 92 percent compared with placebo (p<0.0001), with reversal persisting for 1 to 2 hours after completion of the infusion. The reduction in free unbound apixaban was sustained with the bolus plus infusion, which significantly reduced the mean plasma concentration of free unbound apixaban compared with placebo (p=0.0002). Andexanet alfa also restored thrombin generation to normal in all subjects who received the compound (p<0.0001 vs. placebo). In this study, andexanet alfa was well tolerated. No serious or severe adverse events, no thrombotic events, and no antibodies to Factor X or Xa were reported. All adverse events related to andexanet alfa administration were non-serious and mild.
17
The following diagram depicts the data from the second part of our Phase 3 ANNEXA-A study of
a
ndexanet alfa in subjects taking apixaban.
Phase 3 ANNEXA-R (Andexanet Alfa a Novel Antidote to the Anticoagulant Effects of FXa Inhibitors – Rivaroxaban) Study Design and Results
The randomized, double-blind, placebo-controlled Phase 3 ANNEXA-R study evaluated the safety and efficacy of andexanet alfa in reversing rivaroxaban-induced anticoagulation in healthy volunteers ages 50 to 75 years. Efficacy was evaluated using biomarker endpoints, with anti-fXa levels as the primary endpoint. Secondary endpoints included plasma levels of plasma unbound (free fraction) of rivaroxaban and thrombin generation levels.
In the first part of the ANNEXA-R study, 41 healthy volunteers were given rivaroxaban 20 mg once daily for four days and then randomized in a 2:1 ratio to receive at Cmax either andexanet alfa administered as an 800 mg IV bolus (n=27) or to placebo (n=14). The study achieved its primary endpoint with high statistical significance. Within two to five minutes of completion of the bolus dose, andexanet alfa significantly reversed the anticoagulant activity of rivaroxaban (by 92 percent) compared with placebo (p<0.0001), as measured by anti-fXa activity; significantly reduced the level of free (unbound) rivaroxaban in the plasma compared with placebo (p<0.0001); and fully restored thrombin generation in 96 percent of subjects (p<0.0001 vs. placebo). Andexanet alfa was shown to be well tolerated.
In the second part of the ANNEXA-R study, 39 healthy volunteers were given rivaroxaban 20 mg once daily for four days and then randomized in a 2:1 ratio to receive either andexanet alfa administered as an 800 mg IV bolus followed by a continuous infusion of 8 mg/min for 120 minutes (n=26) or placebo (n=13). Andexanet alfa significantly reduced anti-fXa activity by 97 percent compared with placebo (p<0.0001), with reversal persisting for 1 to 2 hours after completion of the infusion. The reduction in free unbound rivaroxaban was sustained with the bolus plus infusion, which significantly reduced the mean plasma concentration of free unbound rivaroxaban compared with placebo (p<0.0001). Andexanet alfa also restored thrombin generation to normal in all subjects who received the compound (p<0.0001 vs. placebo). Andexanet alfa was shown to be well tolerated.
18
The following diagram depicts the data from the second part of our Phase 3 ANNEXA-R study of
a
ndexanet alfa in subjects taking rivaroxaban.
Our Phase 4 ANNEXA-4 study, which was initiated in early 2015, is a multi-center, open-label, single-arm study being conducted in patients receiving apixaban, rivaroxaban, edoxaban or enoxaparin (a low molecular weight heparin) who present with an acute major bleed. Acute major bleeding includes life-threatening bleeding, bleeding associated with very low blood counts, or bleeding that occurs in a critical area such as the brain or surrounding the heart. The trial excludes bleeding due to major trauma and large blood vessel rupture. For ethical reasons, this study is not randomized and all participants receive andexanet alfa given as a bolus dose over 30 minutes followed by a two-hour infusion. Patients receive a low or high dose depending on which fXa inhibitor they have received and the time they received it. Patients are evaluated for 30 days following andexanet alfa administration. The co-primary efficacy endpoints are the percent change in anti-Factor Xa activity at two hours and assessment of hemostasis over 12 hours following the infusion. Hemostatic efficacy is assessed by an independent endpoint adjudication committee as either excellent, good or poor/none. To date, ANNEXA-4 has enrolled more than 170 patients of the approximately 350 patients targeted for inclusion.
Andexanet alfa pharmacoeconomics
Major bleeding is the most clinically relevant side effect of anticoagulant treatment across all anticoagulants and clinical settings. Clinical trial results suggest that the frequency of major bleeding associated with the administration of fXa inhibitors ranges from 1% to 4% per year, depending on the underlying medical condition and the specific fXa inhibitor. The clinical costs of a major bleeding event in fXa inhibitor treated patients are estimated to be $28,000 per patient on average and $135,000 per patient for the top 10%. Based on the frequency of bleeding rates suggested by clinical trials and our projection of 23 million to 36 million patients treated annually with fXa inhibitors in the G7 countries, we believe that by 2020, the annual costs to the healthcare system to treat major bleeding episodes in patients treated with a fXa inhibitor may exceed $10 billion. We believe that an effective fXa antidote represents a potentially cost-effective way to manage these healthcare system costs.
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Our hematologic cancer and inflammation product candidates
Our early stage development programs are focused on developing small molecule kinase inhibitors for the treatment of hematologic cancers and inflammatory diseases. Kinases are enzymes that act on and modify the activity of different proteins. Syk and JAK are clinically validated kinase targets involved in key signaling pathways that are important in certain hematologic cancers and inflammatory disorders. We have focused on the discovery and development of specific inhibitors of Syk and dual inhibitors of both Syk and JAK based on the unique roles of these kinases in NHL, CLL, allergic asthma, rheumatoid arthritis, or RA, and other inflammatory diseases.
Syk overview
Syk is a cell signaling enzyme that is found in certain white blood cells, including B-cells, basophils, neutrophils, monocytes, and tissue macrophages and mast cells, and is important for controlling the activity and recruitment of these cells. Scientists have focused on the role of Syk in B-cell cancers, such as NHL and CLL, as well as certain inflammatory diseases, such as allergic asthma and RA. B-cell activation is driven by the B-cell receptor, or BCR, whose signaling promotes cell proliferation, adhesion and survival in NHL and CLL. Syk acts downstream of the BCR, and blocking Syk activity in preclinical models results in an inhibition of proliferation, a disruption of tumor cell adhesion and cell death in malignant B-cells. Inhibitors of the BCR pathway, including the Syk inhibitor fostamatinib being developed by Rigel Pharmaceuticals, Inc. and the Syk inhibitor entospletinib being developed by Gilead Sciences, Inc., or Gilead, have been shown to have activity in NHL and CLL
JAK overview
The JAK kinases are a family of related tyrosine kinases that play key roles in cytokine signaling involved in immune processes. JAK activation and signaling is directly downstream from receptors for several cytokines that are integral to normal lymphocyte activation, proliferation and function. JAK also plays a role in malignant lymphocytes, including the survival and proliferation of CLL cells as well as cytokine signaling in certain NHL and other cancers. Leading clinicians have hypothesized that these JAK-related cytokines play a key role in promoting tumor survival and growth and that JAK inhibition may be effective in interrupting signaling processes involved in tumor cells that have mutated and are no longer entirely dependent on B-cell signaling via BCR.
Cerdulatinib—dual Syk/JAK inhibitor
The lead compound in our kinase development effort, cerdulatinib, is a potent inhibitor of both Syk and JAK. We believe that cerdulatinib may be able to treat certain diseases that involve Syk-BCR signaling and cytokine-JAK signaling. Based on the inhibition of these key pathways, we are currently focused on developing cerdulatinib for NHL, CLL and other hematologic cancers, with a focus on patients with certain treatment-resistant mutations, including those targeting the BTK and PI3K kinases, and certain inflammatory diseases. We are currently conducting a Phase 2a proof-of-concept study of cerdulatinib in NHL, and CLL patients.
NHL and CLL
Lymphoma is a large class of hematologic cancer that affects the B-cell and T-cell lymphocytes in lymph nodes. In 2015, lymphoma affected an estimated 760,000 people in the United States, with 580,000 of them suffering from the NHL varieties of the disease. NHL is often aggressive, marked by rapidly growing tumors in the lymph nodes, spleen, liver, bone marrow and other organs.
CLL is also a hematologic cancer that affects B-cell lymphocytes in the blood and bone marrow and is the most common type of leukemia. In 2011, approximately 100,000 patients had CLL in the United States. As it advances, usually slowly, CLL results in swollen lymph nodes, spleen and liver and eventually in anemia and infections.
Despite the introduction of novel therapies for B-cell NHL and CLL, some patients fail to go into remission and of those who do attain remission, many relapse and develop refractory disease and therefore need alternative therapies. The heterogeneity and severity of B-cell malignancies may warrant simultaneous targeting of multiple disease-relevant pathways. Dual inhibition of Syk and JAK represents such a strategy and may have several benefits relative to selective kinase inhibition, such as gaining control over a broader array of disease etiologies, reducing the probability of selection of alternate disease growth mechanisms, and the potential that an overall lower level suppression of multiple targets may be sufficient to modulate disease activity.
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Cerdulatinib is a highly potent inhibitor of Syk and JAK activity in blood cells from human volunteers. In preclinical studies, inhib
ition of Syk and JAK, via
c
erdulatinib, was active in a broad panel of B-cell lymphoma cell lines. Cerdulatinib was more effective than Syk-specific inhibition in these cell lines, suggesting that
c
erdulatinib may be useful in the treatment of a broad rang
e of B-cell lymphomas, including patients with diffuse large B-cell lymphoma, or DLBCL, an aggressive form of NHL that affects over 80,000 patients in the G7 countries, and patients with hard to treat mutations. For example,
c
erdulatinib was shown to be ef
fective in cell lines dependent on NFkB mutations for their survival. Current therapies and those in development, including those targeting the BTK and PI3K kinases, have limited activity in DLBCL patients with these mutations. In addition, preclinical dat
a suggest that dual Syk/JAK inhibition with
c
erdulatinib may also have activity in patients with an inadequate response to novel specific kinase inhibitors in development for NHL and CLL. Our strategy includes targeting
c
erdulatinib for certain CLL and NHL
patient populations, such as those with specific genetic mutations or those who have not responded adequately to other treatments. For example, it is estimated that approximately one third of patients become refractory to standard CLL therapy. We believe
these indications could potentially represent a significant commercial opportunity if we are able to develop an effective therapy.
Based on the preclinical data and our understanding of the role of Syk and JAK signaling in B-cell cancers, we initiated an open label Phase 1/2a proof-of-concept study in October 2013 in NHL and CLL patients who have failed or relapsed on existing marketed therapies or products in development, including patients with identified mutations. Interim results from the Phase 1 dose-escalation portion of the study demonstrated that cerdulatinib was active and well tolerated, including patients who have received prior BTK and P13K inhibitor therapies. We are currently conducting a Phase 2a proof-of-concept study of cerdulatinib in NHL, and CLL patients and depending on the overall results of the study, we would expect to further study cerdulatinib in CLL and/or NHL either alone or in combination with other approved products or with other drugs in development.
Selective Syk inhibitors
Syk is an important mediator of immune response in a number of different types of immune cells. Ora is leading the pre-clinical study of a selective Syk inhibitor for allergic conjunctivitis.
In May 2015, our Biogen Idec agreement was terminated in its entirety, and we entered into a license and collaboration agreement with Ora pursuant to which we granted Ora an exclusive license to co-develop and co-commercialize one of our specific Syk inhibitors, which is currently in a pre-clinical study targeting allergic conjunctivitis. Ora has the primary responsibility for conducting the research and development and regulatory activities under this agreement. We are obligated to provide assistance in accordance with the agreed-upon development plan, as well as participate on various committees.
Sales and marketing
Assuming betrixaban and andexanet alfa are approved by the FDA and other regulatory authorities, we intend to commercialize both molecules using a hospital-based sales force in the United States, and possibly marketing in other major markets. To achieve global commercialization, we anticipate using a variety of distribution agreements and commercial partnerships in those territories where we do not establish a sales force. We expect to target our U.S. sales and marketing efforts at the approximately 1,500 hospitals and out-patient acute care settings that would account for the large majority of the prescribing base for our product candidates, if approved. We plan to commercialize both of our thrombosis product candidates in the U.S. with a hospital-based sales force of approximately 100 to 150 sales representatives. We expect that our commercial infrastructure would be comprised of several proven, experienced marketing and sales management professionals along with a reimbursement support and hospital formulary specialist team. In addition, we intend to develop and publish health economic models demonstrating the value of betrixaban and andexanet alfa to hospital administrators and third party payors.
Research and development
We invest significant effort defining and refining our research and development process and internally teaching our approach to drug development. We favor programs with early decision points, well-validated targets, predictive preclinical models and clear paths to regulatory approval, all in the context of a target product profile that can address significant unmet or underserved clinical needs. Members of our discovery, research and development team have played central roles in discovering and developing a number of promising candidates over the past 20 plus years while at Portola, and while at Millennium and COR Therapeutics, Inc., two early developers of thrombosis therapies. They have used unique biological insights to develop in vitro and in vivo models that speed development. We also selectively leverage outside collaborators to expand into potential additional indications. As our product candidates progress through clinical development, we have focused and will increasingly focus our scientific efforts on supporting that development.
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We emphasize data-driven decisio
n making, strive to advance or terminate projects early based on clearly defined go/no go criteria, prioritize programs at all stages and allocate our capital to the most promising programs. Our current development-stage portfolio consists of three compoun
ds discovered through our internal research efforts and one discovered by Portola scientists during their time at a prior company. In addition we are actively seeking to identify attractive external opportunities. We utilize the same critical filters for i
nvestment when evaluating external programs as we do with our own, internally-derived candidates.
Collaboration and license agreements
Betrixaban
Millennium agreements
In 2003, we entered into an asset purchase agreement to acquire patent rights and intellectual property to an ADP Receptor Antagonist Program, or the ADP Program, and a Platelet Research Program from Millennium. We are obligated to pay to Millennium royalties at tiered single-digit percentages of net sales of certain ADP Program products if product sales are ever achieved, which royalty payments will continue until the expiration of the relevant patents or ten years after launch, whichever is later.
In 2004, we entered into an agreement to license from Millennium certain exclusive rights to research, develop and commercialize certain compounds that inhibit fXa, including betrixaban, or the fXa Program. The license agreement requires us to make certain license fee, milestone, royalty and sublicense sharing payments to Millennium as we develop, commercialize or sublicense betrixaban and other products from the fXa Program. The Millennium license agreement further provides for additional payments to Millennium of up to $35.0 million based on the achievement of regulatory filing and approval milestones related to the fXa Program. In addition, we are obligated to pay Millennium royalties at tiered single-digit percentages of net sales of any fXa Program products if product sales are ever achieved. This license agreement will continue in force, on a product-by-product and country-by-country basis, until the expiration of the relevant patents or ten years after the launch, whichever is later, or termination by either party pursuant to the agreement. This license agreement may be terminated by either party for the other party’s uncured material breach. In addition, we may terminate this agreement for convenience with 30 days’ advance written notice.
In 2005, we amended both the asset purchase agreement for the ADP Program and the license agreement for the fXa Program. In connection with these amendments, we have made aggregate cash payments to Millennium of $6.0 million and issued to Millennium equity securities with an aggregate value of $1.8 million through December 31, 2016.
Andexanet alfa
BMS and Pfizer agreements
In 2012, we entered into a collaboration agreement with BMS and Pfizer, to include subjects dosed with apixaban, their jointly owned product candidate, in one of our Phase 2 proof-of-concept studies of andexanet alfa and in 2014, we entered into a second collaboration agreement with BMS and Pfizer to further study the safety and efficacy of andexanet alfa as a reversal agent to apixaban through our ongoing Phase 3 studies. Under the terms of the Phase 3 agreement, we received an upfront payment of $13.0 million and are eligible to receive additional development and regulatory milestone payments of up to $12.0 million. This Phase 3 collaboration agreement will continue in force until the approval of andexanet alfa as a reversal agent for apixaban by the FDA and EMA.
In 2016, we entered into collaboration agreements with BMS and Pfizer to obtain Japanese regulatory approval and commercialize andexanet alfa in Japan. Under the terms of the agreement we received an upfront payment of $15.0 million and are eligible to receive potential regulatory and sales-based milestone payments totaling $90.0 million, as well as double-digit royalties based on andexanet alfa net sales in Japan. BMS and Pfizer obtained the rights to develop and commercialize andexanet alfa in Japan and will be responsible for all development, regulatory and commercialization activities.
Bayer and Janssen agreements
In 2013, we entered into a clinical collaboration agreement with Bayer and Janssen to include subjects dosed with rivaroxaban, their fXa inhibitor product, in one of our Phase 2 proof-of-concept studies of andexanet alfa, and in February 2014, we entered into a second collaboration agreement with Bayer and Janssen to further study the safety and efficacy of andexanet alfa as a reversal agent to rivaroxaban through our ongoing Phase 3 studies. Under this Phase 3 collaboration agreement, we received an upfront payment of $10 million and the right to receive additional development and regulatory milestone payments of up to $15.0 million. This Phase 3 collaboration agreement will continue in force until the approval of andexanet alfa as a reversal agent for rivaroxaban by the FDA and EMA.
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In 2016, we entered into collaboration agreements
with Bayer to include rivaroxaban in the clinical studies for approval of
a
ndexanet alfa in Japan.
Under the terms of the agreement, we receive
d
an upfront payment of $5.0 million and are eligible to receive
up to $10.0 million in
additional milestone paym
ent
s
based on Japanese regulatory approval of
a
ndexanet alfa as an antidote for rivaroxaban. Bayer will provide technical support as well as fund clinical studies of
a
ndexanet alfa with rivaroxaban in Japan. Bayer received no commercial rights under this a
greement.
Daiichi Sankyo agreement
In 2013, we entered into an agreement with Daiichi Sankyo to include subjects dosed with edoxaban, their fXa inhibitor product, in one of our Phase 2 proof-of-concept studies of andexanet alfa and in July 2014, we entered into a second collaboration agreement with Daiichi Sankyo to perform the necessary development and regulatory activities to support a potential U.S. and EU regulatory approval of andexanet alfa as a reversal agent for edoxaban. Under this Phase 3 collaboration agreement we received an upfront payment of $15.0 million and are eligible to receive additional development and regulatory milestone payments of up to $25.0 million. In 2016, we amended the 2014 agreement to expedite development activities in exchange for $15.0 million and a net increase in total eligible milestones of $8.0 million. This amended collaboration agreement will continue in force until the approval of andexanet alfa as a reversal agent for edoxaban by the FDA and EMA.
In 2016, we entered into collaboration agreements with Daiichi Sankyo to include edoxoban in the clinical studies necessary for approval of andexanet alfa in Japan. Under the terms of the agreement, we will receive an upfront payment of $5.0 million and are eligible to receive up to $10.0 million in additional milestone payments based on Japanese regulatory approval of andexanet alfa as an antidote for edoxaban.
Syk Selective Inhibitors
Biogen Idec agreement
In 2011, we entered into an exclusive worldwide license and collaboration agreement with Biogen Idec to develop and commercialize PRT2607 and certain highly selective Syk inhibitors. Biogen Idec made an upfront cash payment to us of $36.0 million and purchased 636,042 shares of our Series 1 convertible preferred stock for an aggregate purchase price of $9.0 million. Pursuant to the agreement, we had an option to lead development and commercialization efforts in the United States for select smaller indications, as well as discovery efforts for follow-on Syk inhibitors and an option to co-promote the drug alongside Biogen Idec with major indications in the United States. In 2012, we elected to exercise our option to convert the agreement to a fully out-licensed agreement. After such election, we relinquished our right to share profits from sales of products related to Syk inhibitors, but are entitled to receive tiered royalties at low-double-digit percentages (not greater than 20%) from sales of these products by Biogen Idec if product sales are ever achieved. We no longer have an obligation to fund the program under the agreement. The agreement also provides for additional payments to us of up to approximately $370 million based on the occurrence of certain development and regulatory events. Biogen Idec has elected to assume all future development work for Syk inhibitors, including the major indications, such as rheumatoid arthritis and allergic asthma. To date, no development or regulatory events provided by the agreement have occurred and no royalties have been triggered under our agreement with Biogen Idec. This agreement will continue in force until either party terminates the agreement pursuant to the agreement or until the expiration of Biogen Idec’s royalty obligations pursuant to the agreement, which is the later of the expiration of all relevant patents and regulatory exclusivities or 10 years after first commercial sale. Biogen Idec may terminate the agreement without cause upon 120 days’ written notice or for cause if Portola commits a material breach of its obligations under the agreement and fails to cure the breach. We may terminate the agreement with proper written notice for cause if Biogen Idec commits a material breach of its obligations under the agreement and fails to cure the breach for 90 days (or 60 days for nonpayment of an amount due) after written notice is given, if Biogen Idec commences a legal action challenging the validity, enforceability or scope of any of the patents subject to the agreement or in the event of bankruptcy, reorganization, liquidation or receivership of Biogen Idec. In such event, we would regain all development rights and Biogen Idec would have no further payment obligations pursuant to the agreement. In 2015, the Biogen Idec agreement was terminated in its entirety.
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Astellas agreement
In 2005, we entered into an agreement to license certain exclusive rights to research, develop and commercialize Syk inhibitors from Astellas Pharma, Inc., or Astellas, which agreement was subsequently amended and restated in 2010. The agreement with Astellas, as amended, requires us to make certain milestone, royalty and sublicense revenue sharing payments to Astellas as we develop, commercialize or sublicense Syk inhibitors. Pursuant to our agreement with Astellas, we made cash milestone payments to Astellas of $500,000 in 2005, $500,000 in 2006 and $1.0 million in 2008, as we elected to continue our development of Syk inhibitors. In addition, for each Syk inhibitor product, we may be required to make up to $71.5 million in additional milestone payments to Astellas if the product is approved for multiple distinct indications in the United States, Europe and Japan and the product attains certain sales levels. If we grant a sublicense to develop and commercialize Syk inhibitors, we are required to pay Astellas 20% of any payments (excluding royalties) received under the sublicense agreement. In 2011, in connection with our receipt of the upfront payment under our agreement with Biogen Idec, we made a cash payment to Astellas of $7.2 million. In addition, we are required to pay Astellas royalties at low single-digit percentages for worldwide sales for any Syk inhibitor product made by us or our sublicensees. This agreement will continue in force, on a product-by-product and country-by-country basis, until the expiration of relevant patents or ten years after the launch, whichever is later, or termination by either party pursuant to the agreement. The agreement may be terminated by us for convenience upon 60 days’ written notice to Astellas or immediately upon written notice if all major claims of all of the patents covered by the agreement are invalidated by competent judicial or administrative authorities in the U.S. and no measure has been taken to appeal the invalidation. Either party may terminate the agreement upon written notice if the other party is in material breach of its obligations under the agreement for reasons within its control and responsibility and has not remedied the breach within 30 days of receiving written notice or in the event of bankruptcy, liquidation or receivership of the other party.
Cerdulatinib
Aciex agreement (Nicox)
In 2013, we entered into a license and collaboration agreement with Aciex Therapeutics, Inc., or Aciex, pursuant to which we granted Aciex an exclusive license to co-develop and co-commercialize cerdulatinib and certain related compounds for nonsystemic indications, such as the treatment and prevention of ophthalmological diseases by topical administration and allergic rhinitis by intranasal administration. In 2014, this agreement was amended to release all rights for cerdulatinib to us. The collaboration is now focused on development of other related compounds for topical ophthalmic indications. Under the agreement, we will share development costs with Aciex and be entitled to receive either a share of the profits generated by any eventual products or royalty payments. We retain rights to other indications, including dermatologic disorders.
Ora agreement
In 2015, we entered into a license and collaboration agreement with Ora pursuant to which we granted Ora an exclusive license to co-develop and co-commercialize one of our specific Syk inhibitors. Ora has the primary responsibility for conducting the research and development and regulatory activities under this agreement. We are obligated to provide assistance in accordance with the agreed-upon development plan, as well as participate on various committees.
Under the terms of this risk and cost sharing agreement, each party will incur its own share of development costs. Third-party related development costs will be shared by Ora and us at approximately 60% and 40%, respectively, until an End of Phase 2 meeting with the FDA, and equally thereafter. We are entitled to receive either 50% of the profits, if any, generated by future sales of the products developed under the agreement or royalty payments on such sales, should we opt out of the agreement.
We may opt out of the agreement any time prior to 90 days after an End of Phase 2 meeting with the FDA. The timing of the exercise of our opt out rights would impact future royalties we would be entitled to receive from Ora. Each party may also buy out the rights and interests in the licensed compound by paying the greater of $6.0 million or two times the actual aggregate development cost incurred by both parties on or before the date that is 90 days after an End of Phase 2 meeting with the FDA.
Dermavant agreement
In 2016, we granted an exclusive, worldwide license to Dermavant Sciences GmbH, or, Dermavant, to develop and commercialize cerdulatinib in topical formulation for all indications, excluding oncology, in exchange for a non-refundable upfront payment of $8.8 million and contingent development and regulatory milestones and commercial milestone payments based on worldwide annual net sales. Additionally, Dermavant is required to pay us royalties on worldwide net sales of all products commercialized under the agreement throughout the license term, which continues on a country-by-country basis until the later of the 10th anniversary of the first commercial sale or the expiration of the last valid patent.
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See
Note
6 and Note 8
in the Notes to Consolidated
Financial Statements contained in the section of this report entitled “Financial Statements and Supplementary Data” for a more detailed description of the agreement
s and accounting assessments associated with certain of these agreements.
Competition
Our industry is highly competitive and subject to rapid and significant technological change. While we believe that our development experience and scientific knowledge provide us with competitive advantages, we may face competition from large pharmaceutical and biotechnology companies, smaller pharmaceutical and biotechnology companies, specialty pharmaceutical companies, generic drug companies, academic institutions, government agencies and research institutions and others.
Many of our competitors may have significantly greater financial, technical and human resources than we have. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Our commercial opportunity could be reduced or eliminated if our competitors develop or market products or other novel technologies that are more effective, safer or less costly than any that will be commercialized by us, or obtain regulatory approval for their products more rapidly than we may obtain approval for ours. Our success will be based in part on our ability to identify, develop and manage a portfolio of drugs that are safer, more efficacious and/or more cost-effective than alternative therapies.
Betrixaban
In the market for VTE prophylaxis in acute medically ill patients, betrixaban, if approved, will compete with enoxaparin, which is marketed as Lovenox by Sanofi-Aventis U.S. LLC and as a generic pharmaceutical by several manufacturers, and to a lesser extent with other low molecular weight heparins. In addition, betrixaban may face competition in the market for acute medically ill patients from other fXa inhibitors including apixaban, which is marketed by BMS and Pfizer, edoxaban, which is marketed by Daiichi Sankyo, rivaroxaban, which is marketed by Bayer and Janssen, and the direct thrombin inhibitor dabigatran, which is marketed by Boehringer Ingelheim GbmH, although none of these molecules is currently approved for use in that population. We believe, that in light of the significant opportunity in this acute medically ill population, other agents will likely be tested in a Phase 3 study. For example, in 2014, Janssen initiated a Phase 3 study designed to evaluate the efficacy and safety of rivaroxaban compared with placebo in the prevention of symptomatic VTE events and VTE-related death post-hospital discharge in high-risk, medically ill patients. Janssen also announced in 2014 that it had initiated a Phase 3 study designed to evaluate the efficacy and safety of rivaroxaban to reduce the risk of deep vein thrombosis, or DVT, and pulmonary embolism, or PE, due to a concurrent medical illness for up to 45 days after hospital discharge. In the future, owners of approved direct fXa or thrombin inhibitors may decide to develop them for VTE prophylaxis in the acute medically ill patient population although nothing is in development for that indication to our knowledge. In addition, they or other competitors may decide to develop new therapies for VTE prophylaxis in acute medically ill patients.
Andexanet alfa
Currently there are no therapies approved as antidotes for fXa inhibitors. However, andexanet alfa, if approved, may compete with currently approved treatments designed to enhance coagulation including fresh frozen plasma, prothrombin complex concentrates, rFVIIa, Vitamin K, protamine or whole blood. In addition, several companies have conducted clinical research on compounds that are intended to reverse the effects of one or more direct fXa inhibitors and which, if developed, may be competitive with andexanet alfa.
Cerdulatinib
In the market for the treatment of CLL and NHL, cerdulatinib, if approved, will compete with existing therapies, such as rituximab, and obinutuzumab which are marketed by Chugai Pharmaceutical Co., F. Hoffmann-LaRoche Ltd. and Genentech, Inc., ibrutinib, which is marketed by Janssen and Pharmacyclics, Inc. idelalisib, which is marketed by Gilead; and potentially other therapies currently in development by a number of different companies.
Syk Selective Inhibitors
In the market for treatment of allergic conjunctivitis, PRT02761, if approved, will compete with existing products, such as topical antihistamines, corticosteroids, and mast cell stabilizers and potentially with other products currently in development by a number of different companies.
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Intellectual property
Our success will significantly depend upon our ability to obtain and maintain patent and other intellectual property and proprietary protection for our drug candidates, including composition-of-matter, dosage and formulation patents, as well as patent and other intellectual property and proprietary protection for our novel biological discoveries and other important technology inventions and know-how. In addition to patents, we rely upon unpatented trade secrets, know-how, and continuing technological innovation to develop and maintain our competitive position. We protect our proprietary information, in part, using confidentiality agreements with our commercial partners, collaborators, employees and consultants and invention assignment agreements with our employees. We also have confidentiality agreements or invention assignment agreements with our commercial partners and selected consultants. Despite these measures, any of our intellectual property and proprietary rights could be challenged, invalidated, circumvented, infringed or misappropriated, or such intellectual property and proprietary rights may not be sufficient to permit us to take advantage of current market trends or otherwise to provide competitive advantages. For more information, please see “Risk factors—Risks related to intellectual property.”
As of December 31, 2016, we owned 47 issued U.S. patents, 27 U.S. patent applications and 281 issued patents and 145 patent applications in other jurisdictions. We also co-owned 17 additional patents and patent applications. In addition, as of December 31, 2016, we have licensed 196 issued patents and 39 patent applications from third parties, mostly on an exclusive basis. The patent portfolios for our leading product candidates as of December 31, 2016 are summarized below
.
Betrixaban
Our betrixaban patent portfolio includes 22 issued U.S. patents and 4 U.S. patent applications covering the composition of and methods of making and using betrixaban or its analogs, including those owned by us and those licensed from Millennium. The U.S. issued patents relating to the composition of matter of betrixaban are not due to expire before September 2020 and may be extended up to September 2025, if betrixaban receives regulatory approval and if the necessary eligibility requirements are met, pursuant to the Drug Price Competition and Patent Term Restoration Act of 1984, commonly referred to as the Hatch-Waxman Act. Related international patent applications have issued or been allowed in 37 countries and are pending in a number of other countries. These international patents and patent applications, if issued, would not be due to expire before September 2020.
In the United States, the Hatch-Waxman Act permits a patent term extension of up to five years for one patent related to an approved therapy. The length of the extension is based upon the period of time the therapy has been under regulatory review. We believe that, if betrixaban is approved, we will be eligible for a full five year patent term extension for one patent relating to betrixaban.
In addition, in the United States, the Best Pharmaceuticals for Children Act provides that the period of patent exclusivity for a drug may be extended for six months if the owner of the drug conducts studies of the drug in children pursuant to a request from the FDA.
Andexanet alfa
Our fXa inhibitor antidote patent portfolio is wholly owned by us and includes 10 issued U.S. patents and 13 U.S. patent applications covering the composition of and methods of making and using andexanet alfa or its analogs. We retain full commercialization rights to andexanet alfa on a worldwide basis except for Japan where commercial rights have been licensed to BMS and Pfizer.
The last to expire of the U.S. patents is not expected to expire before July 2030.A related international patent application has issued in Australia, New Zealand, China, Japan, Mexico, Singapore, Canada, South Africa, and Europe, another related international patent application has issued in China, Japan, New Zealand, Mexico, Singapore, Australia, and South Korea. These international patents and patent applications, if issued, would not be due to expire before September 2028. Several other international patent applications have issued in Europe and other countries, and international patent applications are still pending in Europe and a number of other countries
.
Cerdulatinib
Our dual Syk-JAK inhibitor patent portfolio is owned in part by us and licensed in part from Astellas and includes five issued U.S. patents covering the composition of and methods of making and using cerdulatinib or its analogs. The last to expire of the U.S. patents is not expected to expire before July 2029. Related international patent applications have issued or been allowed in 47 countries and are pending in a number of other countries. These international patents and patent applications, if issued, would not be due to expire before April 2029.
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Syk Selective Inhibitors
Our Syk-specific inhibitor patent portfolio is owned by us and includes four issued U.S. patents covering the composition of and methods of making and using PRT2607 or its analogs. The last to expire of the U.S. patents is currently expected to expire in July 2029. Related international patent applications have issued or been allowed in 24 countries and, have been granted in Europe and are pending in a number of other countries. These international patents and patent applications, if issued, would not be due to expire before April 2029.
PCSK9
Our PCSK9 patent portfolio includes 4 U.S. patent applications covering the composition of and methods of making and using PCSK9 inhibitors, including those owned by us and those licensed from Serometrix. The U.S. patents relating to the composition of matter of PCSK9 inhibitors, if issued, are not due to expire before February 2034. Related international patent applications are pending in 11 countries. These international patent applications, if issued, would not be due to expire before February 2034. Several international patent applications are still pending and if issued would not be due to expire before 2035.
Manufacturing
We rely on contract manufacturing organizations, or CMOs, to produce our drug candidates in accordance with the FDA’s and EMA’s current Good Manufacturing Practices, or cGMP, regulations for use in our clinical studies. The manufacture of pharmaceuticals is subject to extensive cGMP regulations, which impose various procedural and documentation requirements and govern all areas of record keeping, production processes and controls, personnel and quality control. We currently have no plans to build our own clinical or commercial scale manufacturing capabilities. Our relationships with CMOs are managed by internal personnel with extensive experience in pharmaceutical development and manufacturing.
Betrixaban
Betrixaban is manufactured using common chemical engineering and synthetic processes from readily available raw materials. We relied on Hovione to produce active pharmaceutical ingredient, or API, for betrixaban for our APEX study, and in April 2016 we entered into an agreement with Hovione to manufacture API for betrixaban at commercial scale.
Andexanet alfa
Andexanet alfa is a recombinant biologic molecule produced in living cells, a process that is inherently complex and requires specialized knowledge and extensive process optimization and product characterization to transform laboratory scale processes into reproducible commercial manufacturing processes.
Our current Phase 4 ANNEXA study is using clinical material with bulk drug substance manufactured by CMC ICOS Biologics, Inc., or CMC. In 2016, we entered into an Amended Restated Commercial Supply Agreement, or aCSA, with CMC that amends and restates the terms of the original CSA. The aCSA formally halted further efforts on the expanded 6x2,000L manufacturing line originally intended to support our potential U.S. launch and increases the number of batches to be manufactured on the 2,500L manufacturing line which has been the sole source of our clinical material to date.
Supply from CMC, even if successfully expanded, would not have been sufficient to meet projected worldwide demand for andexanet alfa, therefore, we have been developing an improved and more cost-effective process at Lonza since 2013. In 2014, we entered into a new commercial manufacturing agreement with Lonza, replacing the 2013 agreement, to produce commercial quantities of andexanet alfa using the improved and more-cost-effective process and perform pre-validation and validation work. This agreement has been subsequently amended to increase the number of batches to be manufactured per year, beginning in 2017, to match our projected clinical and commercial demand on a worldwide basis. We have successfully completed process validation at Lonza and expect to seek regulatory approval for the material manufactured by Lonza following initial approval.
See Note 7 in the Notes to Consolidated Financial Statements contained in the section of this report entitled “Financial Statements and Supplementary Data” and refer to the “Off-balance sheet arrangements and contractual obligations” portion of this report in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for a more detailed description of the agreements, obligations and accounting assessments.
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Government regulation
The FDA and comparable regulatory agencies in state and local jurisdictions and in foreign countries impose substantial requirements upon the clinical development, manufacture and marketing of pharmaceutical products. These agencies and other federal, state and local entities regulate research and development activities and the testing, manufacture, quality control, safety, effectiveness, labeling, storage, record keeping, approval, advertising and promotion of our products.
The process required by the FDA before product candidates may be marketed in the United States generally involves the following:
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nonclinical laboratory and animal testing of the product including some that must be conducted in accordance with Good Laboratory Practices or GLPs;
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submission of an investigational new drug application, or IND, which must become effective before human clinical trials may begin;
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adequate and well-controlled human clinical trials to establish the safety and efficacy of the proposed drug candidate for its intended use;
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pre-approval inspection of manufacturing facilities and selected clinical investigators for their compliance with Good Manufacturing Practices, or GMP, and Good Clinical Practices or GCPs; and
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Approval of an NDA, for a drug or a BLA, for a biologic prior to commercial marketing for specific indications for use.
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The testing and approval process requires substantial time, effort and financial resources. Prior to commencing the first clinical trial with a product candidate, we must submit an IND to the FDA. The IND automatically becomes effective 30 days after receipt by the FDA, unless the FDA, within the 30-day time period, raises concerns about the supporting safety data or questions about the design of the clinical trial and imposes a clinical hold. In such a case, the IND sponsor and the FDA must resolve any outstanding concerns before the clinical trial can begin. Submission of an IND may not result in FDA authorization to commence a clinical trial. A separate submission to the existing IND must be made for each successive clinical trial conducted during product development. Further, an independent institutional review board for each medical center 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 commences at that center. Regulatory authorities or an institutional review board or the sponsor may suspend a clinical trial at any time on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable health risk. Some studies also include an Independent Data Monitoring Committee, or IDMC, which receives special access to unblinded data during the clinical trial and may halt the clinical trial if it determines that there is an unacceptable safety risk for subjects or other grounds, such as no demonstration of efficacy. The IDMC may halt a trial if it feels that the data demonstrate efficacy of the drug and it is no longer ethical to withhold the drug from patients in the control arm of the study.
For purposes of NDA or BLA approval, human clinical trials are typically conducted in three sequential phases that may overlap.
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Phase 1 – Studies are initially conducted to test the product candidate for safety, dosage tolerance, absorption, metabolism, distribution and excretion in healthy volunteers or patients.
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Phase 2 – Studies are conducted with groups of patients with a specified disease or condition to provide enough data to evaluate the preliminary efficacy, optimal dosages and dosing schedule and expanded evidence of safety. Multiple Phase 2 clinical trials may be conducted to obtain information prior to beginning larger and more expensive Phase 3 clinical trials.
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Phase 3 – Phase 3 clinical trials are undertaken in large patient populations to further evaluate dosage, to provide statistically significant evidence of clinical efficacy and to further test for safety in an expanded patient population at multiple clinical trial sites. These clinical trials are intended to establish the overall risk/benefit ratio of the product compared to placebo or current standard of care and provide an adequate basis for product labeling. These trials may be done globally to support global registrations.
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The FDA may require, or companies may pursue, additional clinical trials after a product is approved. These so-called Phase 4 studies may be made a condition to be satisfied after approval. The results of Phase 4 studies can confirm the effectiveness of a product candidate and can provide important safety information gathered in routine medical practice.
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Concurrent with clinical trials, companies usually complete additional animal studies and must also develop additional information about the chemistry and physical characteristics of the product candidate as well as 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, the sponsor must also develop methods for testing
the identity, strength, quality and purity of the final product. Additionally, appropriate packaging must be selected and tested and stability studies must be conducted to establish an appropriate shelf life for the product candidate including data demonst
rating that the product candidate does not undergo unacceptable deterioration over its shelf life.
NDA or BLA submission and review by the FDA
The results of product development, nonclinical studies and clinical trials are submitted to the FDA as part of an NDA or BLA. The submission of an NDA or BLA requires payment of a substantial User Fee to FDA. The FDA may convene an advisory committee to provide independent expert clinical opinion on application review questions. The FDA reviews applications to determine, among other things, whether a product is safe and effective for its intended use and whether the manufacturing controls are adequate to assure consistent batch to batch purity, identity, potency, and strength of the product candidate. Before approving an NDA or BLA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application unless it determines that the manufacturing processes, equipment and facilities are in compliance with cGMP requirements. Once the NDA submission has been accepted for filing (60 days post receipt of the application by the FDA), the FDA typically takes ten months to review the application and respond to the applicant, which can take the form of either a Complete Response Letter or Approval. The review process is often significantly extended by FDA requests for additional information or clarification. The FDA may delay or refuse approval of an NDA 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. FDA approval of any NDA or BLA submitted by us will be at a time the FDA chooses. Also, if regulatory approval of a product is granted, such approval may entail limitations on the indicated uses for which such product may be marketed and require post-marketing requirements such as a Risk Evaluation and Mitigation Procedure or a Phase 4 study. 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. In addition, the FDA may require Phase 4 post-marketing studies to monitor the effect of approved products, and may limit further marketing of the product based on the results of these post-marketing studies.
The FDA has a Fast Track program that is intended to expedite or facilitate the process for reviewing new drugs and biological products that meet certain criteria. Specifically, new drugs and biological products are eligible for fast track designation if they are intended to treat a serious or life-threatening condition and demonstrate the potential to address unmet medical needs for the condition. Fast track designation applies to the combination of the product and the specific indication for which it is being studied. For a fast track product, the FDA may consider review of completed sections of an NDA or BLA on a rolling basis provided the sponsor provides, and the FDA accepts, a schedule for the submission of the completed sections of the NDA or BLA. Under these circumstances, the sponsor pays any required user fees upon submission of the first section of the NDA or BLA. A fast track designated drug candidate may also qualify for priority review, under which the FDA reviews the NDA or BLA in a total of six months rather than ten months after it is accepted for filing.
Post-approval requirements
Any products manufactured or distributed by us pursuant to FDA approvals are subject to continuing regulation by the FDA, including record-keeping requirements and reporting of adverse experiences. Drug and 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 GMP, which impose certain procedural and documentation requirements upon us and our third-party manufacturers. We cannot be certain that we or our present or future suppliers will be able to comply with the GMP regulations and other FDA regulatory requirements. If our present or future suppliers are not able to comply with these requirements, the FDA may halt our clinical trials, require us to recall a product from distribution, or withdraw approval of the NDA or BLA.
The FDA closely regulates the marketing and promotion of drugs. A company can make only those claims relating to safety and efficacy, purity and potency that are approved by the FDA. Failure to comply with these requirements can result in 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.
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Healthcare and reimbursement regulation
Our sales, promotion, medical education and other activities following product approval will be subject to regulation by numerous regulatory and law enforcement authorities in the United States in addition to FDA, including potentially the Federal Trade Commission, the Department of Justice, the Centers for Medicare and Medicaid Services, other divisions of the Department of Health and Human Services and state and local governments. Our promotional and scientific/educational programs must comply with the anti-kickback provisions of the Social Security Act, the Foreign Corrupt Practices Act, the False Claims Act, the Veterans Health Care Act and similar state laws.
Depending on the circumstances, failure to meet these applicable regulatory requirements can result in criminal prosecution, fines or other penalties, injunctions, recall or seizure of products, total or partial suspension of production, denial or withdrawal of pre-marketing product approvals, private “qui tam” actions brought by individual whistleblowers in the name of the government or refusal to allow us to enter into supply contracts, including government contracts.
Sales of pharmaceutical products depend significantly on the availability of third-party reimbursement. Third-party payors include government health administrative authorities, managed care providers, private health insurers and other organizations. We anticipate third-party payors will provide reimbursement for our products. However, these 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 pharmacological studies to demonstrate the 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 reimbursement from third-party payors. Reimbursement may not be available or sufficient to allow us to sell our products on a competitive and profitable basis.
The United States and some foreign jurisdictions are considering or have enacted a number of legislative and regulatory proposals to change the healthcare system in ways that could affect our ability to sell our products profitably. Among policy makers and payors in the United States and elsewhere, there is significant interest in promoting changes in healthcare systems with the stated goals of containing healthcare costs, improving quality and/or expanding access. In the United States, the pharmaceutical industry has been a particular focus of these efforts and has been significantly affected by major legislative initiatives.
Foreign regulation
In addition to regulations in the United States, we will be subject to a variety of foreign regulations governing clinical trials and commercial sales and distribution of our products to the extent we choose to develop or sell any products outside of the United States. The approval process varies from country to country and the time may be longer or shorter than that required to obtain FDA approval. The requirements governing the conduct of clinical trials, product licensing, pricing and reimbursement vary greatly from country to country.
European Union, or EU, member states require both regulatory clearances by the national competent authority and a favorable ethics committee opinion prior to the commencement of a clinical trial. Under the EU regulatory systems, we may submit marketing authorization applications either under a centralized or decentralized procedure. The centralized procedure provides for the grant of a single marketing authorization that is valid for all EU member states. The centralized procedure is compulsory for medicines produced by certain biotechnological processes, products with a new active substance indicated for the treatment of certain diseases, such as neurodegenerative disorder or diabetes and products designated as orphan medicinal products and optional for those products which are highly innovative or for which a centralized process is in the interest of patients. The decentralized procedure of approval provides for approval by one or more other, or concerned, member states of an assessment of an application performed by one member state, known as the reference member state. Under the decentralized approval procedure, an applicant submits an application, or dossier, and related materials (draft summary of product characteristics, draft labeling and package leaflet) to the reference member state and concerned member states. The reference member state prepares a draft assessment and drafts of the related materials within 120 days after receipt of a valid application. The sponsor responds to any inquiries and the final report is issued on the 120
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day from submission of application. The final report is forwarded to the EMA for review and approval. Within 90 days of receiving the reference member state’s assessment report, each concerned member state must decide whether to approve the assessment report and related materials. If a member state cannot approve the assessment report and related materials on the grounds of potential serious risk to public health, the disputed points may eventually be referred to the European Commission, whose decision is binding on all member states.
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Employees
As of December 31, 2016, we had 163 full-time employees, 25 of whom hold Ph.D. degrees and six of whom hold M.D. degrees. Of the full-time employees, 106 employees are engaged in research and development and 57 are engaged in general administration, business development, sales and marketing. Our employees are not represented by labor unions or covered by collective bargaining agreements. We consider our relationship with our employees to be good.
Facilities
We lease approximately 74,000 square feet of research and office space in South San Francisco, California under a lease that expires in March 2020. Thereafter, at our option, we may extend the term for an additional three years through March 2023. We believe that our existing facilities are sufficient for our current needs for the foreseeable future.
Legal proceedings
We are not currently a party to any material legal proceedings.
Corporate and Available Information
Our principal corporate offices are located at 270 E. Grand Avenue, South San Francisco, California 94080 and our telephone number is (650) 246-7000. We were incorporated in Delaware in September 2003. Our internet address is www.portola.com. We make available on our website, free of charge, our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and any amendments to those reports filed or furnished 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 the SEC. Our SEC reports can be accessed through the Investors section of our internet website. Further, a copy of this Annual Report on Form 10-K is located at the SEC’s Public Reference Rooms at 100 F Street, N.E., Washington, D. C. 20549. Information on the operation of the Public Reference Room can be obtained by calling the SEC at 1-800-SEC-0330. The SEC maintains a website that contains reports, proxy and information statements and other information regarding our filings at http://www.sec.gov. The information found on our internet website is not incorporated by reference into this Annual Report on Form 10-K or any other report we file with or furnish to the SEC.
Item 1A. RISK FACTORS.
Investing in our common stock involves a high degree of risk. You should consider carefully the following risks, together with all the other information in this report, including our financial statements and notes thereto, before you invest in our common stock. If any of the following risks actually materializes, our operating results, financial condition and liquidity could be materially adversely affected. As a result, the trading price of our common stock could decline and you could lose part or all of your investment.
In assessing these risks, you should also refer to other information contained in this annual report on Form 10-K, including our Condensed Consolidated Financial Statements and related Notes.
RISKS RELATED TO OUR FINANCIAL CONDITION AND NEED FOR ADDITIONAL CAPITAL
We have incurred significant losses, and expect to incur substantial and increasing losses as we continue to develop and commercialize our product candidates.
We are a clinical-stage biopharmaceutical company. We do not currently have any products approved for sale, and we continue to incur significant research and development and selling, general and administrative expenses related to our operations. We expect to incur substantial and increasing losses as we continue to develop and commercialize our product candidates. As of December 31, 2016, we had an accumulated deficit of approximately $918.3 million.
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To date, we have financed our operations primarily through sales of our equity securities, collaborations, including a loan from one of our collaboration partners, a sa
le of a royalty stream from future product sales, sales of commercial and development rights to some of our product candidates, and to a lesser extent, government grants, equipment leases, venture debt and with the benefit of tax credits made available und
er a federal stimulus program supporting drug development. We have devoted substantially all of our efforts to research and development, including clinical studies, but have not completed development of any product candidates. We anticipate that we will co
ntinue to incur substantial expenses as we:
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initiate or continue clinical studies of our three most advanced product candidates;
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continue the research and development of our product candidates;
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seek to discover or in-license additional product candidates;
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seek regulatory approvals for our product candidates that successfully complete clinical studies;
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establish a sales, marketing and distribution infrastructure and scale-up manufacturing capabilities to commercialize products for which we may obtain regulatory approval, including process improvements in order to manufacture andexanet alfa at commercial scale; and
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enhance operational, compliance, financial, quality and information management systems and hire more personnel, including personnel to support development of our product candidates and support our commercialization efforts.
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To be profitable in the future, we must succeed in developing and commercializing products with significant market potential. This will require us to be successful in a range of activities, including advancing our product candidates, completing clinical studies of our product candidates, obtaining regulatory approval for these product candidates and manufacturing, marketing and selling those products for which we may obtain regulatory approval. We are only in the preliminary stages of some of these activities. We may not succeed in these activities and may never generate revenue that is sufficient to be profitable in the future. Even if we are profitable, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to achieve sustained profitability would depress the value of our company and could impair our ability to raise capital, expand our business, diversify our product candidates, market our product candidates, if approved, or continue our operations.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or our guidance.
Our quarterly and annual operating results may fluctuate significantly in the future, which makes it difficult for us to predict our future operating results. From time to time, we enter into licensing and collaboration agreements with other companies that may include development funding and upfront and milestone payments, which could have a significant impact on our operating results. Accordingly, our future operating results could depend to a material extent on payments under our existing or future licensing, collaboration and royalty arrangements, as well as any potential sales of our products, if approved. These upfront and milestone payments may vary significantly from period to period and any such variance could cause a significant fluctuation in our operating results from one period to the next. Furthermore, our operating results may fluctuate due to a variety of other factors, many of which are outside of our control and may be difficult to predict, including the following:
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the cost of manufacturing our product candidates, which may vary depending on United States Food and Drug Administration, or FDA, guidelines and requirements, the quantity of production, technical challenges and the terms of our agreements with manufacturers;
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the timing and cost of, and level of investment in, research and development activities relating to our product candidates, which may change from time to time;
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expenditures that we will or may incur to acquire or develop additional product candidates and technologies;
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the level of demand for our product candidates, should they receive approval, which may vary significantly;
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the timing and success or failure of clinical studies for our product candidates or competing product candidates, or any other change in the competitive landscape of our industry, including consolidation among our competitors or partners;
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the risk/benefit profile, cost and reimbursement policies with respect to our products candidates, if approved, and existing and potential future drugs that compete with our product candidates;
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the application of current or future accounting pronouncements or accounting policies which could impact the timing of our recognition of revenues or expenses or changes in the valuation of our assets or liabilities; and
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the changing and volatile global economic environment.
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The cumulative effects of these factors could result in large fluctuations and unpredictability in our quarterly and annual operating results. As a result, comparing our operating results on a period-to-period
basis may not be meaningful. Investors should not rely on our past results as an indication of our future performance. This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or inve
stors for any period. If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, or if the forecasts we provide to the market are below the expectations of analysts or inves
tors, the price of our common stock could decline substantially. Such a stock price decline could occur even when we have met any previously publicly stated revenue or earnings guidance we may provide.
We will need additional funds to support our operations, and such funding may not be available to us on acceptable terms, or at all, which would force us to delay, reduce or suspend our research and development programs and other operations or commercialization efforts. Raising additional capital may subject us to unfavorable terms, cause dilution to our existing stockholders, restrict our operations or require us to relinquish rights to our product candidates and technologies.
We are advancing multiple product candidates through the research and clinical development process. The completion of the development and the preparation for commercialization of our product candidates will continue to require substantial funds. As of December 31, 2016, we had $318.8 million in cash, cash equivalents and investments. We believe that our available cash, cash equivalents and investments will be sufficient to fund our anticipated level of operations for at least the next 12 months. Our future financing requirements will depend on many factors, some of which are beyond our control, including the following:
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the timing of, and costs involved in, seeking and obtaining approvals from the FDA and other regulatory authorities;
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the costs of commercialization activities, including product sales, marketing, manufacturing and distribution and general corporate and commercial infrastructure;
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the possible development of additional product candidates, including through in-licensing and acquisitions;
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the degree and rate of market acceptance of any products launched by us or future partners;
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our ability to enter into additional collaboration, licensing, commercialization or other financing arrangements and the terms and timing of such arrangements;
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the rate of progress and cost of our clinical studies; and
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the emergence of competing technologies or other adverse market developments.
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Until we can generate a sufficient amount of product revenue to finance our cash requirements, which we may never do, we expect to finance future cash needs through a combination of public or private equity offerings, debt financings, collaborations, strategic alliances, licensing arrangements and other financing, marketing and distribution arrangements. Additional financing may not be available to us when we need it or it may not be available on favorable terms.
If we raise additional capital through financing, marketing and distribution arrangements or other collaborations, strategic alliances, licensing or other financial arrangements with third parties, we may have to relinquish certain valuable rights to our product candidates, technologies, future revenue streams or research programs or grant licenses on terms that may not be favorable to us. If we raise additional capital through public or private equity offerings, the ownership interest of our existing stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. If we raise additional capital through debt financing, we may be subject to covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to obtain adequate financing when needed, we may have to delay, reduce the scope of, or suspend one or more of our clinical studies, research and development programs or commercialization efforts.
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RISKS RELATED TO THE DEVELOPMENT AND COMMERCIALIZATION OF OUR PRODUCT CANDIDATES
Our success depends heavily on the approval and successful commercialization of our lead product candidates, betrixaban and andexanet alfa, along with cerdulatinib. Our development of these product candidates may not be successful. If we are unable to commercialize one or more of our product candidates, or experience significant delays in doing so, our business will be materially harmed.
We have invested a significant portion of our efforts and financial resources into the development of betrixaban, andexanet alfa and, to a lesser extent, cerdulatinib and our selective Syk inhibitor program. Our ability to generate product revenue, which will not occur until after regulatory approval, if ever, will depend on the successful development, regulatory approval and eventual commercialization of one of our product candidates. The success of our product candidates will depend on several factors, including the following:
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our ability to reach agreement with the FDA and other regulatory authorities on the appropriate regulatory path for approval of our product candidates;
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receipt of marketing approvals from the FDA and similar regulatory authorities outside the United States for our product candidates;
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our ability to manufacture product commercially at acceptable costs;
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acceptance of any approved product by the medical community, third-party payors and patients;
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establishing and maintaining commercial manufacturing arrangements with third parties;
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commercializing any product candidate that may be approved, whether alone or in collaboration with others;
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effectively competing with other therapies;
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a continued acceptable safety profile of the product following approval;
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successful enrollment in, and completion of, clinical studies; and
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obtaining, maintaining, enforcing and defending intellectual property rights and claims.
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If we do not achieve one or more of these factors in a timely manner or at all, we could experience significant delays or an inability to successfully commercialize our product candidates, which would materially harm our business.
Our BLA for andexanet alfa was not approved by the FDA and although we are still pursuing regulatory approval, we will need to address deficiencies raised by the FDA before we can re-submit our BLA.
In August 2016, we received a Complete Response Letter, or CRL, from the FDA regarding our BLA for andexanet alfa. This CRL will delay the commercial launch of andexanet alfa, require us to re-submit our BLA with additional information requested by the FDA, and presents additional risk that andexanet alfa will not be approved by the FDA or other regulatory authorities, including the EMA. In the CRL, the items raised by the FDA primarily relate to the manufacturing process and analytical testing of andexanet alfa. The FDA has also asked us for additional data to support the inclusion of edoxaban and enoxaparin in the label, and indicated it needed to finalize its review of the clinical studies required as post-marketing commitments. We will need to resolve the items identified by the FDA in the CRL and obtain approval of our BLA before we can commercialize and begin to generate revenue from sales of andexanet alfa. We can offer no assurances that we will be able to resolve all items raised in the CRL to the satisfaction of the FDA. As a result, our ability to market, sell, distribute, obtain acceptable reimbursement for, set pricing for, and continue to operate, commercialize or continue the development of andexanet alfa may be further delayed, adversely affected or prevented altogether.
Even if the outstanding items identified in the CRL are resolved to the satisfaction of the FDA, the agency retains the right not to approve the BLA or to require additional information, or to raise additional issues to support regulatory approval of andexanet alfa, which could further delay or prevent its approval or limit the approved indications for andexanet alfa. In addition, either the substance of the items identified by the FDA in the CRL, or the CRL itself, could have an adverse impact on our efforts to obtain marketing authorization for andexanet alfa from the EMA and other regulatory authorities. Also, in response to the CRL, we have suspended our efforts to expand post-approval supply based on an expanded Gen1 manufacturing process on the 6x2,000 liter Line C manufacturing line at CMC Biologics and are focusing our efforts on expanding post approval through our Gen2 manufacturing process at the 10,000 liter scale at Lonza. As a result, even if we obtain commercial marketing approval for andexanet alfa, our ability to market andexanet may be adversely impacted by limited supply or treatment indications.
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The results from our APEX clinical trial may cause betrixaban regulatory approval to be delayed, more costly or not be obtained at all.
The outcome of development activities, regulatory approval and commercialization of betrixaban will have a substantial impact on our business. In May 2016, we announced data from our Phase 3 APEX clinical trial of betrixaban, which evaluated extended-duration anticoagulation with oral betrixaban as compared with standard of care anticoagulation with injectable enoxaparin for the prevention of VTE in acute medically ill patients.
The primary efficacy and safety analysis for APEX consisted of three pre-specified patient groups of increasing sample size: Cohort 1 - patients with elevated D-dimer levels (62% of the overall study population), Cohort 2 - patients with elevated D-dimer levels or age >75 years (91% of the overall study population), and the overall study population. By protocol definition, primary efficacy analysis testing of Cohort 1 was done first and required a p-value of 0.05 or less in order to test Cohort 2, which in turn required a p-value of 0.05 or less in order to test the overall study population. Cohort 1 achieved a p-value of 0.054, which did not meet the threshold.
Cohort 2 and the overall study population achieved p-values of 0.029 and 0.006, respectively. There was no statistical difference in major bleeding between the betrixaban and enoxaparin arms in any of these three patient groups. The number of fatal bleeds was balanced between the two arms, and the number of intracranial hemorrhages was numerically lower in the betrixaban arm. Positive net clinical benefit with betrixaban was observed.
Although APEX did not meet its primary efficacy endpoint for Cohort 1, we continue to pursue an approval pathway with the FDA based on efficacy and safety data we believe was demonstrated by the study as a whole. In December 2016 our betrixaban NDA was accepted for filing by the FDA and granted priority review with a PDUFA date of June 24, 2017. However, the FDA has substantial discretion in the approval process and may decide that our data are insufficient for approval and require additional preclinical, clinical or other studies. In addition, varying interpretations of the data obtained from preclinical and clinical testing could delay, limit, or prevent regulatory approval. For example, as APEX failed to meet the required p value for Cohort 1, the FDA may not be willing to assess efficacy data from Cohort 2 and the overall study population. Even if the FDA does agree to review efficacy and safety data from Cohort 2 and the overall study, the FDA may still determine that the data from the APEX trial are insufficient to support the approval of betrixaban and that one or more additional clinical trials of betrixaban would be required to be successfully conducted by us in order to support any such approval, including with respect to any plan for statistical analysis we identify that we believe may potentially support such approval. If we are required to successfully conduct and complete any additional clinical trials of betrixaban in order to support approval of betrixaban, we would be required to obtain additional capital and there can be no assurances that we would be successful in additional clinical development of betrixaban. Further, the decision to conduct any additional clinical trials would need to be made in the context of the time required to conduct such trials in relation to the remaining patent life of betrixaban, which could make additional trials commercially non-viable even if we believed such trials otherwise carried an acceptable likelihood of success. Any regulatory approval we ultimately obtain may be limited in scope or subject to restrictions or post-approval commitments that render the product not commercially viable.
If clinical studies of our product candidates fail to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States or do not otherwise produce positive results, we may incur additional costs or experience delays in completing, or ultimately be unable to complete, the development and commercialization of our product candidates.
Before obtaining regulatory approval for the sale of our product candidates, we must conduct extensive clinical studies to demonstrate the safety and efficacy of our product candidates in humans. Clinical studies are expensive, difficult to design and implement, can take many years to complete and are uncertain as to outcome. A failure of one or more of our clinical studies could occur at any stage of testing. We may experience numerous unforeseen events during, or as a result of, clinical studies that could delay or prevent our ability to receive regulatory approval or commercialize our product candidates, including the following:
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the number of patients required for clinical studies of our product candidates may be larger than we anticipate, enrollment in these clinical studies may be insufficient or slower than we anticipate or patients may drop out of these clinical studies at a higher rate than we anticipate;
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clinical studies of our product candidates may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical studies or abandon product development programs;
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the cost of clinical studies or the manufacturing of our product candidates may be greater than we anticipate;
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our third-party contractors may fail to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all;
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we might have to suspend or terminate clinical studies of our product candidates for various reasons, including unanticipated serious side effects, other unexpected characteristics or unacceptable health
risks;
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regulators may not approve our proposed clinical development plans;
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regulators or institutional review boards may not authorize us or our investigators to commence a clinical study or conduct a clinical study at a prospective study site;
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regulators or institutional review boards may require that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements; and
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the supply or quality of our product candidates or other materials necessary to conduct clinical studies of our product candidates may be insufficient or inadequate.
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If we are required to conduct additional clinical studies or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical studies of our product candidates or other testing, if the results of these studies or tests are not positive or are only modestly positive or if there are safety concerns, we may:
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be delayed in obtaining marketing approval for our product candidates;
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not obtain marketing approval at all;
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obtain approval for indications that are not as broad as intended;
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have the product removed from the market after obtaining marketing approval;
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be subject to additional post-marketing testing requirements; or
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be subject to restrictions on how the product is distributed or used.
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Our product development costs may also increase if we experience delays in testing or approvals. We do not know whether any anticipated clinical studies will begin as planned, or whether anticipated or ongoing clinical studies will need to be restructured or will be completed on schedule, or at all. Significant clinical study delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or allow our competitors to bring products to market before we do, which would impair our ability to commercialize our product candidates and harm our business and results of operations.
The outcome of preclinical testing and early clinical studies may not be predictive of the success of later clinical studies, and interim results of a clinical study do not necessarily predict final results. For example, the favorable results from our Phase 2 proof-of concept studies of andexanet alfa, evaluating the effect of andexanet alfa in healthy volunteers taking apixaban, rivaroxaban, edoxaban or enoxaparin may not be predictive of success in our Phase 4 study or other later studies, if any. In addition, although part 1 of each of our Phase 3 ANNEXA-A (apixaban) and ANNEXA-R (rivaroxaban) studies demonstrated that, for the primary efficacy endpoint, an intravenous bolus of andexanet alfa immediately and significantly reversed the anticoagulation activity of apixaban and rivaroxaban, and part 2 of each of our ANNEXA-A and ANNEXA-R studies demonstrated that, for all the primary and secondary endpoints, an intravenous bolus of andexanet alfa followed by a continuous two-hour infusion sustained the reversal of anticoagulation activity of apixaban and rivaroxaban, these positive results may not be predictive of success in our ANNEXA-4 confirmatory study in certain patients receiving apixaban, rivaroxaban, edoxaban or enoxaparin who present with acute major bleeding. Further, the ANNEXA-4 clinical trial summary data published in August 2016 may not be predictive of the results of the complete ANNEXA-4 trial. Finally, we do not know how the results from our ANNEXA trials will translate into clinical use in patients or the effect of repeat doses.
If serious adverse side effects are identified during the development of any of our product candidates, we may need to abandon our development of that product candidate.
It is impossible to guarantee when or if any of our product candidates will prove safe enough to receive regulatory approval. There can be no assurance that our clinical studies will not fail due to safety issues. In such an event, we might need to abandon development of that product candidate or enter into a partnership to continue development.
For example, our product candidate betrixaban, like all currently marketed inhibitors of Factor Xa, carries some risk of life-threatening bleeding. In addition, patients taking betrixaban in our Phase 2 studies had an increased rate of gastrointestinal issues, such as diarrhea, nausea and vomiting, and other side effects such as back pain, dizziness, headaches, rashes and insomnia as compared to subjects taking a placebo or an active comparator.
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While no serious adverse side effects have been observed in our completed healthy patient studies with andexanet alfa, there is a risk that adverse side effects could be observed through our ANNEXA-4 patient study results, a
dditional clinical experience or repeat doses that are determined to have been caused by andexanet alfa. Some protein-based biologics have encountered problems with immunogenicity, that is, their tendency to trigger an unwanted immune response against them
selves. To date, no neutralizing antibodies against andexanet alfa or antibodies to Factor X or Factor Xa have been detected; however there is still a risk that such antibodies could be identified through our ANNEXA-4 patient study results, additional clin
ical experience or from repeat doses. In addition, reversing the anticoagulant activity of Factor Xa inhibitors in patients with underlying medical conditions requiring anticoagulation is associated with an increased risk of thrombotic events.
Even if any of our product candidates receive marketing approval, if a regulatory agency discovers adverse events of unanticipated severity or frequency it may impose restrictions on that product or us, including requiring withdrawal of the product from the market. Among other legal and administrative actions, a regulatory agency may:
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mandate modifications to promotional materials or require us to provide corrective information to healthcare practitioners;
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suspend any regulatory approvals;
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suspend any ongoing clinical trials;
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refuse to approve pending applications or supplements to approved applications filed by us, our partners or our potential future partners;
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impose restrictions on operations, including costly new manufacturing requirements; or
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seize or detain products or require a product recall.
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In addition, the occurrence of any of the foregoing, even if promptly remedied, could negatively impact the perception of us or the relevant product among the medical community, patients or third party payors.
The failure of two of our competitors’ clinical trials evaluating Factor Xa inhibitors for VTE prophylaxis in acute medically ill patients may suggest an increased risk that our commercial development of betrixaban will also fail.
Two of our competitors’ clinical trials evaluating Factor Xa inhibitors for VTE prophylaxis in acute medically ill patients have failed. The MAGELLAN trial sponsored by Bayer Pharma AG, or Bayer, and Janssen Pharmaceuticals, Inc., or Janssen, which evaluated rivaroxaban, demonstrated efficacy but failed to demonstrate an acceptable benefit to risk profile due to increased bleeding. The ADOPT trial sponsored by Bristol-Myers Squibb Company, which evaluated apixaban, showed a reduction in VTE events, but failed to demonstrate statistically significant efficacy and also showed an increase in bleeding. Betrixaban, like rivaroxaban and apixaban, may fail in clinical trials if we are unable to demonstrate to the satisfaction of the FDA a statistically significant level of efficacy.
Delays in the enrollment of patients in any of our clinical studies could increase our development costs and delay completion of our clinical studies and associated regulatory submissions.
We may not be able to initiate or continue clinical studies for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these studies as required by the FDA or other regulatory authorities. Even if we are able to enroll a sufficient number of patients in our clinical studies, if the pace of enrollment is slower than we expect, the development costs for our product candidates may increase, and the completion of our studies may be delayed or our studies could become too expensive to complete.
For example, the ANNEXA-4 study of andexanet alfa is our first experience in patients with major bleeding who are receiving a factor Xa inhibitor. Because we have limited first-hand enrollment experience in this patient population, our enrollment forecasts are estimated based on our understanding of enrollment experience of similar studies conducted by others in similar patient populations. Our current forecasts suggest that enrolling up to 350 patients should ensure that a sufficient number are able to be included in the primary analysis. However, if after enrolling 350 patients, the true number of evaluable patients is less than required, it may be necessary to continue enrolling additional patients beyond the planned 350. Enrollment of additional patients (or slower than anticipated enrollment of the currently planned 270 patients) could increase the cost and duration of the study, and could result in alterations of the clinical plan including, but not limited to, opening of additional sites or geographic regions, both of which would result in increased costs. In addition, our cerdulatinib clinical studies will require enrollment of patients who have failed current therapies or have relapsed due to mutations. Finding and enrolling a sufficient number of patients for our expansion Cohorts could be difficult, time consuming and expensive because enrollment of clinical patients in the oncology space is often highly competitive and we have limited experience enrolling oncology patients in clinical trials.
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Even if andexanet alfa is approved by th
e FDA, this approval may be limited to certain indications, additional clinical studies and regulatory applications may be required to expand andexanet alfa indications and we can provide no assurances that such additional clinical studies or regulatory ap
plications will be successful.
We are developing andexanet alfa as a universal antidote for patients receiving a Factor Xa inhibitor anticoagulant when reversal of anticoagulation is needed, such as in life-threatening or uncontrolled bleeding or for emergency surgery/urgent procedures. Our ANNEXA-4 Phase 4 study is being conducted in patients receiving either a direct or indirect Factor Xa inhibitor who present with an acute major bleed, and our ANNEXA Phase 3 registration-enabling studies have been conducted on healthy volunteers. It is not certain at this time which indications, if any, the FDA will approve based on this data. For example, in the CRL, the FDA stated that we have not provided sufficient information to permit labeling of andexanet alfa for safe and effective use for the proposed indication. The FDA has also asked us for additional data to support the inclusion of edoxaban and enoxaparin in the label, and indicated it needed to finalize its review of the clinical studies required as post-marketing commitments. These observations in the CRL creates greater risk concerning our efforts to obtain U.S. approval for andexanet alfa as a universal antidote for Factor Xa inhibitors as the issues raised and information requested by the FDA may be costly and time-consuming to address and generate. As a result of these observations, we could decide or be required to seek our initial approval on a more narrow indication relating to serious bleeds among patients on the two most broadly used Factor Xa inhibitors, apixaban and rivaroxaban. Our studies have also not included patients requiring emergency surgery or urgent procedures and we do not anticipate obtaining this indication without clinical data. Additional clinical studies will be required to support our targeted indications, which will require additional time and expense and may not prove successful. Limitations in our label for andexanet alfa will reduce the number of patients for whom andexanet alfa is indicated and could reduce the size of the anticipated market and our financial prospects. Further, there is no guarantee that any efforts that we decide to undertake will meet the FDA’s requirements, and we may not receive approval at all for andexanet alfa, even in a more narrow indication despite such efforts.
Even if the FDA agrees that our APEX study demonstrates statistically significant efficacy and safety of betrixaban for extended duration VTE prophylaxis in acute medically ill patients for 35 days of in-hospital and post-discharge use, the FDA or similar regulatory authorities outside the United States may not approve betrixaban for marketing or may approve it with restrictions on the label, which could have a material adverse effect on our business, financial condition, results of operations and growth prospects.
We anticipate seeking regulatory approval for betrixaban in the United States for extended duration VTE prophylaxis in acute medically ill patients for 35 days of in-hospital and post-discharge use. It is possible that the FDA may not consider the results of our APEX study to be sufficient for approval of betrixaban for this indication. In general, the FDA suggests that sponsors complete two adequate and well-controlled clinical studies to demonstrate effectiveness because a conclusion based on two persuasive studies will be more compelling than a conclusion based on a single study. Although the FDA has informed us that our APEX study, plus supportive Phase 2 data obtained to date, could potentially provide sufficient safety and efficacy data for extended duration VTE prophylaxis in acute medically ill patients for 35 days of in-hospital and post-discharge use, the FDA has further advised us that whether one or two adequate and well-controlled clinical studies are required will be a review issue in connection with a new drug application, or NDA, submission. Even if we achieve favorable results in our APEX study, the FDA may nonetheless require that we conduct additional clinical studies, possibly using a different clinical study design.
Even if the FDA or other regulatory authorities approve betrixaban for VTE prophylaxis in acute medically ill patients, the approval may include additional restrictions on the label that could make betrixaban less attractive to physicians and patients than other products that may be approved for broader indications, which could reduce the potential market for betrixaban.
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We are seeking regulatory approval of andexanet alfa in the United States through an Accelerated Approval process, and since we have limited
experience with this process, the development or commercialization of andexanet alfa could be delayed or abandoned.
In November 2013, the FDA granted breakthrough therapy designation for andexanet alfa which allows for an Accelerated Approval process. The Accelerated Approval regulations allow drugs that are being developed to treat an unmet medical need to be approved substantially based on evidence of an effect on a surrogate biomarker endpoint that is considered reasonably likely to predict clinical benefit rather than a clinical endpoint such as survival or irreversible morbidity. We have asked the FDA for priority review of our biologics license application, or BLA, a process that provides a shortened timetable to approval. Our use of an Accelerated Approval process requires that a Phase 4 clinical study with clinical endpoints that will correlate to a surrogate endpoint(s) must be ongoing at the time our BLA is submitted and some early patient data will be required by the FDA to support the BLA. This study will continue into commercialization. Because of the accelerated timelines required for Accelerated Approval, and following receipt of the CRL, we expect to require more time and incur greater costs than originally anticipated and may not succeed in timely manufacture of drug supply or in obtaining regulatory approval of andexanet alfa. In addition, the FDA may subsequently determine that the studies conducted by us, including any additional studies conducted as a result of the CRL or other FDA responses, were insufficient to support approval for all or some of the marketed direct or indirect Factor Xa inhibitors or proposed indications, require us to conduct extensive post-approval studies or make modifications to our ongoing ANNEXA-4 study.
Even if our product candidates receive regulatory approval, they may fail to achieve the degree of market acceptance by physicians, patients, healthcare payors and others in the medical community necessary for commercial success.
If any of our product candidates receive regulatory approval, they may nonetheless fail to gain sufficient market acceptance by physicians, hospital administrators, patients, healthcare payors and others in the medical community. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including the following:
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the prevalence and severity of any side effects;
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efficacy and potential advantages compared to alternative treatments;
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the price we charge for our product candidates;
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differing interpretations of the results of our clinical trials;
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the willingness of physicians to change their current treatment practices;
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the willingness of hospitals and hospital systems to include our product candidates as treatment options;
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convenience and ease of administration compared to alternative treatments;
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the willingness of the target patient population to try new therapies and of physicians to prescribe these therapies;
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the strength of marketing and distribution support; and
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the availability of third-party coverage or reimbursement.
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For example, while there are no approved therapies for VTE prophylaxis in acute medically ill patients approved for use beyond the typical hospitalization period, there are therapies available for in-hospital use and physicians may not be willing to change their current in-hospital treatment practices in favor of betrixaban. If our product candidates are approved but do not achieve an adequate level of acceptance, we may not generate significant product revenue and we may not become profitable on a sustained basis.
There are risks associated with scaling up manufacturing to commercial scale. Our commercial manufacturing strategy for andexanet alfa is particularly complex and challenging and is currently subject to increased uncertainty due to the CRL. If our manufacturers are unable to manufacture our products on a commercial scale or scale to increased production, this will likely delay regulatory approval and commercialization or materially adversely affect our results of operations.
There are risks associated with scaling up manufacturing to commercial volumes including, among others, cost overruns, technical problems with process scale-up, process reproducibility, stability issues, lot consistency and timely availability of raw materials. Even if efficacy and safety data from our clinical trials would otherwise support regulatory approval for any product candidate, there is no assurance that our manufacturer will be able to manufacture the approved product to specifications acceptable to the FDA or other 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. If our manufacturers are unable to produce sufficient quantities of the approved product for commercialization, either on a timely basis or at all, our commercialization efforts would be impaired, which would have a material adverse effect on our business, financial condition, results of operations and growth prospects.
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We face uncertainties and risks associated with scaling up the manufacturing for andexanet alfa. Andexanet alfa is a recombinant biological molecule, or biologic, rather than a small molecule chemical compound like our other produ
ct candidates. The manufacture of biologics involves complex processes, typically including developing cell lines or cell systems to produce the biologic, growing large quantities of such cells and harvesting and purifying the biologic produced by them. Th
e cost to manufacture biologics is generally far higher than traditional small molecule chemical compounds, and the manufacturing process is more complex and can be difficult to reproduce. There is no guarantee we will be successful in establishing a large
r-scale commercial manufacturing process for andexanet alfa which achieves our objectives for manufacturing capacity and cost of goods. Due to the high cost to manufacture andexanet alfa and the inherent uncertainty related to manufacturing costs, there is
a relatively greater risk that andexanet alfa may not be commercially viable.
Our commercial manufacturing strategy for andexanet alfa is also subject to substantial uncertainty due to items raised by the FDA in the CRL. Changes to our manufacturing strategy, and addressing the manufacturing items in the CRL, will require additional time and capital and may not be successful. For example, we have suspended our efforts to expand post-approval supply based on an expanded generation 1 Line C manufacturing line at CMC Biologics and are focusing our efforts on expanding post approval through our generation 2 manufacturing process at Lonza. We still intend to seek commercial approval based on generation 1 supply from CMC Biologics using the Line A/B manufacturing process. Line A/B produces the andexanet alfa used in our clinical studies on a small scale and is capable of manufacturing only limited supply to support a commercial launch in relation to projected demand. We are currently discussing options with the FDA and our commercial manufacturing organizations for expanding commercial supply post-approval. Without material from the Line C manufacturing facility, even if approved, commercial supply of andexanet alfa at launch will likely be limited to our Line A/B supply until such time as we can the obtain approval for the material manufactured at Lonza.
In addition, in order to obtain FDA approval of material produced by Lonza, the vendor’s manufacturing facility will need to pass a pre-approval regulatory inspection and we will need to demonstrate that such material is comparable to the clinical material we previously used and material produced by CMC Biologics. Demonstrating comparability can require significant pre-clinical and clinical studies. The material may also be considered a new biological entity and a new clinical program, possibly commencing with Phase 1, and a full BLA submission may be required for approval, resulting in additional time and expense. If we are not able to establish a commercial-scale manufacturing process for andexanet alfa, our business, financial condition, results of operations and growth prospects would be materially adversely affected.
We currently have limited sales and distribution personnel and are in the initial stages of developing marketing capabilities. If we are unable to develop effective sales, marketing and distribution capabilities on our own or through collaborations or other marketing partners, we will not be successful in commercializing betrixaban, andexanet alfa or other future products.
We are in the early stages of developing our sales or marketing infrastructure and have never sold, marketed or distributed therapeutic products. To achieve commercial success for any approved product, we must either develop a sales and marketing organization or outsource these functions to third parties. We plan to establish a hospital-based sales force in the United States and possibly other major markets and work with partners in other parts of the world to commercialize both betrixaban and andexanet alfa globally, if they are approved. There are risks involved with both establishing our own sales and marketing capabilities and entering into arrangements with third parties to perform these services. For example, recruiting and training a sales force is expensive and time-consuming and could delay any product launch. If the commercial launch of a product candidate for which we recruit a sales force and establish marketing capabilities is delayed or does not occur for any reason, we would have prematurely or unnecessarily incurred these commercialization expenses. This may be costly, and our investment would be lost if we cannot retain or reposition our sales and marketing personnel.
We also may not be successful entering into 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. We likely will have little control over such third parties, and any of them may fail to devote the necessary resources and attention to sell and market our products effectively, which could damage our reputation. If we do not establish sales and marketing capabilities successfully, either on our own or in collaboration with third parties, we will not be successful in commercializing our product candidates.
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We face substantial competition, which may result in others discovering, developing or commercializing competing products more successf
ully than we do.
The development and commercialization of new therapeutic products is highly competitive. We face competition with respect to our current product candidates, and will face competition with respect to any products that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. For example, several large pharmaceutical and biotechnology companies currently market and sell direct or indirect Factor Xa inhibitors for use in various disease states, including injectable Factor Xa inhibitors for the prevention of VTE in acute medically ill patients. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization. Many of these competitors are attempting to develop therapeutics for our target indications.
In addition, many of our competitors are large pharmaceutical companies that will have a greater ability to reduce prices for their competing drugs in an effort to gain market share and undermine the value proposition that we might otherwise be able to offer to payors. We are developing our product candidate betrixaban for extended duration VTE prophylaxis in acute medically ill patients for 35 days of in-hospital and post-discharge use. The current standard of care for VTE prophylaxis in acute medically ill patients in the United States is a 6- to 14-day administration of enoxaparin, marketed as Lovenox® and also available in generic form, an indirect Factor Xa inhibitor. Enoxaparin is widely accepted by physicians, patients and third-party payors. As a result, we may face difficulties in marketing betrixaban as a substitute therapy in the hospital for the current standard of care, enoxaparin.
Furthermore, the FDA has already approved a number of therapies that, like betrixaban, are oral direct Factor Xa inhibitors and that have already achieved substantial market acceptance. Although these products have not been approved for VTE prophylaxis in acute medically ill patients, the owners of the products may decide to seek such approval or physicians may decide to prescribe these products for the treatment of VTE in acute medically ill patients absent such approval, known as prescribing “off-label.” Further, our competitors may have the financial and other resources to conduct additional clinical studies in an effort to obtain regulatory approval for use of their drugs for VTE prophylaxis in acute medically ill patients, even in cases where they have previously run clinical trials that have failed. For example, in March 2014, Bayer and Janssen announced the initiation of a new Phase 3 clinical trial to evaluate the safety and efficacy of rivaroxaban to reduce the risk of post-hospital discharge symptomatic VTE in patients hospitalized for acute medical illness.
While there are no therapies approved specifically as antidotes for Factor Xa inhibitors, we are aware of at least one drug candidate being studied in early stage clinical trials as a potential antidote to Factor Xa inhibitors. In addition, in December 2014, Bristol-Myers Squibb Company and Pfizer Inc. announced that a clinical trial of 15 healthy human subjects demonstrated that 4-factor prothrombin complex concentrate may affect the steady-state pharmacodynamics effects of Eliquis (apixaban). Andexanet alfa, if approved, may compete with other currently approved treatments designed to enhance coagulation, such as fresh frozen plasma, prothrombin complex concentrates, recombinant Factor VIIa or whole blood. Although there is no clinical evidence supporting the use of such treatments in patients taking Factor Xa inhibitors, physicians may choose to use them because of familiarity, cost or other reasons. In addition, we are aware that several companies have conducted preclinical research on compounds intended to be antidotes for Factor Xa inhibitors.
Also, in October 2015, Boehringer Ingelheim Corporation obtained FDA and EMA approvals of idarucizumab for the reversal of the anticoagulant effect of Pradaxa (dabigatran) for emergency/urgent procedures or in life-threatening or uncontrolled bleeding. Although idarucizumab is a specific reversal agent for Pradaxa, a direct thrombin inhibitor, rather than a Factor Xa inhibitor, to the extent the availability of a specific reversal agent leads to increased adoption of Pradaxa rather than Factor Xa inhibitors or low molecular weight heparins, the demand for andexanet alfa as a specific reversal agent for Factor Xa inhibitors and low molecular weight heparins could also be reduced.
There are also a number of products in clinical development for hematologic cancer, ophthalmological diseases, allergic rhinitis, allergic asthma and other inflammatory diseases that are potential indications for cerdulatinib or selective Syk inhibitors. Our competitors may develop products that are more effective, safer, more convenient or less costly than any that we are developing or that would render our product candidates obsolete or noncompetitive. Many competing products are in later stages of development than our products and are, therefore, likely to obtain FDA or other regulatory approval for their products before we obtain approval for ours.
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Many of our competitors, including a number of large pharmaceutical companies that compete directly with us, have significantly greater financial resources and expertise in res
earch and development, manufacturing, preclinical testing, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical, biotechnology and diagnostic industries may re
sult 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. T
hese third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical study sites and patient registration for clinical studies, as well as in acquiring technologies complementary to, or necessa
ry for, our programs.
RISKS RELATED TO OUR RELIANCE ON THIRD PARTIES
We rely on third parties to conduct our clinical studies, and those third parties may not perform satisfactorily, including failing to meet deadlines for the completion of such studies.
We do not independently conduct clinical studies of our product candidates. We rely on third parties, such as contract research organizations, or CROs, clinical data management organizations, medical institutions and clinical investigators, to perform this function. Our reliance on these third parties for clinical development activities reduces our control over these activities but does not relieve us of our responsibilities. We remain responsible for ensuring that each of our clinical studies is conducted in accordance with the general investigational plan and protocols for the study.
Moreover, the FDA requires us to comply with standards, commonly referred to as good clinical practices, for conducting, recording and reporting the results of clinical studies to assure that data and reported results are credible and accurate and that the rights, integrity and confidentiality of patients in clinical studies are protected. Furthermore, these third parties may also have relationships with other entities, some of which may be our competitors. If these third parties do not successfully carry out their contractual duties, meet expected deadlines or conduct our clinical studies in accordance with regulatory requirements or our stated protocols, we will not be able to obtain, or may be delayed in obtaining, regulatory approvals for our product candidates and will not be able to, or may be delayed in our efforts to, successfully commercialize our product candidates.
We also rely on other third parties to store and distribute supplies for our clinical studies. Any performance failure on the part of our existing or future distributors could delay clinical development or regulatory approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue
We rely on third-party contract manufacturing organizations to manufacture and supply our product candidates for us. If one of our suppliers or manufacturers fails to perform adequately or fulfill our needs, we may be required to incur significant costs and devote significant efforts to find new suppliers or manufacturers. We may also face significant delays in the development and commercialization of our product candidates.
We do not own facilities for clinical-scale or commercial manufacturing of our product candidates and we rely on third-party suppliers to manufacture each of our product candidates. For example, we have contracted with CMC Biologics to manufacture andexanet alfa bulk drug substance to support our potential U.S. commercial launch, and we have engaged Lonza to develop a new, higher-capacity and lower cost process for andexanet alfa bulk drug substance in order to support our broader, worldwide commercialization strategy. Following our receipt of the CRL, this manufacturing and commercialization strategy is under review and subject to substantial uncertainty. We have entered into a manufacturing agreement with Hovione Limited for the manufacture of betrixaban and will likely rely on this manufacturing organization to supply betrixaban for commercial launch. We also rely or expect to rely on other third party providers for raw materials, drug substance and drug product manufacturing, packaging, labeling and supply chain distribution. If we and our suppliers cannot agree to the terms and conditions for them to provide the drug supply necessary for our clinical and commercial needs, or if any single source supplier breaches an agreement with us, or terminates the agreement in response to an alleged breach by us or otherwise becomes unable to fulfill its supply obligations, we would not be able to manufacture and distribute the product candidate until a qualified alternative supplier is identified, which could also significantly delay the development of, and impair our ability to commercialize, our product candidates.
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The manufacture of pharmaceutical products in compliance with the FDA’s current good manufacturing practices, or cGMPs, requires significant expertise and capital investment, includi
ng the development of advanced manufacturing techniques and process controls. Manufacturers of pharmaceutical products often encounter difficulties in production, including difficulties with production costs and yields, quality assurance, including stabili
ty of the product candidate and quality control testing, shortages of qualified personnel, as well as compliance with strictly enforced cGMP requirements, other federal and state regulatory requirements and foreign regulations. If our manufacturers were to
encounter any of these difficulties or otherwise fail to comply with their obligations to us or under applicable regulations and agreements, our ability to provide the drug supply necessary for our clinical studies and commercial needs would be jeopardize
d. Any delay or interruption in the supply of clinical study materials could delay the completion of our clinical studies, increase the costs associated with maintaining our clinical study programs and, depending upon the period of delay, require us to com
mence new studies at significant additional expense or terminate the studies completely.
All manufacturers of our product candidates must comply with cGMP requirements enforced by the FDA through its facilities inspection program. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. Manufacturers of our product candidates may be unable to comply with these cGMP requirements and with other FDA, state and foreign regulatory requirements. The FDA or similar foreign regulatory agencies may also implement new standards at any time, or change their interpretation and enforcement of existing standards for manufacturing, packaging or testing of products. We have limited control over our manufacturers’ compliance with these regulations and standards. A failure to comply with these requirements may result in fines and civil penalties, suspension of production, suspension or delay in product approval, product seizure or recall or withdrawal of product approval. If the safety of any product supplied is compromised due to our manufacturers’ failure to adhere to applicable laws or for other reasons, we may not be able to obtain regulatory approval for or successfully commercialize our products and we may be held liable for any injuries sustained as a result. Any of these factors could cause a delay or interruption of clinical studies, regulatory submissions, approvals or commercialization of our product candidates, entail higher costs or adversely affect our reputation.
Although alternative sources of supply exist, the number of third-party suppliers with the necessary manufacturing and regulatory expertise and facilities to manufacture biologics is limited, and it could be expensive and take a significant amount of time to arrange for alternative suppliers, which could have a material adverse effect on our business. New suppliers of any product candidate would be required to qualify under applicable regulatory requirements and would need to have sufficient rights under applicable intellectual property laws to the method of manufacturing the product candidate. Obtaining the necessary FDA approvals or other qualifications under applicable regulatory requirements and ensuring non-infringement of third-party intellectual property rights could result in a significant interruption of supply and could require the new manufacturer to bear significant additional costs which may be passed on to us.
We may enter into collaborations that place the development of our product candidates outside our control, require us to relinquish important rights or may otherwise be on terms unfavorable to us, and if our collaborations are not successful, our product candidates may not reach their full market potential.
We may enter into additional collaboration agreements with third parties with respect to our product candidates for the commercialization of the candidates outside the U.S., or for other purposes. For example, we have out-licensed development and commercial rights to andexanet alfa in Japan. In addition, depending on our capital requirements, development and commercialization costs, need for additional therapeutic expertise and other factors, it is possible that we will enter into broader development and commercialization arrangements with respect to our product candidates. Our likely collaborators for any distribution, marketing, licensing or broader collaboration arrangements include large and mid-size pharmaceutical companies, regional and national pharmaceutical companies and biotechnology companies. We will have limited control over the amount and timing of resources that our collaborators dedicate to the development or commercialization of our product candidates. Our ability to generate revenue from these arrangements will depend in part on our collaborators’ abilities to successfully perform the functions assigned to them in these arrangements.
Collaborations involving our product candidates are subject to numerous risks, which may include the following:
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collaborators have significant discretion in determining the efforts and resources that they will apply to any such collaborations;
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collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on clinical study 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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collaborators may delay clinical studies, provide insufficient funding for a clinical study program, stop a clinical study, abandon a product candidate, repeat or conduct new clinical studies or require a new formul
ation of a product candidate for clinical testing;
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collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates;
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a collaborator with marketing and distribution rights to one or more products may not commit sufficient resources to their marketing and distribution;
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collaborators 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;
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disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our product candidates or that results in costly litigation or arbitration that diverts management attention and resources;
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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 candidates; and
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collaborators 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.
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Any termination or disruption of our collaboration with potential collaborators could result in delays in the development and commercialization of our product candidates, increases in our costs to develop and commercialize the product candidate, or the termination of development of a product candidate.
RISKS RELATED TO THE OPERATION OF OUR BUSINESS
Our future success depends on our ability to retain our chief executive officer and other key executives and to attract, retain and motivate qualified personnel.
We are highly dependent on William Lis, our Chief Executive Officer, and the other principal members of our executive and scientific teams. Under the terms of their employment, our executives may terminate their employment with us at any time. The loss of the services of any of these people could impede the achievement of our research, development and commercialization objectives. We maintain “key person” insurance for Mr. Lis but not for any other executives or employees. Any insurance proceeds we may receive under our “key person” insurance on Mr. Lis would not adequately compensate us for the loss of his services.
Recruiting and retaining qualified scientific, clinical, manufacturing and sales and marketing personnel will also be critical to our success. We may not be able to attract and retain these personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating our research and development and commercialization strategy. Our consultants and advisors may 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 expect to expand our development, regulatory and sales and marketing capabilities, and as a result, we may encounter difficulties in managing our growth, which could disrupt our operations.
Over the next several years, we expect to experience significant growth in the number of our employees and the scope of our operations, particularly in the areas of drug development, regulatory affairs, quality, commercial compliance, medical affairs, and sales and marketing. To manage our anticipated future growth, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Due to our limited financial resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage the expansion of our operations or recruit and train additional qualified personnel. The physical expansion of our operations may lead to significant costs and may divert our management and business development resources. Any inability to manage growth could delay the execution of our business plans or disrupt our operations.
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We incur significant costs as a result of operating as a public company, and our management is required to devote substantial time to existing and new public company compliance and reporting regulation
s.
As a public company, we incur significant legal, accounting and other expenses. For example, the Sarbanes-Oxley Act, and rules of the SEC and those of The NASDAQ Stock Market, or the NASDAQ, have imposed various requirements on public companies including requiring establishment and maintenance of effective disclosure and financial controls. Our management and other personnel have and will need to continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations are continuously being revised, have increased and will continue to increase our legal and financial compliance costs and will make some activities more time-consuming and costly.
The Sarbanes-Oxley Act requires, among other things, that we maintain effective internal control over financial reporting and disclosure controls and procedures. In particular, we must perform system and process evaluation and testing of our internal control over financial reporting to allow management to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act. In addition, we are required to have our independent registered public accounting firm attest to the effectiveness of our internal control over financial reporting. Our compliance with Section 404 of the Sarbanes-Oxley Act, as applicable, requires us to incur substantial accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to continue to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge. If we or our independent registered public accounting firm identify deficiencies in our internal control over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline and we could be subject to sanctions or investigations by the NASDAQ, the SEC or other regulatory authorities, which would require additional financial and management resources.
Our ability to successfully implement our business plan and comply with Section 404, as applicable, requires us to be able to prepare timely and accurate financial statements. We expect that we will need to continue to improve existing, and implement new operational and financial systems, procedures and controls to manage our business effectively. Any delay in the implementation of, or disruption in the transition to, new or enhanced systems, procedures or controls, may cause our operations to suffer and we may be unable to conclude that our internal control over financial reporting is effective and to obtain an unqualified report on internal controls from our auditors as required under Section 404 of the Sarbanes-Oxley Act. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results, and current and potential stockholders may lose confidence in our financial reporting. This, in turn, could have an adverse impact on trading prices for our common stock, and could adversely affect our ability to access the capital markets.
Product liability lawsuits against us could cause us to incur substantial liabilities and to limit commercialization of any products that we may develop.
We face an inherent risk of product liability exposure related to the testing of our product candidates in human clinical studies and will face an even greater risk if we commercially sell any products that we may develop. For example, the manufacturers of currently marketed Factor Xa inhibitors and other manufacturers of anticoagulants have faced substantial litigation due to certain alleged bleeding risks. If we cannot successfully defend ourselves against claims that our product candidates or products caused injuries, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability claims may result in:
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decreased demand for any product candidates or products that we may develop;
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injury to our reputation and significant negative media attention;
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withdrawal of patients from clinical studies or cancellation of studies;
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significant costs to defend the related litigation;
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substantial monetary awards to patients;
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the inability to commercialize any products that we may develop.
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We currently hold $10.0 million in product liability insurance coverage, which may not be adequate to cover all liabilities that we may incur. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
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We may expend our limited resources to pursue a particular product candidate or indication and fail to capitalize on product candidates or indications that may be more profita
ble or for which there is a greater likelihood of success.
Because we have limited financial and managerial resources, we focus on research programs and product candidates for specific indications. As a result, we may forego or delay pursuit of opportunities with other product candidates or other indications that later prove to have greater commercial potential. Our resource allocation decisions may cause us to fail to capitalize on viable commercial products or profitable market opportunities. Our spending on current and future research and development programs and product candidates for specific indications may not yield any commercially viable products.
If we do not accurately evaluate the commercial potential or target market for a particular product candidate, we may relinquish valuable rights to that product candidate through collaboration, licensing, or other royalty arrangements in cases in which it would have been advantageous for us to retain sole development and commercialization rights.
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 the success of our business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We generally contract with third parties for the disposal of these materials and wastes. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological or hazardous materials. In addition, we may be required to incur substantial costs to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
Business disruptions could seriously harm our future revenue and financial condition and increase our costs and expenses.
Our operations could be subject to earthquakes, power shortages, telecommunications failures, floods, hurricanes, typhoons, fires, extreme weather conditions, medical epidemics and other natural or manmade disasters or business interruptions. The occurrence of any of these business disruptions could seriously harm our operations and financial condition and increase our costs and expenses. Our corporate headquarters is located in California near major earthquake faults. Our operations and financial condition could suffer in the event of a major earthquake, fire or other natural or manmade disaster.
If we obtain approval to commercialize any approved products outside of the United States, a variety of risks associated with international operations could materially adversely affect our business. If any product candidates that we may develop are approved for commercialization outside the United States, we will be subject to additional risks related to entering into international business relationships, including:
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different regulatory requirements for drug approvals in foreign countries;
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reduced protection for intellectual property rights;
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unexpected changes in tariffs, trade barriers and regulatory requirements;
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economic weakness, including inflation or political instability in particular foreign economies and markets;
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compliance with tax, employment, immigration and labor laws for employees living or traveling abroad;
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foreign taxes, including withholding of payroll taxes;
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foreign currency fluctuations, which could result in increased operating expenses and reduced revenue, and other obligations incident to doing business in another country;
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workforce uncertainty in countries where labor unrest is more common than in the United States;
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production shortages resulting from any events affecting raw material supply or manufac
turing capabilities abroad; and
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business interruptions resulting from geopolitical actions, including war and terrorism, or natural disasters including earthquakes, typhoons, floods and fires.
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In connection with our betrixaban and andexanet alfa development, we are currently utilizing certain suppliers outside of the United States, which subjects us to certain of the above risks.
Our internal computer systems, or those of our CROs or other contractors or consultants, may fail or suffer security breaches, which could result in a material disruption of our drug development programs.
Despite the implementation of security measures, our internal computer systems and those of our CROs and other contractors and consultants are vulnerable to damage from computer viruses, unauthorized access, natural disasters, terrorism, war and telecommunication and electrical failures. While we have not experienced any such system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations, it could result in a material disruption of our drug development programs. For example, the loss of clinical study data from completed or ongoing clinical studies for any of our product candidates 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 was to result in a loss of or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we could incur liability and the further development of our product candidates could be delayed.
RISKS RELATED TO INTELLECTUAL PROPERTY
If we fail to comply with our obligations in our intellectual property licenses with third parties, we could lose license rights that are important to our business.
We are a party to intellectual property license agreements with third parties, including with respect to betrixaban, cerdulatinib, one of our selective Syk inhibitors, and our PCSK9 program, and we expect to enter into additional license agreements in the future. Our existing license agreements impose, and we expect that our future license agreements will impose, various diligence, milestone payment, royalty, insurance and other obligations on us. If we fail to comply with these obligations, our licensors may have the right to terminate these agreements, in which event we may not be able to develop and market any product that is covered by these agreements. Termination of these licenses or reduction or elimination of our licensed rights may result in our having to negotiate new or reinstated licenses with less favorable terms or our not having sufficient intellectual property rights to operate our business. The occurrence of such events could materially harm our business.
Our ability to successfully commercialize our technology and products may be materially adversely affected if we are unable to obtain and maintain effective intellectual property rights for our technologies and product candidates.
Our success depends in large part on our and our licensors’ ability to obtain and maintain patent and other intellectual property protection in the United States and in other countries with respect to our proprietary technology and products. In some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology or products that we license from third parties. Therefore, we cannot be certain that these patents and applications will be prosecuted and enforced in a manner consistent with the best interests of our business. In addition, if third parties who license patents to us fail to maintain such patents, or lose rights to those patents, the rights we have licensed may be reduced or eliminated.
We have sought to protect our proprietary position by filing patent applications in the United States and abroad related to our novel technologies and products that are important to our business. This process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. It is also possible that we will fail to identify patentable aspects of our research and development output before it is too late to obtain patent protection. Our existing patents and any future patents we obtain may not be sufficiently broad to prevent others from using our technologies or from developing competing products and technologies.
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The patent position of biotechnology and pharmaceutical companies generally is highly uncertain and involves complex legal and factual questions for which 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 and our licensors’ patent rights are highly uncertain. Our and our licensors’ pending and future patent applications may not result in patents be
ing issued which protect our technology or products 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 countr
ies may diminish the value of our patents or narrow the scope of our patent protection. 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 o
ften 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 or our licensors wer
e the first to make the inventions claimed in our owned and licensed patents or pending patent applications, or that we or our licensors were the first to file for patent protection of such inventions. Assuming the other requirements for patentability are
met, prior to March 16, 2013, in the United States, the first to make the claimed invention is entitled to the patent, while outside the United States, the first to file a patent application is entitled to the patent. On March 16, 2013, under the recently
enacted America Invents Act, the United States moved to a first to file system.
The effects of these changes are currently unclear as the United States Patent and Trademark Office, or USPTO, has only recently implemented various regulations, the courts have only just begun to issue decisions addressing 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. We may become involved in opposition or other proceedings challenging our patent rights or the patent rights of others, and the outcome of any proceedings are highly uncertain. For example, in November 2013, Zentiva k.s. and Günter SÖLCH separately filed papers with the European Patent Office opposing European Patent 2101760, assigned to Millennium Pharmaceuticals, Inc., to which we have an exclusive license. The European Patent Office decided in favor of revoking the European patent. Portola will appeal this revocation. This patent is related to a formulation of betrixaban. Should the appeal or other proceedings be unsuccessful, this could reduce the scope of, or invalidate, our patent rights, allow third parties to commercialize our technology or products 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.
Even if our owned and 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 to its scope, validity or enforceability, and our owned and licensed patents may be challenged in the courts or patent offices in the United States and abroad. Such challenges may result in patent claims 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 technology and products. Given the amount of time required for the development, testing and regulatory review of new product candidates, patents protecting such candidates might expire before or shortly after such candidates are commercialized. As a result, our owned and licensed patent portfolio may not provide us with sufficient rights to exclude others from commercializing products similar or identical to ours or otherwise provide us with a competitive advantage.
We may become involved in lawsuits to protect or enforce our patents, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation.
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Third parties may initiate legal proceedings alleging that we are infringing their intellectual property rights, the outcome of which would be uncertain and could have a material adverse effect on the succ
ess of our business.
Our commercial success depends upon our ability and the ability of our collaborators to develop, manufacture, market and sell our product candidates and use our proprietary technologies without infringing, misappropriating or otherwise violating the proprietary rights or intellectual property of third parties. We may become party to, or be threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference proceedings before the USPTO. An interference proceeding is a proceeding before the USPTO to determine the priority among multiple patents or patent applications. Third parties may assert infringement claims against us based on existing patents or patents that may be granted in the future. If we are found to infringe a third-party’s intellectual property rights, we could be required to obtain a license from such third-party to continue developing and marketing our products and technology. However, we may not be able to obtain any required license on commercially reasonable terms or at all.
Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us. We could be forced, including by court order, to cease commercializing the infringing technology or product. In addition, we could be found liable for monetary damages. A finding of infringement could prevent us from commercializing our product candidates or force us to cease some of our business operations, which could materially harm our business. Claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business.
We may be unable to protect the confidentiality of our trade secrets, thus harming our business and competitive position.
In addition to our patented technology and products, we rely upon trade secrets, including unpatented know-how, technology and other proprietary information to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants. We also have agreements with our employees and consultants that obligate them to assign their inventions to us. However, it is possible that technology relevant to our business will be independently developed by a person that is not a party to such an agreement. Furthermore, if the employees, consultants or collaborators that are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets through such breaches or violations. Further, our trade secrets could be disclosed, misappropriated or otherwise become known or be independently discovered by our competitors. In addition, intellectual property laws in foreign countries may not protect our intellectual property to the same extent as the laws of the United States. If our trade secrets are disclosed or misappropriated, it would harm our ability to protect our rights and have a material adverse effect on our business.
We may be subject to claims that our employees have wrongfully used or disclosed intellectual property of their former employers. Intellectual property litigation or proceedings could cause us to spend substantial resources and distract our personnel from their normal responsibilities.
Many of our employees were previously employed at universities or other biotechnology or pharmaceutical companies, including our competitors or potential competitors. Although we try to ensure that our employees do not use the proprietary information or know-how of others in their work for us, we may be subject to claims that we or these employees have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s former employer. Litigation may be necessary to defend against these claims. 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. Such litigation or proceedings 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 have a material adverse effect on our ability to compete in the marketplace.
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RISKS RELATED TO GOVERNMENT REGULATION
The regulatory approval process is expensive, time consuming and uncertain and may prevent us from obtaining approvals for the commercialization of some or all of our product candidates.
The research, testing, manufacturing, labeling, approval, selling, import, export, marketing and distribution of drug products are subject to extensive regulation by the FDA and other regulatory authorities in the United States and other countries, which regulations differ from country to country. We will not be permitted to market our product candidates in the United States until we receive approval of an NDA or a BLA, from the FDA. Obtaining approval of an NDA or BLA can be a lengthy, expensive and uncertain process that may not be successful. In addition, failure to comply with FDA and other applicable U.S. and foreign regulatory requirements may subject us to administrative or judicially imposed sanctions, including the following:
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civil or criminal penalties and fines;
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suspension or withdrawal of regulatory approval;
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suspension of any ongoing clinical studies;
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voluntary or mandatory product recalls and publicity requirements;
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refusal to accept or approve applications for marketing approval of new drugs or biologics or supplements to approved applications submitted by us;
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restrictions on operations, including costly new manufacturing requirements; or
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seizure or detention of our products or import bans.
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Prior to receiving approval to commercialize any of our product candidates in the United States or abroad, we must demonstrate with substantial evidence from well-controlled clinical studies, and to the satisfaction of the FDA and other regulatory authorities abroad, that such product candidates are safe and effective for their intended uses. Results from preclinical studies and clinical studies can be interpreted in different ways. Even if we and our collaboration partners believe the preclinical or clinical data for our product candidates are promising, such data may not be sufficient to support approval by the FDA and other regulatory authorities. Administering any of our product candidates to humans may produce undesirable side effects, which could interrupt, delay or cause suspension of clinical studies of our product candidates and result in the FDA or other regulatory authorities denying approval of our product candidates for any or all targeted indications.
Regulatory approval of an NDA or BLA is not guaranteed, and the approval process is expensive and may take several years. The FDA also has substantial discretion in the approval process. Despite the time and expense exerted, failure can occur at any stage, and we could encounter problems that cause us to abandon or repeat clinical studies, or perform additional preclinical studies and clinical studies. The number of preclinical studies and clinical studies that will be required for FDA approval varies depending on the product candidate, the disease or condition that the product candidate is designed to address and the regulations applicable to any particular product candidate. The FDA can delay, limit or deny approval of a product candidate for many reasons, including, but not limited to, the following:
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a product candidate may not be deemed safe or effective;
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FDA officials may not find the data from preclinical studies and clinical studies sufficient;
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the FDA may find our manufacturing data insufficient to support approval
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the FDA might not approve our or our third-party manufacturer’s processes or facilities; or
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the FDA may change its approval policies or adopt new regulations.
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If any of our product candidates fails to demonstrate safety and efficacy in clinical studies or does not gain regulatory approval, our business and results of operations will be materially and adversely harmed.
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Even if we receive regulatory approval for a product candidate, we will be subject to ongoing regulatory obligations and continued regulatory review, which may result in
significant additional expense and subject us to penalties if we fail to comply with applicable regulatory requirements.
Once regulatory approval has been granted, the approved product and its manufacturer are subject to continual review by the FDA and non-U.S. regulatory authorities. Any regulatory approval that we or our collaboration partners receive for our product candidates may be subject to limitations on the indicated uses for which the product may be marketed or contain requirements for potentially costly post-marketing follow-up studies to monitor the safety and efficacy of the product. In addition, if the FDA or non-U.S. regulatory authorities approve any of our product candidates, we will be subject to extensive and ongoing regulatory requirements by the FDA and other regulatory authorities with regard to the labeling, packaging, adverse event reporting, storage, advertising, promotion, price reporting, aggregate spend or “sunshine” reporting and recordkeeping for our products. In addition, manufacturers of our drug products are required to comply with cGMP regulations, which include requirements related to quality control and quality assurance as well as the corresponding maintenance of records and documentation. Further, regulatory authorities must approve these manufacturing facilities before they can be used to manufacture our drug products, and these facilities are subject to continual review and periodic inspections by the FDA and other regulatory authorities for compliance with cGMP regulations. Pharmaceutical distribution channels are also subject to increasing levels of regulatory oversight which increases our compliance obligations. If we or a third party discover previously unknown problems with a product, such as adverse events of unanticipated severity or frequency, or problems with the facility where the product is manufactured or elsewhere within the supply chain, a regulatory authority may impose restrictions on that product, the manufacturer or us, including requiring withdrawal of the product from the market or suspension of manufacturing.
The regulatory requirements and policies may change and additional government regulations may be enacted for which we may also be required to comply. 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 in other countries. If we are not able to maintain regulatory compliance, we may not be permitted to market our future products and our business may suffer.
Unfavorable pricing regulations, third-party reimbursement practices or healthcare reform initiatives could harm our business.
There is increasing pressure on biotechnology companies to reduce healthcare costs. In the U.S., these pressures come from a variety of sources, such as managed care groups, institutional, and government purchasers. Increased purchasing power of entities that negotiate on behalf of federal healthcare programs and private sector beneficiaries could increase pricing pressures in the future. Such pressures may also increase the risk of litigation or investigation by the government regarding pricing calculations. The biotechnology industry will likely face greater regulation and political and legal action in the future.
The regulations that govern marketing approvals, pricing and reimbursement for new therapeutic products vary widely from country to country. Some countries, including European Union, or EU, member countries, require approval of the sale price of a product before it can be marketed. In many countries, including EU member countries, the pricing review period begins after marketing or product licensing approval is granted. In some foreign markets, prescription pharmaceutical pricing remains subject to continuing governmental control even after initial approval is granted. In some foreign markets, including the EU member countries, current standard of care and/or competitive products may be used as a benchmark or reference to determine pricing and reimbursement level for novel products such as andexanet alfa and betrixaban. To the extent that comparators are available at lower prices than our anticipated pricing for andexanet alfa or betrixaban, the pricing and reimbursement level of our products in the EU could be negatively impacted. As a result, we might obtain regulatory approval for a product in a particular country, but then be subject to price regulations that delay our commercial launch of the product and negatively impact the revenue we are able to generate from the sale of the product in that country, or even reduce the commercial viability of the product to an extent that prevents the launch altogether.
Adverse pricing limitations may hinder our ability to recoup our investment in one or more product candidates, even if our product candidates obtain regulatory approval. Adverse pricing limitations prior to approval will also adversely affect us by reducing our commercial potential. Our ability to commercialize any products successfully also will depend in part on the extent to which reimbursement for these products and related treatments becomes available from government health administration authorities, private health insurers and other organizations. Government authorities and third-party payors, such as private health insurers and health maintenance organizations, decide which medications they will pay for and establish reimbursement levels.
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A primary trend in the U.S. healthcare industry and elsewhere is cost containment. Government authorities and t
hese third-party payors have attempted to control costs by limiting coverage and the amount of reimbursement for particular medications. Increasingly, third-party payors are requiring that companies provide them with predetermined discounts from list price
s and are challenging the prices charged for medical products. We cannot be sure that coverage and reimbursement will be available for any product that we commercialize and, if reimbursement is available, what the level of reimbursement will be. Reimbursem
ent may impact the demand for, or the price of, any product for which we obtain marketing approval. Obtaining reimbursement for our products may be particularly difficult because of the higher prices often associated with products administered under the su
pervision of a physician. If reimbursement is not available or is available only to limited levels, we may not be able to successfully commercialize any product candidate that we successfully develop.
There may be significant delays in obtaining reimbursement for approved products, and coverage may be more limited than the purposes for which the product is approved by the FDA or regulatory authorities in other countries. Moreover, eligibility for reimbursement does not imply that any product will be paid for in all cases or at a rate that covers our costs, including research, development, manufacture, sale and distribution. Interim payments for new products, if applicable, may also not be sufficient to cover our costs and may not be made permanent. Payment rates may vary according to the use of the product and the clinical setting in which it is used, may be based on payments allowed for lower cost products that are already reimbursed and may be incorporated into existing payments for other services. Net prices for products may be reduced by mandatory discounts or rebates required by government healthcare programs or private payors and by any future relaxation of laws that presently restrict imports of products from countries where they may be sold at lower prices than in the United States. Third-party payors often rely upon Medicare coverage policy and payment limitations in setting their own reimbursement policies. Our inability to promptly obtain coverage and profitable payment rates from both government funded and private payors for new products that we develop could have a material adverse effect on our operating results, our ability to raise capital needed to commercialize products and our overall financial condition.
Failure to obtain regulatory approvals in foreign jurisdictions will prevent us from marketing our products internationally.
We may pursue commercialization of our future products in international markets, either through distribution and marketing partners or our own commercial organization. In order to market our future products in the European Economic Area, or EEA, and many other foreign jurisdictions, we must obtain separate regulatory approvals. Specifically, in the EEA, medicinal products can only be commercialized after obtaining a Marketing Authorization, or MA. Before granting the MA, the EMA or the competent authorities of the member states of the EEA make an assessment of the risk-benefit balance of the product on the basis of scientific criteria concerning its quality, safety and efficacy.
We have had limited interactions with foreign regulatory authorities, and the approval procedures vary among countries and can involve additional clinical testing, and the time required to obtain approval may differ from that required to obtain FDA approval. Clinical studies conducted in one country may not be accepted by regulatory authorities in other countries. Approval by the FDA does not ensure approval by regulatory authorities in other countries, and approval by one or more foreign regulatory authorities does not ensure approval by regulatory authorities in other foreign countries or by the FDA. However, a failure or delay in obtaining regulatory approval in one country may have a negative effect on the regulatory process in others. The foreign regulatory approval process may include all of the risks associated with obtaining FDA approval. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to submit for regulatory approvals and even if we submit we may not receive necessary approvals to commercialize our products in any market.
Healthcare reform measures could hinder or prevent our product candidates’ commercial success.
In the United States, there have been and we expect there will continue to be a number of legislative and regulatory changes to the healthcare system in ways that could affect our future revenue and profitability and the future revenue and profitability of our potential customers. Federal and state lawmakers regularly propose and, at times, enact legislation that would result in significant changes to the healthcare system, some of which are intended to contain or reduce the costs of medical products and services. For example, one of the most significant healthcare reform measures in decades, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, collectively, the Affordable Care Act, was enacted in 2010. The Affordable Care Act contains a number of provisions, including those governing enrollment in federal healthcare programs, reimbursement changes and fraud and abuse measures, all of which will impact existing government healthcare programs and will result in the development of new programs. The Affordable Care Act, among other things:
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imposes a non-deductible annual fee on pharmaceutical manufacturers or importers who sell “branded prescription drugs,” effective 2011;
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increases the minimum level of Medicaid rebates payable by manufacturers of brand-name drugs from 15.1% to 23.1%, effective 2011;
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could result in the imposition of injunctions;
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expanded Medicaid drug rebates to cover drugs paid by Medicaid managed care organizations;
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changes the Medicaid rebate rates for line extensions or new formulations of oral solid dosage form;
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expands the types of entities eligible for the “Section 340B discounts” for outpatient drugs;
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requires manufacturers to participate in a coverage gap discount program, under which they must agree to offer 50% point-of-sale discounts off negotiated prices of applicable branded drugs to eligible beneficiaries during their coverage gap period, as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D; and
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creates a process for approval of biologic therapies that are similar or identical to approved biologics.
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While the U.S. Supreme Court upheld the constitutionality of most elements of the Affordable Care Act in June 2012, other legal challenges are still pending final adjudication in several jurisdictions. In addition, Congress has in the past proposed and likely will continue to propose a number of legislative initiatives, including possible repeal of the Affordable Care Act.In January 2017, Congress voted to adopt a budget resolution for fiscal year 2017, or the Budget Resolution, that authorizes the implementation of legislation that would repeal portions of Affordable Care Act. The Budget Resolution is not a law; however, it is widely viewed as the first step toward the passage of legislation that would repeal certain aspects of Affordable Care Act. Further, on January 20, 2017, President Trump signed an Executive Order directing federal agencies with authorities and responsibilities under Affordable Care Act to waive, defer, grant exemptions from, or delay the implementation of any provision of Affordable Care Act that would impose a fiscal or regulatory burden on states, individuals, healthcare providers, health insurers, or manufacturers of pharmaceuticals or medical devices. Congress also could consider subsequent legislation to replace elements of Affordable Care Act that are repealed. At this time, it remains unclear whether there will be any changes made to the Affordable Care Act, whether to certain provisions or its entirety. We cannot assure that the Affordable Care Act, as currently enacted or as amended in the future, will not adversely affect our business and financial results and we cannot predict how future federal or state legislative or administrative changes relating to healthcare reform will affect our business.
In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. For example, the Budget Control Act of 2011, or Budget Control Act, among other things, created the Joint Select Committee on Deficit Reduction to recommend proposals in spending reductions to Congress. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, which triggered the legislation’s automatic reduction to several government programs, including aggregate reductions to Medicare payments to providers of up to 2% per fiscal year, starting in 2013. In January 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which delayed for another two months the budget cuts mandated by the sequestration provisions of the Budget Control Act. The ATRA, among other things, also reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. In March 2013, the President signed an executive order implementing sequestration, and in April 2013, the 2% Medicare reductions went into effect. In December 2013, Congress amended the Budget Control Act to provide greater discretionary spending in 2014 and 2015 than originally budgeted and provide relief from the FDA user fee for two years. This amendment also extended the prohibition against reducing payments to Medicare providers by more than 2% until 2023. In December 2014, Congress passed the Consolidated and Further Continuing Appropriations Act, 2015 and a tax extenders bill, both of which may negatively impact coverage and reimbursement of healthcare items and services.
There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of healthcare. We cannot predict the initiatives that may be adopted in the future or their full impact. The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may adversely affect:
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our ability to set a price we believe is fair for our products;
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our ability to generate revenue and achieve or maintain profitability; and
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the availability of capital.
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Further, changes in regulatory requirements and guidance may occur and we may need to amend clinical study protocols to reflect these cha
nges. Amendments may require us to resubmit our clinical study protocols to Institutional Review Boards for reexamination, which may impact the costs, timing or successful completion of a clinical study. In light of widely publicized events concerning the
safety risk of certain drug products, regulatory authorities, members of Congress, the Governmental Accounting Office, medical professionals and the general public have raised concerns about potential drug safety issues. These events have resulted in the r
ecall and withdrawal of drug products, revisions to drug labeling that further limit use of the drug products and establishment of risk management programs that may, for instance, restrict distribution of drug products or require safety surveillance and/or
patient education. The increased attention to drug safety issues may result in a more cautious approach by the FDA to clinical studies and the drug approval process. Data from clinical studies may receive greater scrutiny with respect to safety, which may
make the FDA or other regulatory authorities more likely to terminate or suspend clinical studies before completion, or require longer or additional clinical studies that may result in substantial additional expense and a delay or failure in obtaining app
roval or approval for a more limited indication than originally sought.
Given the serious public health risks of high profile adverse safety events with certain drug products, the FDA may require, as a condition of approval, costly risk evaluation and mitigation strategies, which may include safety surveillance, restricted distribution and use, patient education, enhanced labeling, special packaging or labeling, expedited reporting of certain adverse events, preapproval of promotional materials and restrictions on direct-to-consumer advertising.
If we fail to comply with healthcare regulations, we could face substantial penalties and our business, operations and financial condition could be adversely affected.
Pharmaceutical companies are heavily regulated by federal, state and local regulations in the countries in which business activities occur. Even though we do not and will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payors, certain federal and state healthcare laws and regulations pertaining to fraud and abuse and patients’ rights are and will be applicable to our business. We could be subject to laws and regulations governing healthcare fraud and abuse, advertising and other promotional activities, data privacy and patient rights by both the federal government and the states in which we conduct our business. The regulations that may affect our ability to operate include, without limitation:
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the federal Anti-Kickback Statute, which prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the Medicare and Medicaid programs;
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the federal Physician Payment Sunshine Act or Open Payments Program provisions and the implementing regulations which will require extensive tracking of physician and teaching hospital payments, maintenance of a payments database, and public reporting of the payment data;
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the federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government;
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federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;
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the Foreign Corrupt Practices Act and similar statutes and regulations in foreign jurisdictions, which makes it unlawful for certain classes of persons and entities to make payments to foreign government officials to assist in obtaining or retaining business;
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the federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, which governs the conduct of certain electronic healthcare transactions and protects the security and privacy of protected health information;
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the Drug Quality and Security Act which requires manufacturers and other distribution parties to create systems to trace certain prescription drugs as they are distributed in the United States; and
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state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.
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The Affordable Care Act, among other things, amends the intent requirement of the Federal Anti-Kickback Statute and criminal healthcare fraud statutes. A person or entity no longer needs to have actual knowledge of this statute or specific intent to violate it. In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the Federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the False Claims Act.
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If our op
erations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us, we may be subject to substantial penalties, including civil and criminal penalties, damages, fines and the curtailment or restr
ucturing of our operations. Any penalties, damages, fines, curtailment or restructuring of our operations could adversely affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we su
ccessfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. Moreover, achieving and sustaining compliance with applicable federal and state privacy, security and
fraud laws may prove costly.
RISKS RELATED TO OWNERSHIP OF OUR COMMON STOCK
Our stock price may be volatile, and investors in our common stock could incur substantial losses.
Our stock price has fluctuated in the past and may be volatile in the future. The stock market in general, and the market for biotechnology companies in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. As a result of this volatility, investors may experience losses on their investment in our stock. The market price for our common stock may be influenced by many factors, including the following:
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announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments;
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results of clinical trials or regulatory actions with respect to our product candidates;
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market conditions in the pharmaceutical and biotechnology sectors;
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actual or anticipated changes in earnings estimates or changes in stock market analyst recommendations regarding our common stock, other comparable companies or our industry generally;
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trading volume of our common stock;
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sales of our common stock by us or our stockholders;
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general economic, industry and market conditions; and
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the other risks described in this “Risk factors” section.
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These broad market and industry factors may seriously harm the market price of our common stock, regardless of our operating performance. In the past, following periods of volatility in the market, securities class-action litigation has often been instituted against companies. Such litigation, if instituted against us, could result in substantial costs and diversion of management’s attention and resources, which could materially and adversely affect our business, financial condition, results of operations and growth prospects.
Our executive officers, directors and principal stockholders have the ability to significantly influence all matters submitted to stockholders for approval.
Based, in part, on a review of SEC filings, we believe that our executive officers, directors and stockholders who own more than 5% of our outstanding common stock beneficially own a significant percentage of our outstanding shares of common stock, based on shares of common stock outstanding as of December 31, 2016. As a result, if these stockholders were to choose to act together, they would be able to significantly influence all matters submitted to our stockholders for approval, as well as our management and affairs. For example, these stockholders, if they choose to act together, will significantly influence 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.
If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, our stock price and trading volume could decline.
The trading market for our common stock depends, in part, on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts may cease to publish research on our company at any time in their discretion. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our stock could decrease, which might cause our stock price and trading volume to decline. In addition, if one or more of the analysts who cover us downgrade our stock or publish inaccurate or unfavorable research about our business, our stock price would likely decline. If our operating results fail to meet the forecasts of analysts, our stock price will likely decline.
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Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders 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, 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. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions include the following:
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our board of directors is divided into three classes with staggered three-year terms which may delay or prevent a change of our management or a change in control;
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our board of directors has the right to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;
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our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors, the chairman of the board, the chief executive officer or the president;
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our certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;
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stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of our company; and
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our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.
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Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
Our agreements with our executive officers may require us to pay severance benefits to any of those persons who are terminated in connection with a change in control of us, which could harm our financial condition or results or discourage third parties from seeking business combinations.
Our executive officers are parties to agreements that contain change in control and severance provisions providing for aggregate cash payments of up to approximately $3.8 million for severance and other benefits and acceleration of vesting of equity awards with a value of approximately $9.0 million as of December 31, 2016, based on the closing price of our common stock of $22.4 on such date in the event of a termination of employment in connection with a change in control of us. The accelerated vesting of equity awards could result in dilution to our existing stockholders and harm the market price of our common stock. The payment of these severance benefits could harm our financial condition and results. In addition, these potential severance payments may discourage or prevent third parties from seeking a business combination with us.
Because we do not anticipate paying any cash dividends on our common stock in the foreseeable future, capital appreciation, if any, will be our stockholders’ sole source of gain.
We have never declared or paid cash dividends on our common 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 existing or any future debt agreements may preclude us from paying dividends. As a result, capital appreciation, if any, of our common stock will be our stockholders’ sole source of gain for the foreseeable future.
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