UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
For the quarterly period ended
OR
For the transition period from to
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
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Securities registered pursuant to Section 12(b) of the Act:
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Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☒
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
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Smaller reporting company |
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Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes
As of August 10, 2022, there were
CONFIDENTIAL
Special Note Regarding Forward-Looking Statements
This Quarterly Report on Form 10-Q contains “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995, which statements involve substantial risks and uncertainties. Any statements in this Quarterly Report on Form 10-Q about the Company’s future expectations, plans and prospects, including statements about its strategy, future operations, development of its product candidates, the review of strategic alternatives and the outcome of such review and other statements containing words such as “believes,” “anticipates,” “plans,” “expects,” “estimates,” “intends,” “predicts,” “projects,” “targets,” “could,” “may,” and similar expressions, constitute forward-looking statements, although not all forward-looking statements include such identifying words. Forward-looking statements include, but are not limited to statements regarding:
Actual results may differ materially from those indicated by such forward-looking statements as a result of various important factors, including the factors listed under “Risk Factor Summary” below. These risks and uncertainties, as well as other risks and uncertainties that could cause the Company’s actual results to differ significantly from the forward-looking statements contained herein, are described in greater detail in Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q.
Any forward-looking statements contained in this Quarterly Report on Form 10-Q speak only as of the date hereof and not as of any future date, and the Company expressly disclaims any intent to update any forward-looking statements, whether as a result of new information, future events or otherwise.
The market data and certain other statistical information used in this Quarterly Report are based on independent industry publications, governmental publications, reports by market research firms or other independent sources. Some data are also based on our good faith estimates. Information that is based on estimates, forecasts, projections, market research or similar methodologies is inherently subject to uncertainties and actual events or circumstances may differ materially from events and circumstances reflected in this information.
2
RISK FACTOR SUMMARY
The following summarizes the principal factors that make an investment in the Company speculative or risky, all of which are more fully described in Part II, Item 1A, Risk Factors in this Quarterly Report on Form 10-Q. This summary should be read in conjunction with the Risk Factors section and should not be relied upon as an exhaustive summary of the material risks facing our business. The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described in our public filings when evaluating our business.
3
4
ELEDON PHARMACEUTICALS, INC.
FORM 10-Q
FOR THE QUARTER ENDED June 30, 2022
Table of Contents
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Page |
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PART I. |
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Item 1. |
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6 |
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Condensed Consolidated Balance Sheets as of June 30, 2022 and December 31, 2021 |
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7 |
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8 |
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Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2022 and 2021 |
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10 |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Item 3. |
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28 |
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Item 4. |
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28 |
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PART II. |
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Item 1. |
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Item 1A. |
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29 |
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Item 2. |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
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5
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
ELEDON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except share data)
(Unaudited)
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June 30, |
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December 31, |
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ASSETS |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Prepaid expenses and other current assets |
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Total current assets |
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Operating lease asset, net |
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Goodwill |
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In-process research and development |
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Other assets |
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Total assets |
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$ |
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$ |
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LIABILITIES AND STOCKHOLDERS’ EQUITY |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Current operating lease liability |
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Accrued expenses and other liabilities |
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Total current liabilities |
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Deferred tax liability |
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Non-current operating lease liability |
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Total liabilities |
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(Note 5) |
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Stockholders’ equity: |
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Series X1 non-voting convertible preferred stock, $ |
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Series X non-voting convertible preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Accumulated deficit |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
6
ELEDON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(In thousands, except share and per share data)
(Unaudited)
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For the Three Months |
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For the Six Months |
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2022 |
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2021 |
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2022 |
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2021 |
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Operating expenses |
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Research and development |
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$ |
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$ |
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$ |
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$ |
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General and administrative |
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Total operating expenses |
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Loss from operations |
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Other income/(expense), net |
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Loss before income tax benefit |
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Income tax benefit |
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— |
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— |
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Net loss and comprehensive loss |
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$ |
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$ |
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$ |
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$ |
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Net loss per share, basic and diluted |
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$ |
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$ |
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$ |
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$ |
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Weighted-average common shares outstanding, basic and diluted |
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See accompanying notes to unaudited condensed consolidated financial statements.
7
ELEDON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
(In thousands, except share data)
(Unaudited)
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Series X1 Non-Voting Convertible Preferred Stock |
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Series X Non-Voting Convertible Preferred Stock |
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Common Stock |
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Additional |
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Accumulated |
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Shares |
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Amount |
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Shares |
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Amount |
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Shares |
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Amount |
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Capital |
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Deficit |
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Total |
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Balance as of December 31, 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
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$ |
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Cancellation of common stock in connection |
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— |
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— |
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— |
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( |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss and other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of June 30, 2022 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Balance as of March 31, 2022 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss and other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of June 30, 2022 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Balance as of December 31, 2020 |
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$ |
— |
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— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Cancellation of common stock in connection |
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— |
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— |
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— |
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( |
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— |
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— |
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— |
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— |
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Cancellation of common stock in connection |
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— |
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— |
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— |
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— |
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( |
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( |
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— |
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— |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss and other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Balance as of June 30 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Balance as of March 31, 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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Stock-based compensation |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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Net loss and other comprehensive loss |
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— |
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— |
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— |
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— |
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— |
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— |
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— |
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( |
) |
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( |
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Balance as of June 30 2021 |
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$ |
— |
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$ |
— |
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$ |
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$ |
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$ |
( |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
8
ELEDON PHARMACEUTICALS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
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For the Six Months |
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2022 |
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2021 |
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Operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Amortization of operating lease asset |
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Stock-based compensation |
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Deferred tax liabilities |
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— |
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( |
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Changes in operating assets and liabilities: |
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Prepaid expenses and other assets |
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( |
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Accounts payable and accrued expenses |
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( |
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Operating lease liability |
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( |
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( |
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Net cash used in operating activities |
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( |
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Financing activities |
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Offering costs in connection with PIPE transaction |
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— |
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( |
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Net cash used in financing activities |
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— |
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( |
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Net change in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of non-cash investing and financing activities |
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Common stock exchanged for X1 preferred stock |
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$ |
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$ |
— |
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Common stock exchanged for warrants |
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$ |
— |
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$ |
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Increase in operating lease asset and liability due to lease modification |
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$ |
— |
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$ |
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See accompanying notes to unaudited condensed consolidated financial statements.
9
ELEDON PHARMACEUTICALS, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Description of Business
Eledon Pharmaceuticals, Inc. (formerly Novus Therapeutics, Inc.) is a clinical stage biopharmaceutical company focused on developing life-changing, targeted medicines for persons living with an autoimmune disease, requiring an organ or cell-based transplant, or living with amyotrophic lateral sclerosis (“ALS”). Unless otherwise indicated, references to the terms “Eledon,” “our,” “us,” “we”, or the “Company” refer to Eledon Pharmaceuticals, Inc. and its wholly owned subsidiaries, on a consolidated basis.
The Company’s lead compound in development is tegoprubart, an anti-CD40L antibody with high affinity for CD40 ligand, a well-validated biological target with broad therapeutic potential.
On
Note 2. Summary of Significant Accounting Policies
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and Article 8 of Regulation S-X requirements as set forth by the Securities and Exchange Commission (“SEC”) for interim financial information and reflect all adjustments and disclosures, which are, in the opinion of management, of a normal and recurring nature, and considered necessary for a fair presentation of the financial information contained herein. Pursuant to these rules and regulations, the unaudited condensed consolidated financial statements do not include all information and notes necessary for a complete presentation of results of operations and comprehensive loss, financial position, and cash flows in conformity with GAAP.
The accompanying unaudited condensed consolidated financial statements and notes should be read in conjunction with the audited financial statements and accompanying notes of Eledon for the year ended December 31, 2021 included in the Annual Report on Form 10-K filed by the Company with the SEC on March 24, 2022. The results of operations and comprehensive loss for the three and six months ended June 30, 2022 are not necessarily indicative of results expected for the full fiscal year or any other future period.
Principles of Consolidation
Eledon, a Delaware corporation, owns
The functional currency of the Company’s foreign subsidiary is the U.S. Dollar; however, certain expenses, assets and liabilities are transacted at the local currency. These transactions are translated from the local currency into U.S. Dollars at exchange rates during or at the end of the reporting period. The activities of the Company’s foreign subsidiary are not significant to the condensed consolidated financial statements.
All significant intercompany accounts and transactions among the entities have been eliminated from the condensed consolidated financial statements.
10
Liquidity and Financial Condition
The Company has experienced recurring net losses and negative cash flows from operating activities since its inception. The Company recorded a net loss of $
At the time of issuance of the condensed consolidated financial statements for the three and six months ended June 30, 2022, the Company’s management performed an analysis and concluded that the Company had sufficient cash resources to meet its anticipated cash needs through at least the next 12 months from the date of issuance of the accompanying condensed consolidated financial statements.
Use of Estimates
The preparation of the Company’s consolidated financial statements in conformity with GAAP requires management to make informed estimates and assumptions that affect the reported amounts of assets, liabilities and expenses and the disclosure of contingent assets and liabilities in the Company’s consolidated financial statements and accompanying notes. The most significant estimates in the Company’s consolidated financial statements relate to stock-based compensation, accruals for liabilities, impairment of long-lived assets, including goodwill, and other matters that affect the consolidated financial statements and related disclosures. Actual results could differ materially from those estimates under different assumptions or conditions and the differences may be material to the consolidated financial statements.
Cash and Cash Equivalents
Cash represents cash deposits held at financial institutions. The Company considers all liquid investments purchased with an original maturity of
Concentration of Credit Risk and Other Risks and Uncertainties
As of June 30, 2022 and December 31, 2021, all of the Company’s long-lived assets were located in the United States.
Financial instruments that are subject to concentration of credit risk consist primarily of cash equivalents. The Company’s policy is to invest cash in institutional money market funds to limit the amount of credit exposure. At times, the Company maintains cash equivalents in short‑term money market funds and it has not experienced any losses on its cash equivalents.
The Company’s products will require approval from the U.S. Food and Drug Administration (“FDA”) and foreign regulatory agencies before commercial sales can commence. There can be no assurance that its products will receive any of these required approvals. The denial or delay of such approvals may impact the Company’s business in the future. In addition, after the approval by the FDA, there is still an ongoing risk of adverse events that did not appear during the product approval process.
The Company is subject to risks common to companies in the pharmaceutical industry, including, but not limited to, new technological innovations, clinical development risk, establishment of appropriate commercial partnerships, protection
11
of proprietary technology, compliance with government and environmental regulations, uncertainty of market acceptance of products, product liability, the volatility of its stock price and the need to obtain additional financing.
Our facilities and equipment, including those of our suppliers and vendors, may be affected by natural or man-made disasters. Our administrative office is based in Irvine, California and we manage all our research and development activities through third parties that are located throughout the world. We have taken precautions to safeguard our facilities, equipment and systems, including insurance, health and safety protocols, and off-site storage of computer data. However, our facilities and systems, as well as those of our third-party suppliers and vendors, may be vulnerable to earthquakes, fire, storm, health emergencies, including the ongoing COVID-19 pandemic or other future health crises, power loss, telecommunications failures, physical and software break-ins, software viruses and similar events which could cause substantial delays in our operations, damage or destroy our equipment or inventory, and cause us to incur additional expenses and delay research and development activities. In addition, the insurance coverage we maintain may not be adequate to cover our losses in any circumstance and may not continue to be available to use on acceptable terms, or at all.
Reportable Segments
Operating segments under GAAP are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the Chief Operating Decision Maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The CODM is the Company’s Chief Executive Officer and the Company has determined that it operates in
Research and Development Expenses
Research and development expenses include personnel and facility-related expenses, outside contracted services including clinical trial costs, manufacturing and process development costs, research costs and other consulting services and non-cash stock-based compensation. Research and development costs are expensed as incurred. Amounts due under contracts with third parties may be either fixed fee or fee for service, and may include upfront payments, monthly payments and payments upon the completion of milestones or receipt of deliverables. Non-refundable advance payments under agreements are capitalized and expensed as the related goods are delivered or services are performed.
The Company contracts with third parties to perform various clinical trial activities in the on-going development of potential products. The financial terms of these agreements are subject to negotiation, vary from contract to contract and may result in uneven payment flows to its vendors. Payments under the contracts depend on factors such as the achievement of certain events, successful enrollment of patients, and completion of portions of the clinical trial or similar conditions. The Company’s accrual for clinical trials is based on estimates of the services received and efforts expended pursuant to contracts with clinical trial centers and clinical research organizations. These contracts may be terminated by the Company upon written notice and the Company is generally only liable for actual effort expended by the organizations to the date of termination, although in certain instances the Company may be further responsible for termination fees and penalties, as well as reasonable shutdown costs. The Company estimates its research and development expenses and the related accrual as of each balance sheet date based on the facts and circumstances known to the Company at that time. There have been no material adjustments to the Company’s prior‑period accrued estimates for clinical trial activities during the three and six months ended June 30, 2022.
Net Loss Per Share
Basic net loss per common share is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of common shares outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of common shares and potentially dilutive securities outstanding for the period determined using the treasury-stock and if-converted methods. For purposes of the diluted net loss per share calculation, preferred stock, convertible notes and accrued interest, stock options, warrants and restricted stock units (“RSUs”) are considered to be potentially dilutive securities and are excluded from the calculation of diluted net loss per share because their effect would be anti-dilutive. Therefore, basic and diluted net loss per share was the same for the periods presented due to the Company’s net loss position. Basic weighted average shares outstanding for the three and six months ended June 30, 2022 include
12
consideration (an exercise price per share equal to $
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For the Three Months |
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For the Six Months |
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2022 |
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2021 |
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2022 |
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2021 |
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(In thousands, except share and per share data) |
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|||||||||||||
Net loss used in the calculation of basic and diluted |
|
$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
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$ |
( |
) |
Net loss per share, basic and diluted |
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$ |
( |
) |
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$ |
( |
) |
|
$ |
( |
) |
|
$ |
( |
) |
Weighted-average number of common shares, basic |
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|
|
|
|
||||
The computation of diluted earnings per share excludes stock options, warrants, and RSUs that are anti-dilutive. As of June 30, 2022 and 2021, common share equivalents of
Stock-based Compensation
The Company recognizes compensation expense for all stock-based awards based on the grant-date estimated fair value.
The fair value of stock options is determined using the Black-Scholes option pricing model, using assumptions that are subjective and require significant judgment and estimation by management. The risk-free rate assumption was based on observed yields from governmental zero-coupon bonds with an equivalent term. The expected volatility assumption was based on historical volatilities of a group of comparable industry companies whose share prices are publicly available. The peer group was developed based on companies in the pharmaceutical industry. The expected term of stock options represents the weighted-average period that the stock options are expected to be outstanding. Because the Company does not have historical exercise behavior, it determined the expected life assumption using the simplified method for stock options granted to employees, which is an average of the options ordinary vesting period and the contractual term.
RSUs and performance-based RSUs (“PRSUs”) are measured and recognized based on the quoted market price of our common stock on the date of grant.
In March 2020, the Board approved an increase of
On December 18, 2020, the Company held a special meeting of its stockholders (the “Special Meeting”), whereby the Company’s stockholders approved the 2020 Long Term Incentive Plan (the “2020 Plan”). The aggregate number of shares of stock initially available for issuance under the 2020 Plan was
13
The 2014 Plan was closed to new grants following the approval of the 2020 Plan, and therefore, there were
Recently Adopted Accounting Pronouncements
No new accounting pronouncement issued or effective during the fiscal period had or is expected to have a material impact on the Company’s condensed consolidated financial statements or disclosures.
Note 3. Prepaid Expenses and Other Current Assets
Prepaid expenses and other current assets consisted of the following (in thousands):
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June 30, |
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December 31, |
|
||
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2022 |
|
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2021 |
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Prepaid insurance |
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$ |
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$ |
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Prepaid clinical |
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Prepaid other |
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Other current assets |
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Total prepaid expenses and other current assets |
|
$ |
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$ |
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Note 4. Accrued Expenses and Other Liabilities
Accrued expenses and other liabilities consisted of the following (in thousands):
|
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June 30, |
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|
December 31, |
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||
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2022 |
|
|
2021 |
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||
Accrued compensation and related expenses |
|
$ |
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|
$ |
|
||
Accrued severance |
|
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— |
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Accrued clinical |
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Accrued professional services |
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Accrued other |
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Total accrued expenses and other liabilities |
|
$ |
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$ |
|
||
Note 5. Commitments and Contingencies
Operating Leases
The Company leases office space under various operating leases. Total rental expense for all operating leases in the accompanying condensed consolidated statements of operations and comprehensive loss was $
The Company has an operating lease for
On November 4, 2021, the Company entered into an operating lease for approximately
The Company determines if a contract contains a lease at inception. Our office leases have a remaining term ranging from
Operating lease assets and liabilities are recognized at the lease commencement date. Operating lease liabilities represent the present value of lease payments not yet paid. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities as adjusted for prepayments or accrued lease payments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental secured borrowing rates corresponding to the maturities of the leases. As we have no
14
outstanding debt nor committed credit facilities, secured or otherwise, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management’s judgment.
Our leases contain rent escalations over the lease term. We recognize expense for these leases on a straight-line basis over the lease term. Additionally, tenant incentives used to fund leasehold improvements are recognized when earned and reduce our right-of-use asset related to the lease. These are amortized through the right-of-use asset as reductions of expense over the lease term. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.
While we do not currently have any lease agreement with lease and non-lease components, we elected to account for lease and non-lease components as separate components.
We have elected the short-term lease recognition exemption for all applicable classes of underlying assets. Short-term disclosures include only those leases with a term greater than one month and 12 months or less, and expense is recognized on a straight-line basis over the lease term. Leases with an initial term of 12 months or less, that do not include an option to purchase the underlying asset that we are reasonably certain to exercise, are not recorded on the condensed consolidated balance sheet.
The components of lease expense were as follows:
|
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For the Six Months |
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|||||
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2022 |
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2021 |
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Operating lease cost(a) |
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$ |
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$ |
|
||
(a) Includes variable operating lease expenses, which are immaterial |
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|||||||
Other information related to leases was as follows (in thousands, except lease term and discount rate):
|
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For the Six Months |
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2022 |
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2021 |
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Supplemental Cash Flows Information |
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Cash paid for amounts included in the measurement of lease liability: |
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Operating cash flows from operating lease |
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$ |
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Remaining lease term |
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Discount rate |
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Operating lease |
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% |
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Future payments under noncancelable operating leases having initial or remaining terms of one year or more are as follows for the succeeding fiscal year and thereafter (in thousands):
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June 30, |
|
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2022 |
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2022 (remainder of) |
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$ |
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2023 |
|
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2024 |
|
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Total minimum lease payments |
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|
|
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Less imputed interest |
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( |
) |
Present value of lease liabilities |
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Less current portion of operating lease liability |
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( |
) |
Non-current operating lease liability |
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$ |
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|
15
Grants and Licenses
ALS Therapy Development Foundation, Inc. License Agreement
In May 2015, Anelixis executed a License Agreement (the “ALS Agreement”), which is an exclusive patent rights agreement with ALS Therapy Development Foundation, Inc. (“ALS TDI”) for certain patents and “know-how” of ALS TDI. This ALS Agreement continues until the licensee terminates the agreement with ninety days written notice. The ALS Agreement requires license fees payable to ALS TDI, subject to the achievement of certain milestones and other conditions.
The first and second milestones of the ALS Agreement are the dosing of the first subjects in a first toxicity study in non-human primates and the dosing of the first patient in a Phase I Clinical Trial, respectively. Both milestones were achieved as of December 31, 2018 and 2017. The fee due for the achievement of these milestones was $
The ALS Agreement was amended and restated in February 2020, and a first amendment to the restated license agreement was executed in September 2020. As amended in September 2020, the remaining milestone payments for a first licensed product total $
In addition to the milestone payments, the Company is required to pay ALS TDI an amended annual license maintenance fee of $
Furthermore, the Company shall pay ALS TDI fees based on reaching certain levels of annual net sales of any product produced with the patent rights. A royalty in the low single digits will be due on aggregate net sales. Upon the first calendar year of reaching $
Lonza Sales AG Inc. License Agreement
In September 2018, Anelixis executed a License Agreement (the “Lonza Agreement”), which is a manufacturing know-how rights agreement with Lonza Sales AG Inc. (“Lonza”) for the use of certain processes and know-how related to the manufacture of tegoprubart. The Lonza Agreement continues until the later of the last Valid Claim (as defined therein) or ten years from the First Commercial Sale of tegoprubart, as defined and subject to the conditions therein. A royalty in the low single digits will be due on aggregate net sales of tegoprubart that is manufactured by Lonza or any other third-party or licensee.
Israeli Innovation Authority Grant
From 2012 through 2015, the Company received grants in the amount of approximately $
Legal Matters
The Company is involved in various lawsuits and claims arising in the ordinary course of business, including actions with respect to intellectual property, employment, and contractual matters. In connection with these matters, the Company assesses, on a regular basis, the probability and range of possible loss based on the developments in these matters. A liability is recorded in the financial statements if it is believed to be probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Because litigation is inherently unpredictable and unfavorable results could occur, assessing
16
contingencies is highly subjective and requires judgments about future events. The Company regularly reviews outstanding legal matters to determine the adequacy of the liabilities accrued and related disclosures. The amount of ultimate loss may differ from these estimates. Each matter presents its own unique circumstances, and prior litigation does not necessarily provide a reliable basis on which to predict the outcome, or range of outcomes, in any individual proceeding. Because of the uncertainties related to the occurrence, amount, and range of loss on any pending litigation or claim, the Company does not consider a liability probable and is currently unable to predict their ultimate outcome, and, with respect to any pending litigation or claim where no liability has been accrued, to make a meaningful estimate of the reasonably possible loss or range of loss that could result from an unfavorable outcome. In the event that opposing litigants in outstanding litigation proceedings or claims ultimately succeed at trial and any subsequent appeals on their claims, any potential loss or charges in excess of any established accruals, individually or in the aggregate, could have a material adverse effect on the Company’s business, financial condition, results of operations, and/or cash flows in the period in which the unfavorable outcome occurs or becomes probable, and potentially in future periods.
Legal Proceedings
We are not currently a party to any material legal proceedings. We may, however, in the ordinary course of business face various claims brought by third parties or government regulators and we may, from time to time, make claims or take legal actions to assert our rights, including claims relating to our directors, officers, stockholders, intellectual property rights, employment matters and the safety or efficacy of our products.
Indemnifications
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnification. The Company’s exposure under these agreements is unknown because it involves future claims that may be made against the Company but have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future because of these indemnification obligations.
Contingencies
From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business activities. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. There have been
Note 6. Stockholders’ Equity
Equity Distribution Agreement
On March 31, 2021, the Company filed a registration statement on Form S-3 containing a prospectus and prospectus supplement under which the Company may offer and sell up to $
17
Common Stock Warrants
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Roll Forward of Warrant Activity |
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Registered direct |
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Private placement warrants |
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Private placement warrants, placement agent |
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Warrants exchanged for common stock |
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Warrants exchanged for Series X1 preferred stock |
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Total |
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Balance as of December 31, 2021 |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Issued |
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Exercised |
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Cancelled/Expired |
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Balance as of June 30, 2022 |
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Exchange Agreements
On January 11, 2022, the Company entered into an exchange agreement (the “Series X1 Exchange Agreement”) with Biotechnology Value Fund, L.P., Biotechnology Value Fund II, L.P., Biotechnology Value Trading Fund OS, L.P., MSI BVF SPV, L.L.C. (collectively, the “BVF Exchanging Stockholders”), pursuant to which the Series X1 Exchanging Stockholders exchanged (the “Series X1 Exchange”)
Preferred Stock Warrants
As of June 30, 2022, there were
|
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Roll Forward of |
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Total |
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Balance as of December 31, 2021 |
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Assumed and replaced |
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Exercised |
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Cancelled/Expired |
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Balance as of June 30, 2022 |
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Stock-Based Compensation
Total stock-based compensation expense was recognized in our condensed consolidated statements of operations and comprehensive loss as follows (in thousands):
|
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For the Three Months |
|
|
For the Six Months |
|
||||||||||
|
|
2022 |
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2021 |
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2022 |
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2021 |
|
||||
Research and development |
|
$ |
|
|
$ |
|
|
$ |
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$ |
|
||||
General and administrative |
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Total stock-based compensation |
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$ |
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|
$ |
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$ |
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$ |
|
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18
Note 7. Subsequent Events
The Company has evaluated events subsequent to June 30, 2022 through the filing date of this Quarterly Report on Form 10-Q. Any material subsequent events that occurred during this time have been properly recognized or disclosed in the condensed consolidated financial statements and accompanying notes.
19
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The unaudited interim financial statements and this Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read together with our audited financial statements and accompanying notes for the year ended December 31, 2021 included in the Annual Report on Form 10-K filed by the Company with the Securities and Exchange Commission (the “SEC”) on March 24, 2022. In addition to historical information, this discussion and analysis contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Please see Part II, Item 1A. Risk Factors for a discussion of certain risk factors applicable to our business, financial condition, and results of operations. Operating results are not necessarily indicative of results that may occur for the full fiscal year or any other future period. See also “Special Note Regarding Forward-Looking Statements” in this Quarterly Report on Form 10-Q. Unless otherwise indicated, references to the terms “Eledon”, the “Company”, “we”, “our”, and “us” refer to Eledon Pharmaceuticals, Inc. References to the term “Tokai” refer to Tokai Pharmaceuticals, Inc., the legal predecessor of the Company.
ABOUT ELEDON PHARMACEUTICALS
Overview
Eledon Pharmaceuticals, Inc. (“Eledon” or the “Company”) is a clinical stage biopharmaceutical company focused on developing life-changing, targeted medicines for persons requiring an organ or cell-based transplant, living with autoimmune disease, or living with amyotrophic lateral sclerosis (“ALS”). The Company’s lead compound in development is tegoprubart, an IgG1, anti-CD40L antibody with high affinity for CD40 Ligand (“CD40L”, also called “CD154”), a well-validated biological target that we believe has broad therapeutic potential.
Tegoprubart is engineered to potentially both improve safety and provide pharmacokinetic, pharmacodynamic, and dosing advantages compared to other anti-CD40 approaches. The CD40L/CD40 pathway is recognized for its prominent role in immune regulation. CD40L is primarily expressed on activated CD4+ T cells, platelets and endothelial cells while the CD40 receptor is constitutively expressed on antigen presenting cells such as macrophages and dendritic cells, as well as B cells. By blocking CD40L and not the CD40 receptor, tegoprubart inhibits both the CD40 and CD11 costimulatory signaling pathways, providing the potential for improved efficacy compared to anti-CD40 receptor approaches. Blocking CD40L also increases polarization of CD4+ lymphocytes to Tregs, a specialized subpopulation of T cells that act to suppress an immune response, thus creating a more tolerogenic environment, which may play a therapeutic role for autoimmune diseases and in the transplant setting.
Tegoprubart is designed to negate the risk of thrombolytic events seen in the first generation of anti-CD40L antibodies by introducing structural modifications that have been shown in preclinical models to eliminate binding to the Fcγ receptors associated with platelet activation without altering the binding of tegoprubart to CD40L. In non-human primate studies, dosing of Tegoprubart up to 200 mg/kg per week for 26 weeks, demonstrated no adverse events regarding coagulation, platelet activation or thromboembolism.
In September 2020, we acquired Anelixis Therapeutics, Inc. (“Anelixis”), the company that owned or controlled the intellectual property related to tegoprubart.
Our business strategy is to optimize the clinical and commercial value of tegoprubart and become a global biopharmaceutical company with a focused autoimmune franchise. We plan to develop tegoprubart in up to four indications: ALS, prevention of kidney allograft rejection, prevention of islet cell allograft rejection, and IgA Nephropathy (“IgAN”). We selected our indications based on preclinical and clinical data that was generated with either our molecule or historical anti-CD40L molecules.
Amyotrophic Lateral Sclerosis
ALS is a progressive, paralytic disorder characterized by degeneration of motor neurons in the brain and spinal cord. In the U.S., the incidence is estimated at approximately 5,000 cases per year with a prevalence of approximately 30,000 cases overall. Despite 2 approved drugs, in most cases, death from respiratory failure occurs between 3 to 5 years from diagnosis, with 50% of patients living at least 3 years from diagnosis and only 20% of patients living at least 5 years from diagnosis.
While the exact pathogenic mechanism of ALS is still not fully understood, there is strong evidence indicating that neuroinflammation plays an important role in the disease’s pathogenesis. Neuroinflammation in ALS is characterized by the infiltration of lymphocytes and macrophages into the central nervous system, and the activation of microglia and reactive astrocytes. Reactive astrocytes and microglia as well as infiltrating lymphocytes, dendritic cells, monocytes, macrophages
20
and immune complexes have been identified in cerebrospinal fluid and neural tissues in both animal models of ALS and at autopsy in ALS patients.
Tegoprubart is designed to block CD40L binding to CD40, thereby potentially inhibiting neuroinflammatory pathways leading to disease progression in ALS. In vitro proof-of-concept studies have shown that tegoprubart binds to CD40L in human cells and blocks CD40L binding on APCs and activated T cells. The potential for therapeutic benefit of CD40L blockage in treating ALS has been demonstrated in a SOD1 mouse model of ALS, where a murine anti-CD40L antibody, MR1, prolonged survival and delayed the onset of neurological disease progression. These clinical manifestations are believed to be due to reduced immune cell infiltration of macrophages into skeletal muscle and their destroying denervated nerves. The plasticity of the nervous system to repair itself in the absence of this immune cell attack is believed to result in improved neuromuscular junction occupancy and improved muscle function. Blocking CD40L signaling also prevents pro-inflammatory polarization of lymphocytes, reduced neuroinflammation and improved motor neuron survival in rodent ALS models.
In 2019, we completed a single ascending dose Phase 1 study of tegoprubart in healthy volunteers and people with ALS. In this study, the doses of tegoprubart studied were well tolerated in healthy subjects and adults with ALS. Tegoprubart demonstrated low anti-drug antibody responses that were not dose related, linear dose proportionality across the dose ranges, and a half-life of up to 26 days.
In October 2020, we initiated a Phase 2a, open-label, multi-center study to evaluate the safety and tolerability of multiple doses of tegoprubart in adult subjects with ALS. Fifty-four subjects with ALS were enrolled into the study in the United States and Canada at 13 ALS treatment sites. Ascending doses of tegoprubart were administered as IV infusions to four sequentially enrolling cohorts. The first two cohorts consisted of nine participants, and the last two cohorts of 18 participants each. All enrolled subjects received six bi-weekly infusions of tegoprubart over the study period. Blood samples for target engagement, and exploratory biomarkers for inflammation and neurodegeneration were taken and analyzed. Participant-focused clinical outcomes were also assessed. In May 2022, we completed the Phase 2a study and released positive topline results. Tegoprubart successfully met the primary endpoints of safety and tolerability. Fifty of the fifty-four subjects completed all six study infusions, and adverse events were typical of an ALS patient population. Tegoprubart was well-tolerated, and no drug-related serious adverse events were observed. No new safety signals emerged. Anti-drug antibodies (ADAs) were present in less than 5 percent of samples. All ADAs were of low titer and did not impact tegoprubart drug levels. Tegoprubart target engagement was demonstrated in all dose cohorts with increasing target engagement in a dose-dependent manner, plateauing at the 4 and 8 mg / kg dosing levels using CD40L and CXCL13 biomarkers related to T cell and B cell function, respectively. 32 different inflammatory biomarkers were detectable in the study population, including TNF-α, MCP1, EN-RAGE, C-Reactive Protein (CRP), and IL-6. IL-1b was not detected in the study patient population. Statistically significant dose-dependent reductions were observed in 23 of these biomarkers, including TNF-α, MCP1, EN-RAGE, and CRP. Pro-inflammatory biomarkers significantly reduced included biomarkers also associated with IgA nephropathy and kidney transplant rejection, such as IgA, IgE, IgM, C3, CXCL9, and CXCL10. While the study was neither primarily designed nor powered to assess the effect of tegoprubart on ALS Functional Rating Scale (“ALSFRS”), both target engagement and level of pro-inflammatory biomarker reduction were associated with a trend in the slowing of disease progression as measured by ALSFRS slope. The Company is committed to further progressing ALS clinical development, and plans to work with key opinion leaders, our patient community, and regulators on potential next steps to do so. However, we will be unable to continue our clinical development of tegoprubart for people with ALS without additional financing, and we can provide no assurances that we will be able to obtain financing on acceptable terms or at all.
Kidney transplantation: prevention of allograft rejection
Kidney transplantation is the most common type of solid organ transplantation in the United States with an estimated 227,000 Americans living with a transplanted kidney. In 2019, an estimated 23,000 kidneys were transplanted, of which up to 15% were re-transplants in persons that had already received at least one other kidney. Over 90,000 people in the U.S. are waiting for a kidney transplant and in 2014, nearly 5,000 Americans died waiting for a kidney with another nearly 4,000 becoming too sick to receive a transplant.
Calcineurin inhibitors (“CNI”s) are a critical component of many immunosuppressive regimens to prevent acute and long-term kidney transplant rejection. However, chronic exposure to certain CNIs including tacrolimus is associated with nephrotoxicity, cardiotoxicity, new onset diabetes due to pancreatic Beta cell toxicity and an increase in both opportunistic infections and malignancies. Over time, these CNI side effects may significantly damage transplanted kidneys or result in a requirement for reduced exposures to CNIs and a resulting potential decrease in the ability to prevent long-term rejection.
21
Tegoprubart seeks to address challenges associated with current immunosuppressive transplantation regimens using CNI-based therapies. The ability to prevent acute and chronic transplant rejection without the need for CNIs has the potential to transform the clinical management of preventing graft rejection by mitigating the adverse events associated with CNIs and improving long-term graft survival, thus potentially decreasing the need for repeat kidney transplants.
In July 2021, the Company received a No Objection Letter (NOL) from Health Canada for a Phase 1b clinical trial of tegoprubart, in up to 12 subjects, replacing tacrolimus as an immunosuppressive regimen component in patients undergoing de novo kidney transplantation. In December 2021, the Company received regulatory approval from the Medicines and Healthcare products Regulatory Agency (MHRA) in the United Kingdom to add additional sites to the Phase 1b clinical trial. No subjects have been enrolled in the Phase 1b study as of June 30, 2022.
Islet cell transplantation: prevention of allograft rejection
Type 1 diabetes is a T cell mediated autoimmune disease with progressive loss of insulin producing pancreatic beta cells and affects over one million persons in the U.S. Of these individuals, an estimated 70,000 people have a particularly hard to control type 1 diabetes called Brittle Diabetes (“BT1D”) which is in part characterized by large swings in blood glucose levels and impaired awareness of hypoglycemia. Impaired awareness of hypoglycemia for people with type 1 diabetes is associated with severe hypoglycemic events which can lead to significant symptoms and even death. Pancreatic islet cell transplantation may be a therapeutic option for type 1 diabetes because it can restore physiological insulin secretion, minimize the risk of hypoglycemic unawareness, and reduce the risk of death due to severe hypoglycemia. The advances made in this field over the past decade have improved patient outcomes.
A number of issues are believed to continue to hamper the overall success of islet cell transplantation and to need to be addressed in order for there to be widespread clinical acceptance. These include the acute loss of transplanted islets with current immunosuppressive treatments, particularly those with CNI-based therapies, due to islet cell toxicity and alloreactive immunologic responses to transplanted islets. Over time, the progressive loss of islet cells and decline in islet cell function often leads to the need for multiple transplant procedures in order for BTID patients to have optimal response to blood glucose levels and possibly achieve insulin independence. We believe that treatment with tegoprubart will address the challenges associated with current islet cell transplantation immunosuppressive regimens using CNI-based therapies, by replacing the CNIs with tegoprubart. CD40L blockade may abolish many effector mechanisms of inflammation, prevent, and intervene in the progression of autoimmunity, and instill transplant tolerance without causing harm to islet cells.
Historical studies in nonhuman primate models of islet cell transplantation have demonstrated that treatment with anti-CD40L antibodies induces long term islet cell function and graft survival, even as a monotherapy. Tegoprubart has shown pre-clinical, proof-of-concept efficacy in a non-human primate model of type 1 diabetes, where animals undergoing islet cell transplantation maintained glucose control and sustained levels of C-peptide with chronic tegoprubart treatment for up to a year. Compared to combination immunosuppressive therapy including CNIs, tegoprubart monotherapy was more effective in preventing long term islet cell rejection, associated with better graft function, and showed an improved safety profile.
In November 2020, the Company received clearance from Health Canada to proceed with the initiation of a Phase 2a clinical trial of tegoprubart for people with type 1 diabetes undergoing islet cell transplantation. In November 2021, the Company received investigational new drug (“IND”) clearance from the FDA for a Phase 2a clinical trial of tegoprubart for up to six people with type 1 diabetes undergoing islet cell transplantation in the United States. No subjects have been enrolled in the Phase 2a study as of June 30, 2022.
IgA Nephropathy
IgAN is the leading cause of glomerulonephritis, a state of inflammation producing damage to the filtering part of the kidney. Disease manifestation and clinical presentation involves renal dysfunction characterized by proteinuria with a slow relentless course. Approximately 30%-40% of patients ultimately reach end stage renal disease (ESRD). The standard of care for ESRD is dialysis or kidney transplant, which represents a significant economic burden as well as a major impact on a patient’s quality of life. With an estimated prevalence of approximately 150,000 persons in the United States, IgAN is one of the most common autoimmune glomerulonephropathies. There are currently no European Medicines Agency (“EMA”) approved treatments for IgAN, although in the United States budesonide was approved for use in IgAN by the FDA in December 2021.
The pathophysiology of IgAN has been well characterized, and based on its mechanism of action, tegoprubart has the potential to impact the disease process both upstream, at the source of the immune complexes, and downstream in the kidney
22
itself, where it may reduce inflammation in the glomeruli. By disrupting multiple steps in the IgAN’s pathophysiology, tegoprubart has the potential to affect the clinical course of the disease and improve outcomes for patients. The inhibition of CD40L has been shown to be effective in models of multiple glomerulonephritides, as measured by a reduction in proteinuria and were associated with a decrease in immune cell infiltrate into the glomeruli
Through June 30, 2022, the Company received regulatory clearances to initiate a phase 2a study in IgAN in Australia, Malaysia, New Zealand, Philippines, Spain, Sri Lanka and the United Kingdom, and plans to expand the study in up to 5 additional countries. The global study is a 96-week open-label, dose ranging trial, and will include up to 42 subjects in high dose and a low dose cohorts. The primary endpoint is change in urinary protein:creatinine ratio (UPCR) at week twenty-four. Secondary endpoints include change in estimated Glomerular Filtration Rate (eGFR) at week 96 as well as safety and tolerability. The first subject was dosed in May 2022.
Market Trends and Uncertainties
We may face future business disruption and related risks resulting from the ongoing outbreak of COVID-19 or from another pandemic, epidemic or infectious disease outbreak, or from broader macroeconomic trends, any of which could have a significant impact on our business or delay the development of our product candidates or completion of our current and proposed clinical trials. Although the impacts of COVID-19 have not been material to-date, we have experienced delays in certain clinical studies and resulting delays in data collection and have also experienced inefficiencies in planning and executing trials due to our limited ability to conduct meetings with key third parties and we could experience further delays and inefficiencies in the future. We will continue to monitor the impact of COVID-19 on our operations, including enrollment and execution of our clinical trials.
In addition, the global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, rising interest rates and uncertainty about economic stability. We have utilized a range of financing methods to fund our operations in the past; however, current conditions in the financial and credit markets may limit the availability of funding or increase the cost of funding. If we are unable to obtain necessary debt or equity financing in a timely manner or on favorable terms, if at all, then our ability to continue clinical development of our product candidates or fund additional clinical studies will be adversely impacted.
Any of the foregoing items could materially affect our business, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted. See Item 1A, “Risk Factors” for additional information.
CRITICAL ACCOUNTING POLICIES AND SIGNIFICANT JUDGMENTS AND ESTIMATES
Our management’s discussion and analysis of our financial condition and results of operations are based on our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of these financial statements requires us to make estimates and judgments that affect the reported amount of assets, liabilities, and expenses and the disclosure of contingent assets and liabilities as of the date of the financial statements. On an ongoing basis, we evaluate our estimates and judgments. We base our estimates on historical experience, known trends and events, and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from these estimates under different assumptions or conditions. There have been no significant and material changes in our critical accounting policies and significant judgments and estimates during the six months ended June 30, 2022, as compared to those disclosed in the Annual Report on Form 10-K for the year ended December 31, 2021, filed by the Company with the SEC on March 24, 2022.
23
RESULTS OF OPERATIONS
Comparison of the Three Months Ended June 30, 2022 and 2021
The following table provides comparative unaudited results of operations for the three months ended June 30, 2022 and 2021 (in thousands):
|
|
For the Three Months |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
$ Variance |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
5,743 |
|
|
$ |
4,242 |
|
|
$ |
1,501 |
|
General and administrative |
|
|
3,540 |
|
|
|
3,729 |
|
|
|
(189 |
) |
Total operating expenses |
|
|
9,283 |
|
|
|
7,971 |
|
|
|
1,312 |
|
Loss from operations |
|
|
(9,283 |
) |
|
|
(7,971 |
) |
|
|
(1,312 |
) |
Other income/(expense), net |
|
|
36 |
|
|
|
(1 |
) |
|
|
37 |
|
Loss before income tax benefit |
|
|
(9,247 |
) |
|
|
(7,972 |
) |
|
|
(1,275 |
) |
Income tax benefit |
|
|
— |
|
|
|
588 |
|
|
|
(588 |
) |
Net loss |
|
$ |
(9,247 |
) |
|
$ |
(7,384 |
) |
|
$ |
(1,863 |
) |
Research and Development Expenses
Research and development expenses increased $1.5 million, to $5.7 million for the three months ended June 30, 2022, as compared to $4.2 million for the three months ended June 30, 2021. The increase was primarily due to an increase in clinical development costs of $0.6 million, primarily with external CROs, as we advance our tegoprubart program, an increase in consulting expenses of $0.8 million as well as increases in personnel costs of $0.2 million, due to increased headcount and stock-based compensation costs of $0.1 million. The increase was partially offset by a decrease of $0.2 million in external costs related to the production of clinical trial materials.
General and Administrative Expenses
General and administrative expenses decreased $0.2 million to $3.5 million for the three months ended June 30, 2022, as compared to $3.7 million for the three months ended June 30, 2021. The decrease was primarily related to decline in personnel related costs of $0.5 million, due to lower headcount, and general operating costs of $0.1 million. The decrease was partially offset by an increase in professional services of $0.3 million and stock-based compensation costs of $0.1 million.
Other Income (Expense), Net
The increase in other income (expense), net was primarily due to an increase in interest income and a decrease in realized losses on foreign currency translation for the three months ended June 30, 2022.
Income Tax Benefit
The Company recognized an income tax benefit of $0.6 million for the three months ended June 30, 2021 due to the change in deferred tax liabilities for acquired in-process research and development ("IPR&D") related to the Anelixis acquisition.
24
Comparison of the Six Months Ended June 30, 2022 and 2021
The following table provides comparative unaudited results of operations for the six months ended June 30, 2022 and 2021 (in thousands):
|
|
For the Six Months |
|
|
|
|
||||||
|
|
2022 |
|
|
2021 |
|
|
$ Variance |
|
|||
Operating expenses: |
|
|
|
|
|
|
|
|
|
|||
Research and development |
|
$ |
12,378 |
|
|
$ |
9,895 |
|
|
$ |
2,483 |
|
General and administrative |
|
|
6,764 |
|
|
|
7,081 |
|
|
|
(317 |
) |
Total operating expenses |
|
|
19,142 |
|
|
|
16,976 |
|
|
|
2,166 |
|
Loss from operations |
|
|
(19,142 |
) |
|
|
(16,976 |
) |
|
|
(2,166 |
) |
Other income, net |
|
|
31 |
|
|
|
4 |
|
|
|
27 |
|
Loss before income tax benefit |
|
|
(19,111 |
) |
|
|
(16,972 |
) |
|
|
(2,139 |
) |
Income tax benefit |
|
|
— |
|
|
|
1,089 |
|
|
|
(1,089 |
) |
Net loss |
|
$ |
(19,111 |
) |
|
$ |
(15,883 |
) |
|
$ |
(3,228 |
) |
Research and Development Expenses
Research and development expenses increased $2.5 million, to $12.4 million for the six months ended June 30, 2022, as compared to $9.9 million for the six months ended June 30, 2021. The increase was primarily due to an increase in clinical development costs of $1.7 million, primarily with external CROs, as we advance our tegoprubart program, an increase in consulting services of $0.9 million as well as increases in personnel costs of $0.4 million, due to increased headcount, and stock-based compensation costs of $0.3 million. The increase was partially offset by a decrease of $0.8 million in external costs related to the production of clinical trial materials.
General and Administrative Expenses
General and administrative expenses decreased $0.3 million to $6.8 million for the six months ended June 30, 2022, as compared to $7.1 million for the six months ended June 30, 2021. The decrease was primarily related to declines in personnel costs of $0.6 million, due to lower headcount, and general operating costs of $0.1 million. The decrease was partially offset by an increase in stock-based compensation costs of $0.4 million.
Other Income (Expense), Net
The increase in other income, net, was primarily due to an increase in interest income and a decrease in realized losses on foreign currency translation for the six months ended June 30, 2022.
Income Tax Benefit
The Company recognized an income tax benefit of $1.1 million for the six months ended June 30, 2021 due to the change in deferred tax liabilities for acquired IPR&D related to the Anelixis acquisition.
LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
As of June 30, 2022, we had cash and cash equivalents of $70.5 million, consisting of readily available cash in bank accounts. While we believe our cash and cash equivalents are not subject to excessive risk, we maintain significant amounts of cash at one or more financial institutions that are in excess of federally insured limits. To date, our operations have been financed primarily by net proceeds from the sale of preferred and common stock, the sale of warrants, and the issuance of convertible promissory notes.
We do not have any approved products for commercial sale and have never generated revenue from product sales and have incurred significant net losses since our inception and expect to continue to incur net operating losses for the foreseeable future. We do not expect to receive any revenue from any product candidates that we develop unless and until we obtain regulatory approval and commercialize our product candidates or enter into collaborative arrangements with third parties. We currently have no credit facility or committed sources of capital.
25
We believe our cash balance at June 30, 2022, will be sufficient to meet our projected operating requirements for at least the next 12 months from the date of this filing. We have based this estimate on assumptions that may prove to be incorrect, and we could utilize our available resources sooner than we currently expect. Further, from time to time, our operating plans may change, and we may need additional funds to meet operational needs for clinical studies sooner than planned or to fund additional clinical studies. For example, we do not currently have sufficient liquidity to fund the continued clinical development of tegoprubart for people with ALS without additional financing, notwithstanding the positive topline results of our Phase 2a study of tegoprubart for adult subjects with ALS announced in May 2022. We will continue to monitor our liquidity position in light of various financing alternatives and may pursue additional financing or other alternatives to allow us to continue our ALS clinical development. However, there can be no assurance such financing or other alternatives will be available to us on acceptable terms, or at all.
Material Cash Requirements
Our primary use of cash is to fund operating expenses, which consist of clinical research and development expenses, manufacturing expenses, legal and compliance expenses, compensation and related expenses, and general overhead costs. Cash used to fund operating expenses is impacted by the timing of when we pay or prepay these expenses. As of June 30, 2022, there have been no material changes in our cash requirements from known contractual and other obligations, including commitments for capital expenditures, as disclosed under “Liquidity and Capital Resources—Material Cash Requirements” in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K.
We expect our expenses to increase in connection with our ongoing activities, particularly as we expand our clinical program with tegoprubart, continue the research and development of, and seek marketing approval for, our product candidates. In addition, if we obtain marketing approval for any of our product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution.
We will continue to require additional financing in order to advance our drug product through clinical development, to manufacture, obtain regulatory approval for and to commercialize our product candidates, to develop, acquire or in-license other potential product candidates, and to fund operations for the foreseeable future. Therefore, we will seek to raise additional capital through equity offerings, debt financings or other capital sources, including potentially collaborations, licenses and other similar arrangements. The ability to raise substantial additional capital will depend on many factors, including:
Current conditions in the financial and credit markets may also limit the availability of funding or increase the cost of funding. As a result of any of the foregoing factors, adequate additional funding may not be available to us on acceptable
26
terms on a timely basis, or at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, and may result in a prolonged suspension of our ALS clinical development or cause us to delay the scope of or suspend one or more of our other clinical trials, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business. To the extent that we raise additional capital through the sale of equity or convertible debt securities, our stockholders’ ownership interests will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect our stockholders’ rights. Debt financing, if available, would result in fixed payment obligations and may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through collaborations, licenses and other similar arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates or to grant licenses on terms that may not be favorable to us. Please see Part II, Item 1A. Risk Factors in this Quarterly Report on Form 10-Q for additional risks associated with our substantial capital requirements and the challenges we may face in raising capital.
On March 31, 2021, the Company filed a registration statement on Form S-3 containing a prospectus and prospectus supplement under which the Company may offer and sell up to $75.0 million in shares of its common stock, from time to time, pursuant to an open market sale agreement with Jeffries LLC and by any method deemed to be an “at the market offering” as defined in Rule 415(a)(4) promulgated under the Securities Act of 1933 (the “ATM Program”). Pursuant to the “baby shelf rules” promulgated by the SEC, if the Company’s public float is less than $75.0 million as of specified measurement periods, the number of shares of common stock that may be offered and sold by the Company under a Form S-3 registration statement, including pursuant to the ATM Program, in any twelve-month period is limited to an aggregate amount that does not exceed one-third of the Company’s public float. As of June 30, 2022, due to the SEC’s “baby shelf rules,” the Company was permitted to sell up to $14.5 million of shares of common stock pursuant to the ATM Program. The Company will remain subject to the “baby shelf rules” under the Form S-3 registration statement until such time as its public float exceeds $75.0 million. Through June 30, 2022, no shares of common stock have been sold under the ATM program.
Cash Flows
The following table provides a summary of our net cash flow activity (in thousands):
|
|
For the Six Months |
|
|||||
|
|
2022 |
|
|
2021 |
|
||
Net cash used in operating activities |
|
$ |
(14,373 |
) |
|
$ |
(12,612 |
) |
Net cash used in financing activities |
|
|
— |
|
|
|
(450 |
) |
Net change in cash and cash equivalents |
|
$ |
(14,373 |
) |
|
$ |
(13,062 |
) |
Comparison of the Six Months Ended June 30, 2022 and 2021
Net cash used in operating activities for the six months ended June 30, 2022 consisted primarily of our net loss of $19.1 million, partially offset by non-cash items consisting of stock-based compensation and amortization of operating lease assets totaling $4.7 million. There was no impact to net cash as a result of changes in operating assets and liabilities for the six months ended June 30, 2022.
Net cash used in operating activities for the six months ended June 30, 2021 consisted primarily of our net loss of $15.9 million, partially offset by non-cash items consisting primarily of stock-based compensation and amortization of operating lease assets totaling $3.9 million, as well as deferred income taxes of $1.1 million. Additionally, cash used in operating activities for the six months ended June 30, 2021 reflected a net increase in cash from changes in operating assets and liabilities of $0.5 million, primarily due to an increase in our prepaid expenses and other current assets of $0.1 million, an increase in our accounts payable and other accrued expenses of $0.6 million, and a decrease in operating lease liability of $0.1 million.
There was no cash provided by or used in the Company’s investing activities for the six months ended June 30, 2022 and 2021.
Net cash used in financing activities for the six months ended June 30, 2021 was comprised of $0.5 million of offering costs accrued as of December 31, 2020 in connection with the sale of shares of common stock.
27
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Per §229.305 of Regulation S-K, the Company, designated a Smaller Reporting Company as defined in §229.10(f)(1) of Regulation S-K, is not required to provide the disclosure required by this Item.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
As of June 30, 2022, our management, with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives and management necessarily applies its judgment in evaluating the cost benefit relationship of possible controls and procedures. Based on this evaluation, management concluded that our disclosure controls and procedures were effective, at the reasonable assurance levels, as of June 30, 2022.
Changes in Internal Control Over Financial Reporting
There have been no changes in our internal control over financial reporting (as defined in Rules 13a-15(f) or 15d-15(f) of the Exchange Act) during the quarter ended June 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
28
PART II – OTHER INFORMATION
Item 1. Legal Proceedings
Information pertaining to legal proceedings is provided under the heading “Legal Proceedings” in Note 5, Commitments and Contingencies, to the condensed consolidated financial statements and is incorporated by reference herein.
Item 1A. Risk Factors
An investment in shares of our common stock involves a high degree of risk. You should carefully consider the following risk factors, as well as the other information in this Quarterly Report on Form 10-Q and in our other public filings. The occurrence of any of these risks could harm our business, financial condition, results of operations and/or growth prospects or cause our actual results to differ materially from those contained in forward-looking statements we have made in this report and those we may make from time to time. You should consider all of the risk factors described in our public filings when evaluating our business.
Unless otherwise indicated, references to the terms “Eledon”, the “Company”, “we”, “our”, and “us” refer to Eledon Pharmaceuticals, Inc.
Risks Related to Our Operations
Our short operating history and the Anelixis acquisition may make it difficult to evaluate the success of our business to date and to assess our future viability.
We are a clinical stage biopharmaceutical company. Our ongoing operations to date have been limited to organizing and staffing the Company, business planning, raising capital, acquiring and developing technology, identifying potential product candidates and pursuing nonclinical and clinical trials. We have not yet demonstrated our ability to successfully manufacture drug product in large enough quantities and with stability to support additional clinical trials, execute pivotal clinical trials, obtain marketing approvals, manufacture a commercial scale product or arrange for a third party to do so on our behalf, or conduct sales and marketing activities necessary for successful product commercialization. It can take many years to develop a new medicine from the time it is discovered to when it is available for treating patients. Consequently, any predictions made about our future success or viability based on our short operating history to date may not be as accurate as they could be if we had a longer operating history. In addition, as a result of the acquisition of Anelixis our future business, prospects, financial position and operating results could be significantly different than those in historical periods or projected by our management.
In addition, as an early-stage business, we may encounter unforeseen expenses, difficulties, complications, delays and other known and unknown factors. To successfully market any of our product candidates, we will need to transition from a company with a clinical development focus to a company capable of supporting commercial activities. We may not be successful in such a transition.
We have incurred significant operating losses since our inception and expect that we will continue to incur losses over the next several years and may never achieve or maintain profitability.
We have incurred significant annual net operating losses in every year since our inception. We have no products approved for commercial sale and have not generated any revenue from product sales to date, and we continue to incur significant research and development and other general and administrative expenses related to our ongoing operations. If tegoprubart or any future product candidates we develop are not successfully developed and approved, we may never generate any revenue from sales of products. The Company has experienced recurring net losses and negative cash flows from operating activities since its inception. The Company’s net loss for the quarter ended June 30, 2022 is $9.2 million. As of June 30, 2022, the Company had cash and cash equivalents of $70.5 million, working capital of $69.5 million and an accumulated deficit of $134.0 million. We have not generated any revenues from product sales, have not completed the development of any product candidate and may never have a product candidate approved for commercialization. We expect it will be several years, if ever, before we have a product candidate ready for commercialization. We have financed our operations to date primarily through sales of equity. We have devoted substantially all of our financial resources and efforts to research and development, including preclinical studies and our clinical trials. Our net losses may fluctuate significantly from quarter to quarter and year to year and will depend, in part, on the rate at which we incur expenses and our ability to generate revenue. Net losses and negative cash flows have had, and will continue to have, an adverse effect on our stockholders’ equity and working capital.
29
We anticipate that we will continue to incur significant expenses as we:
To become and remain profitable, we must develop and eventually commercialize a product or products with significant market potential. This will require us to be successful in a range of challenging activities, including completing clinical trials of our product candidates, obtaining marketing approval for these product candidates and manufacturing, marketing and selling those products for which we obtain marketing approval. We may never succeed in these activities, including if we do not have available financial resources to allow us to pursue clinical trials and other clinical development activities, and, even if we are successful, we may never generate revenues that are significant or large enough to achieve profitability. If we do achieve profitability, we may not be able to sustain or increase profitability on a quarterly or annual basis. Our failure to become and remain profitable would decrease the value of the Company, could impair our ability to raise capital, maintain our nonclinical and clinical development efforts, and expand our business or continue our operations and may require us to raise additional capital that may dilute the ownership interest of common stockholders. A decline in the value of the Company could also cause stockholders to lose all or part of their investment.
Our product candidates are in the early stages of clinical development and may not be successfully developed. If we are unable to successfully develop and commercialize these or any other product candidate, or if we experience significant delays in doing so, our business will be materially harmed.
We currently do not have any products that have gained regulatory approval. We have invested substantially all our efforts and financial resources in product development, including funding our formulation and device development, manufacturing, nonclinical studies, and clinical trials. A significant portion of our financial resources were devoted to the development of products for patients with disorders of the ear, nose, and throat, particularly our surfactant-based product for the treatment of Otitis Media; however, in June 2020 topline results from our phase 2a clinical trial of OP0201 nasal aerosol in infants and children with acute otitis media did not meet the primary efficacy endpoints in the trial and our board of directors (the “Board”) initiated a review of strategic alternatives that resulted in the acquisition of Anelixis, a privately held clinical stage biotechnology company with a single product candidate in clinical development (tegoprubart) and a second candidate in pre-clinical development (AT-2001). Our ability to generate product revenues, which we do not expect will occur for several years, if ever, will depend heavily on the successful development and eventual commercialization of one or more drug candidates. As a result, our business is substantially dependent on our ability to successfully complete the development of and obtain regulatory approval for one of our potential future additional product candidates.
We have not yet demonstrated an ability to successfully overcome many of the risks and uncertainties frequently encountered by companies in new and rapidly evolving fields, particularly in the pharmaceutical area. For example, to execute our business plan, we will need to successfully:
30
If we are unsuccessful in accomplishing these objectives, we may not be able to successfully develop and commercialize our or other product candidates, and our business will suffer.
The ongoing COVID-19 pandemic and actions taken in response to it have resulted and may continue to result in disruptions to our business operations, which could have a material adverse effect on our business.
Our business and operations, including but not limited to ongoing or planned research and development activities, have been and may continue to be adversely affected by the ongoing COVID-19 pandemic, which has also caused significant disruption in the operations of third parties upon whom we rely.
Our clinical trials have also been affected by, and may continue to be affected by, the COVID-19 pandemic. Clinical site initiation and patient enrollment have been, and may continue to be, delayed due to the prioritization of hospital resources toward the COVID-19 pandemic. Some patients have not been able to, and others may not be able to, comply with clinical trial protocols if quarantines impede patient movement or interrupt healthcare services. Similarly, any inability to recruit and retain patients and principal investigators and site staff who, as healthcare providers, may have heightened exposure to COVID-19, may adversely impact our clinical trial operations.
Our business may experience additional disruptions as a result of the COVID-19 pandemic or from another pandemic, epidemic or infectious disease outbreak that could severely impact our operations and development activities, including, but not limited to:
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The further spread of COVID-19 and its effects, including actions to limit the spread of the illness, or other pandemics, epidemics or infectious disease outbreaks could impact our ability to carry out our business and may materially adversely impact global economic conditions. Any of the foregoing factors, or other effects of the COVID-19 pandemic or another pandemic, epidemic or infectious disease outbreak, could materially affect our business, possibly to a significant degree. The severity and duration of any such impacts cannot be predicted.
Unfavorable global economic conditions could adversely affect our business, financial condition and results of operations
The global economy, including the financial and credit markets, has recently experienced extreme volatility and disruptions, including severely diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates, increases in inflation rates, rising interest rates and uncertainty about economic stability. Likewise, the current conflict between Ukraine and Russia has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets. A severe or prolonged economic downturn or continued volatility in the financial and credit markets could negatively impact our ability to obtain necessary debt or equity financing in a timely manner or on favorable terms, if at all. The severity and duration of any such impacts cannot be predicted. Any such failure to raise capital as and when needed could have a negative impact on our financial condition and on our ability to pursue our business plans and strategies, and may result in a prolonged suspension of our ALS clinical development or cause us to delay the scope of or suspend one or more of our other clinical trials, research and development programs or commercialization efforts, out-license intellectual property rights to our product candidates or sell unsecured assets, or a combination of the above. Any of these actions could materially harm our business.
In addition, inflation has recently increased throughout the U.S. economy. As a result of inflation, we have experienced and may continue to experience cost increases, including costs of clinical trials and research and development of our product candidates, production costs, the price of labor, administration and other costs of doing business. Although we may continue to take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected. Further, in an inflationary environment, cost increases may outpace our expectations, causing us to use our cash and other liquid assets faster than forecasted. If this happens, we may need to raise more capital to fund our operations than expected, and such capital may not be available in sufficient amounts or on reasonable terms, if at all.
Drug development involves a lengthy and expensive process with an uncertain outcome, including failure to demonstrate safety and efficacy to the satisfaction of the FDA or similar regulatory authorities outside the United States. We may incur additional costs or experience delays in completing, or ultimately be unable to complete, the formulation and commercialization of our product candidates.
Given the early stage of development for our product candidates, the risk of failure is high. Before obtaining marketing approval from regulatory authorities for the sale of any product candidate, we must conduct nonclinical trials, and then conduct extensive clinical trials to demonstrate the safety and efficacy of our product candidates in humans. Formulation and device development, nonclinical and clinical testing are all expensive activities, difficult to design and implement, and can take years to complete. Failure can occur at any time during the development program, including during the clinical trial process. Further, the results of nonclinical studies and early clinical trials of our product candidates, as well as earlier generation formulations may not be predictive of the results of later-stage clinical trials. Interim results of a clinical trial do not necessarily predict final results. Moreover, nonclinical and clinical data are often susceptible to varying interpretations and analyses, and many companies that have believed their product candidates performed satisfactorily in nonclinical and clinical trials have nonetheless failed to obtain marketing approval of their products. There is a risk that additional nonclinical and/or clinical safety studies will be required by the FDA or similar regulatory authorities outside the United States and/or that subsequent studies will not match results seen in prior studies. It is impossible to predict when or if any of our product candidates will prove effective, safe and well-tolerated in humans or will receive regulatory approval.
We may experience delays in our clinical trials, and we do not know whether planned clinical trials will begin or enroll subjects on time, need to be redesigned or be completed on schedule, if at all. There can be no assurance that the FDA or equivalent foreign regulatory bodies will approve investigational new drug applications and allow us to start clinical trials for any of our product candidates in the future, including for islet cell transplant. Once a clinical trial has commenced, there is also no assurance that the FDA or equivalent foreign regulatory body will not put any of our product candidates on clinical hold. We may experience numerous unforeseen events during, or as a result of, clinical trials that could delay or prevent our ability to receive marketing approval or commercialize our product candidates. Clinical trials may be delayed, suspended or prematurely terminated for a variety of reasons, such as:
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If we are required to conduct additional clinical trials or other testing of our product candidates beyond those that we currently contemplate, if we are unable to successfully complete clinical trials of our product candidates or other testing, if the results of these trials or tests are not positive or are only modestly positive, or if there are safety concerns, we may:
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Our product development costs will also increase if we experience delays in testing or marketing approvals. We do not know whether any of our nonclinical studies or clinical trials will need to be restructured or will be completed on schedule, or at all. Significant nonclinical or clinical trial delays also could shorten any periods during which we may have the exclusive right to commercialize our product candidates or may allow our competitors to bring products to market before we do and impair our ability to successfully commercialize our product candidates and may harm our business and results of operations.
If we experience delays or difficulties in the enrollment of patients in clinical trials, our receipt of necessary regulatory approvals could be delayed or prevented and expenses for the development of our product candidates could increase.
We may not be able to initiate or continue clinical trials for our product candidates if we are unable to locate and enroll a sufficient number of eligible patients to participate in these trials to demonstrate safety and efficacy. We do not know whether the ongoing or planned clinical trials will enroll subjects in a timely fashion, require redesign of essential trial elements or be completed on its projected schedule. In addition, competitors may have ongoing clinical trials for product candidates that treat related or the same indications as our product candidates, and patients who would otherwise be eligible for our clinical trials may instead enroll in clinical trials of our competitors’ product candidates. Our inability to enroll a sufficient number of patients for our clinical trials would result in significant delays and could require us to abandon one or more clinical trials altogether.
Patient enrollment is affected by other factors including:
Enrollment delays in our clinical trials may result in increased development costs for our product candidates, which would cause the value of the Company to decline and limit our ability to obtain additional financing.
We may not be able to conduct clinical trials in some jurisdictions outside of the United States.
We expect to open clinical trial sites in regions outside the United States during 2022, including the European Union and the United Kingdom, and we may conduct future clinical trials in markets outside the United States. Our ability to conduct clinical trials at sites located outside the United States is subject to numerous risks unique to conducting business in jurisdictions outside the United States, including:
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Additionally, Russia’s February 2022 invasion of Ukraine and the resulting imposition of economic and other sanctions by the United States, European Union and many other nations on Russia, individuals in Russia, Russian businesses and the Russian central bank, or any escalation of tensions in the region, could have a broader impact that expands into other countries. Although the length and impact of any military action and expansion of the conflict into other countries are highly unpredictable, if the conflict spreads or has effects on countries outside Ukraine and Russia, we may experience disruptions or delays in our plans to conduct clinical trial activities in affected regions outside the United States.
If serious adverse events or unacceptable side effects are identified during the development of our product candidates, we may need to abandon or limit our development of some of our product candidates.
If our product candidates are associated with undesirable effects in nonclinical or clinical trials or have characteristics that are unexpected, we may need to interrupt, delay or abandon their development or limit development to more narrow uses or subpopulations in which the undesirable side effects or other characteristics are less prevalent, less severe or more acceptable from a risk-benefit perspective. Any occurrences of clinically significant adverse events with our product candidates may harm our business, financial condition and prospects significantly.
Tegoprubart is an early‑product candidate, and the side effect profile in humans has not been fully established. Currently unknown, drug-related side effects may be identified through ongoing and future clinical trials and, as such, these possible drug-related side effects could affect patient recruitment, the ability of enrolled subjects to complete the trial, or result in potential product liability claims.
Although we have raised significant capital, we will require additional funding to be able to complete the development of our lead drug candidate and identify and develop new product candidates. If we are unable to raise capital when needed, we may be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether.
We expect our expenses to increase in parallel with our ongoing activities, particularly as we incur expenses relating to the exploration of strategic options intended to maximize stockholder value, seek to identify new clinical candidates and potentially seek to partner, out-license or otherwise monetize our drug candidates. If we are unable to raise capital when needed or on attractive terms, we may be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether. For example, we are currently unable to continue our clinical development of tegoprubart for people with ALS without additional financing, and we can provide no assurances that we will be able to obtain financing on acceptable terms or at all. Our funding needs may fluctuate significantly based on a number of factors, such as:
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Identifying potential product candidates and conducting formulation development, nonclinical testing and clinical trials is a time-consuming, expensive and uncertain process that takes years to complete, and we may never generate the necessary data or results required to obtain marketing approval and achieve product sales. In addition, our product candidates, if approved, may not achieve commercial success. Our commercial revenues, if any, will be derived from sales of products that we do not expect to be commercially available for several years, if at all. Accordingly, we will need to continue to rely on additional financing to achieve our business objectives. Even if we generate positive clinical data, additional financing may not be available to us on acceptable terms, or at all. If we are unable to raise sufficient capital to fund our planned operations, we may be forced to significantly alter our business strategy, substantially curtail our current operations, or liquidate and cease operations altogether.
Our future success depends on our ability to retain executives and key employees and to attract, retain and motivate qualified personnel in the future.
We are highly dependent on the product development, clinical and business development expertise of the principal members of our management, scientific and clinical team. Although we have entered into employment agreements with our executives and key employees, each of them may terminate their employment with us at any time. We do not maintain “key person” insurance for any of our executives or other employees. Our recent acquisition of Anelixis and the resulting integration of the company may increase the likelihood that employees depart in the foreseeable future.
Recruiting and retaining qualified scientific, clinical, manufacturing, sales and marketing personnel is critical to our success. Due to the small size of the Company and the limited number of employees, each of our executives and key employees serves in a critical role. The loss of the services of our executive officers or other key employees could impede the achievement of our development and commercialization objectives and seriously harm our ability to successfully implement our business strategy. Furthermore, replacing executive officers and key employees may be difficult and may take an extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to successfully develop, gain regulatory approval of, and commercialize products. Competition to hire from this limited pool is intense, and we may be unable to hire, train, retain or motivate these key personnel on acceptable terms given the competition among numerous pharmaceutical and biotechnology companies for similar personnel. We also experience competition for the hiring of scientific and clinical personnel from universities and research institutions. In addition, we rely on consultants and advisors, including scientific and clinical advisors, to assist us in formulating drug product, nonclinical development, clinical development, regulatory strategy, and commercial 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 provide services to us. If we are unable to continue to attract and retain high quality personnel, our ability to pursue our growth strategy will be limited.
Risks Related to Regulatory Approval of Our Product Candidates and Other Legal Compliance Matters
If we are not able to obtain, or if there are delays in obtaining, required regulatory approvals, or the approvals may be for a narrow indication, we may not be able to commercialize our product candidates, and our ability to generate revenue may be materially impaired.
Our product candidates must be approved by the FDA pursuant to a new drug application in the United States and by other regulatory authorities outside the United States prior to commercialization in the respective regions. The process of obtaining marketing approvals, both in the United States and outside the United States, is expensive and takes several years, if approval is obtained at all, and can vary substantially based upon a variety of factors, including the type, complexity and novelty of the product candidates involved. Failure to obtain marketing approval for a product candidate will prevent us from commercializing the product candidate. We have not received approval to market any of our product candidates from regulatory authorities in any country. We have no experience in filing and supporting the applications necessary to gain marketing approvals for our products and may engage third-party consultants to assist in this process. Securing marketing approval requires the submission of extensive nonclinical and clinical data, and other supporting information to regulatory authorities for each therapeutic indication to establish the product candidate’s safety and efficacy. Securing marketing
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approval also requires the submission of information about the product formulation and manufacturing process to, and inspection of manufacturing facilities by, the regulatory authorities. Our product candidates may not be effective, may be only moderately effective or may prove to have undesirable or unintended side effects, toxicities or other characteristics that may preclude our obtaining marketing approval or prevent or limit commercial use. Regulatory authorities have substantial discretion in the approval process and may refuse to accept any application or may decide that our data are insufficient for approval and require additional nonclinical, clinical or other data. In addition, varying interpretations of the data obtained from nonclinical and clinical trials could delay, limit or prevent marketing approval of a product candidate. Changes in marketing approval policies during the development period, changes in or the enactment of additional statutes or regulations, or changes in regulatory review for each submitted product application, may also cause delays in or prevent the approval of an application.
Any marketing approval we ultimately obtain may be for fewer or more limited indications than requested or subject to restrictions or post-approval commitments that render the approved product not commercially viable or its market potential significantly impaired. In addition, regulatory agencies may not approve the labeling claims that are necessary or desirable for the successful commercialization of our product candidates.
In order to market and sell our products in the EU and other international jurisdictions outside of the United States, we or our third-party collaborators must obtain separate marketing approvals and comply with numerous and varying regulatory requirements. The approval procedure varies among countries and may require additional nonclinical, clinical or health outcome data. In addition, the time required to obtain approval may differ substantially amongst international jurisdictions. The regulatory approval process outside the United States generally includes all the risks associated with obtaining FDA approval. In addition to regulatory approval, in many countries outside the United States, it is required that the product be approved for reimbursement before the product can be approved for sale in that country.
If we experience delays in obtaining approval or if we fail to obtain approval of our product candidates, the commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.
Any product candidate for which we obtain marketing approval will be subject to extensive post-marketing regulatory requirements and could be subject to post-marketing restrictions or withdrawal from the market, and we may be subject to penalties if we fail to comply with regulatory requirements or if we experience unanticipated problems with our products, when and if any of them are approved.
Our product candidates and the activities associated with their development and commercialization, including their testing, manufacture, recordkeeping, labeling, storage, approval, advertising, promotion, sale and distribution, are subject to comprehensive regulation that are specific to those defined by regulatory authorities in the countries where the product is approved. In the United States and other countries that follow the International Conference on Harmonization, these requirements include submissions of safety and other post-marketing information and reports, registration and listing requirements, cGMP requirements relating to manufacturing, quality control, quality assurance and corresponding maintenance of records and documents, including periodic inspections by the FDA and other regulatory authorities, requirements regarding the distribution of samples to physicians and recordkeeping.
The FDA, or other regulatory authorities, may also impose requirements for costly post-marketing studies or clinical trials and surveillance to monitor the safety or efficacy of the product. The FDA closely regulates the post-approval marketing and promotion of drugs to ensure drugs are marketed only for the approved indications and in accordance with the provisions of the approved labeling. The FDA imposes stringent restrictions on manufacturers’ communications regarding use of their products and if we promote our products beyond their approved indications, we may be subject to enforcement action for off-label promotion. Violations of the Federal Food, Drug, and Cosmetic Act relating to the promotion of prescription drugs may lead to investigations alleging violations of federal and state healthcare fraud and abuse laws, as well as state consumer protection laws.
In addition, later discovery of previously unknown adverse events or other problems with our products, manufacturers or manufacturing processes, or failure to comply with regulatory requirements, may yield various results, including:
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Non-compliance with EU requirements regarding safety monitoring or pharmacovigilance, and with requirements related to the development of products for the pediatric population, can also result in significant financial penalties. Similarly, failure to comply with the EU’s requirements regarding the protection of personal information can also lead to significant penalties and sanctions.
Legislation regulating the pharmaceutical and healthcare industries may increase the difficulty and cost for us to obtain marketing approval of and commercialize our product candidates and affect the prices we may obtain.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes intended to contain healthcare costs and modify the regulation of drug and biologic products. These and other regulatory changes could prevent or delay marketing approval of our product candidates, restrict or regulate post-approval activities and affect our ability to profitably sell any product candidates for which we obtain marketing approval.
We expect that additional state and federal healthcare reform measures and regulations will be adopted in the future. Any of these measures and regulations could limit the amounts that federal and state governments will pay for healthcare products and services, result in reduced demand for our product candidates or additional pricing pressures and affect our product development, testing, marketing approvals and post-market activities.
Laws, restrictions, and other regulatory measures are also imposed by healthcare laws and regulations in international jurisdictions and in those jurisdictions we face the same issues as in the United States regarding difficulty and cost for us to obtain marketing approval and commercialization of our product candidates and which may affect the prices we may obtain.
In some countries, particularly the countries of the EU, the pricing of prescription pharmaceuticals is subject to governmental control. In these countries, pricing negotiations with governmental authorities can take considerable time after the receipt of marketing approval for a product. To obtain reimbursement or pricing approval in some countries, we may be required to conduct a clinical trial that compares the cost-effectiveness of our product candidate to other available therapies. If reimbursement of our products is unavailable or limited in scope or amount, or if pricing is set at unsatisfactory levels, our business could be harmed, possibly materially.
Our business operations and relationships with healthcare providers, physicians, third-party payers, and customers will be subject to applicable anti-kickback, fraud and abuse and other broadly applicable healthcare laws, which could expose us to criminal sanctions, civil penalties, program exclusion, contractual damages, reputational harm and diminished profits and future earnings.
Healthcare providers, physicians and third-party payers will play a primary role in the recommendation and prescription of any product candidates for which we receive marketing approval. Our current and future arrangements may expose us to broadly applicable fraud and abuse and other healthcare laws that may constrain the business or financial arrangements and relationships through which we would market, sell and distribute the products for which we receive marketing approval. Even though we will not control referrals of healthcare services or bill directly to Medicare, Medicaid or other third-party payers, federal and state healthcare laws are and will be applicable to our business. Such laws include, but are not limited to federal false claims, false statements and civil monetary penalties laws, including the federal civil False Claims Act (“FCA”), the federal Anti-Kickback Statute, the federal Health Insurance Portability and Accountability Act of
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1996 (“HIPAA”), patient data privacy and security regulation, including, in the United States, HIPAA, as amended by the Health Information Technology for Clinical Health Act of 2009 (“HITECH”), the federal transparency requirements under the Physician Payments Sunshine Act, and analogous state, local or foreign law.
Pharmaceutical and other healthcare companies have been prosecuted under these laws for a variety of promotional and marketing activities, such as: providing free trips, free goods, sham consulting fees and grants and other monetary benefits to prescribers; reporting to pricing services inflated average wholesale prices that were then used by federal programs to set reimbursement rates; engaging in off-label promotion; and submitting inflated best price information to the Medicaid Rebate Program to reduce liability for Medicaid rebates. Efforts to ensure that our business arrangements with third parties will comply with applicable healthcare laws and regulations will involve substantial costs. It is possible that governmental authorities will conclude that our business practices may not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations.
If our operations are found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, disgorgement, fines, imprisonment, exclusion from government funded healthcare programs, such as Medicare and Medicaid, additional oversight and reporting obligations, contractual damages, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations. If any of the physicians or other healthcare providers or entities with whom we expect to do business are found to be not in compliance with applicable laws, that person or entity may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Laws, restrictions, and other regulatory measures are also imposed by anti-kickback, fraud and abuse, and other healthcare laws and regulations in international jurisdictions, and in those jurisdictions we face the same issues as in the United State regarding exposure to criminal sanctions, civil penalties, program exclusion, contractual damages, reputational harm, and diminished profits and future earnings.
We depend on our information technology systems and those of our third-party collaborators, service providers, contractors or consultants. Our internal computer systems, or those of our third-party collaborators, service providers, contractors or consultants, may fail or suffer security breaches, disruptions, or incidents, which could result in a material disruption of our development programs or loss of data or compromise the privacy, security, integrity or confidentiality of sensitive information related to our business and have a material adverse effect on our reputation, business, financial condition or results of operations.
In the ordinary course of our business, we collect, store and transmit large amounts of confidential information, including intellectual property, proprietary business information and personal information. Our internal technology systems and infrastructure, and those of our current or future third-party collaborators, service providers, contractors and consultants are vulnerable to damage from computer viruses, unauthorized access or use resulting from malware, natural disasters, terrorism, war and telecommunication and electrical failures, denial-of-service attacks, cyber-attacks or cyber-intrusions over the Internet, hacking, phishing and other social engineering attacks, persons inside our organizations (including employees or contractors), loss or theft, or persons with access to systems inside our organization. Attacks on information technology systems are increasing in their frequency, levels of persistence, sophistication and intensity, and they are being conducted by increasingly sophisticated and organized foreign governments, groups and individuals with a wide range of motives and expertise. In addition to extracting or accessing sensitive information, such attacks could include the deployment of harmful malware, ransomware, denial-of-service attacks, social engineering and other means to affect service reliability and threaten the security, confidentiality, integrity and availability of information. The prevalent use of mobile devices that access sensitive information also increases the risk of data security incidents which could lead to the loss of confidential information or other intellectual property. While to our knowledge we have not experienced any material system failure, accident or security breach to date, if such an event were to occur and cause interruptions in our operations or the operations of third-party collaborators, service providers, contractors and consultants, it could result in a material disruption of our development programs and significant reputational, financial, legal, regulatory, business or operational harm. The costs to us to mitigate, investigate and respond to potential security incidents, breaches, disruptions, network security problems, bugs, viruses, worms, malicious software programs and security vulnerabilities could be significant, and while we have implemented security measures to protect our data security and information technology systems, our efforts to address these problems may not be successful, and these problems could result in unexpected interruptions, delays, cessation of service and other harm to our business and our competitive position.
For example, the loss of clinical trial data from completed, ongoing or planned clinical trials for our product candidates could result in delays in our regulatory approval efforts and significantly increase our costs to recover or
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reproduce the data. To the extent that any real or perceived security breach affects our systems (or those of our third-party collaborators, service providers, contractors or consultants), or results in the loss of or accidental, unlawful or unauthorized access to, use of, release of, or other processing of personally identifiable information or damage to our data or applications or other data or applications relating to our technology or product candidates, or inappropriate disclosure of confidential or proprietary information, we could incur liabilities and the further development of our product candidates could be delayed. Such a breach may require notification to governmental agencies, the media or individuals pursuant to various foreign, domestic (federal and state) privacy and security laws, if applicable, including HIPAA, as amended by HITECH, and its implementing rules and regulations, as well as regulations promulgated by the Federal Trade Commission and state breach notification laws. In addition, our liability insurance may not be sufficient in type or amount to cover us against claims related to security breaches, cyberattacks and other related incidents.
Any failure or perceived failure by us or any third-party collaborators, service providers, contractors or consultants to comply with our privacy, confidentiality, data security or similar obligations, or any data security incidents or other security breaches that result in the accidental, unlawful or unauthorized access to, use of, release of, processing of, or transfer of sensitive information, including personally identifiable information, may result in negative publicity, harm to our reputation, governmental investigations, enforcement actions, regulatory fines, litigation or public statements against us, could cause third parties to lose trust in us or could result in claims by third parties, including those that assert that we have breached our privacy, confidentiality, data security or similar obligations, any of which could have a material adverse effect on our reputation, business, financial condition or results of operations. To the extent we maintain individually identifiable health information, we could be subject to fines and penalties (including civil and criminal) under HIPAA for any failure by us or our business associates to comply with HIPAA’s requirements. Moreover, data security incidents and other security breaches can be difficult to detect, and any delay in identifying them may lead to increased harm. While we have implemented data security measures intended to protect our information, data, information technology systems, applications and infrastructure, there can be no assurance that such measures will successfully prevent service interruptions or data security incidents.
European data collection is governed by restrictive regulations governing the collection, use, processing and cross-border transfer of personal information.
We may collect, process, use or transfer personal information from individuals located in the European Economic Area in connection with our business, including in connection with conducting clinical trials in the EEA. Additionally, if any of our product candidates are approved, we may seek to commercialize those products in the European Economic Area. The collection and use of personal health data in the European Economic Area is governed by the provisions of the General Data Protection Regulation ((EU) 2016/679) (the “GDPR”), along with other European Union and country-specific laws and regulations. The United Kingdom and Switzerland have also adopted data protection laws and regulations. These legislative acts (together with regulations and guidelines) impose requirements relating to having legal bases for processing personal data relating to identifiable individuals and transferring such data outside of the European Economic Area, including to the United States, providing details to those individuals regarding the processing of their personal data, keeping personal data secure, having data processing agreements with third parties who process personal data, responding to individuals’ requests to exercise their rights in respect of their personal data, reporting security breaches involving personal data to the competent national data protection authority and affected individuals, appointing data protection officers or corporate representatives, conducting data protection impact assessments and record-keeping. The GDPR imposes additional responsibilities and liabilities in relation to personal data that we process, and we may be required to put in place additional mechanisms ensuring compliance with the new data protection rules. Failure to comply with the requirements of the GDPR and related national data protection laws of the member states of the European Economic Area and other states in the European Economic Area may result in substantial fines, other administrative penalties and civil claims being brought against us, which could have a material adverse effect on our business, financial condition and results of operations. European data protection authorities may interpret the GDPR and national laws differently and may impose additional requirements, which adds to the complexity of processing personal data in or from the EEA or United Kingdom. Guidance on implementation and compliance practices are often updated or otherwise revised.
If we fail to comply with environmental, health and safety laws and regulations, we could become subject to fines or penalties or incur costs that could harm our business.
We may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our nonclinical or clinical development or production efforts. Our failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions.
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Risks Related to the Commercialization of Our Product Candidates
Even if any of our product candidates receives marketing approval, we may fail to achieve the degree of market acceptance by physicians, patients, third-party payers and others in the medical community necessary for commercial success.
If any of our product candidates receives marketing approval, we may nonetheless fail to gain sufficient market acceptance by physicians, patients, third-party payers and others in the medical community. In addition, physicians, patients and third-party payers may prefer other novel products to ours. If our product candidates do not achieve an adequate level of acceptance, we may not generate significant product revenues and we may not become profitable. The degree of market acceptance of our product candidates, if approved for commercial sale, will depend on a number of factors, including:
If our current product candidates, or a future product candidate receives marketing approval and we, or others, later discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, the ability to market the product could be compromised.
Clinical trials are conducted in carefully defined subsets of patients who have agreed to enter into clinical trials. Consequently, it is possible that our clinical trials may indicate an apparent beneficial effect of a product candidate that is greater than the actual positive effect in a broader patient population or alternatively fail to identify undesirable side effects. If, following approval of a product candidate, we, or others, discover that the product is less effective than previously believed or causes undesirable side effects that were not previously identified, any of the following events could occur:
Any of these events could have a material and adverse effect on our operations and business. The commercial prospects for our product candidates may be harmed and our ability to generate revenues will be materially impaired.
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We currently have no marketing and sales force. If we are unable to establish effective marketing and sales capabilities or enter into agreements with third parties to market and sell our product candidates, we may not be able to effectively market and sell our product candidates, if approved, or generate product revenues.
We currently do not have a marketing or sales team for the marketing, sales and distribution of any of our product candidates that are able to obtain regulatory approval. In order to commercialize any product candidates, we must build on a territory-by-territory basis marketing, sales, distribution, managerial and other non-technical capabilities or make arrangements with third parties to perform these services, and we may not be successful in doing so. If our product candidates receive regulatory approval, we intend to establish an internal sales and marketing team with technical expertise and supporting distribution capabilities to commercialize our product candidates, which will be expensive and time-consuming, will require significant attention of our executive officers to manage and may nonetheless fail to effectively market and sell our product candidates. Any failure or delay in the development of our internal sales, marketing and distribution capabilities would adversely impact the commercialization of any of our products that we obtain approval to market. With respect to the commercialization of all or certain of our product candidates, we may choose to collaborate, either globally or on a territory-by-territory basis, with third parties that have direct sales forces and established distribution systems, either to augment our own sales force and distribution systems or in lieu of our own sales force and distribution systems. If we are unable to enter into such arrangements when needed on acceptable terms or at all, we may not be able to successfully commercialize any of our product candidates that receive regulatory approval, or any such commercialization may experience delays or limitations. If we are not successful in commercializing our product candidates, either on our own or through collaborations with one or more third parties, our future product revenue will suffer, and we may incur significant additional losses.
We face substantial competition, which may result in others discovering, developing or commercializing competing products before or more successfully than we do.
The development and commercialization of new drug products is highly competitive. We face competition with respect to our current product candidates and will face competition with respect to any product candidates that we may seek to develop or commercialize in the future, from major pharmaceutical companies, specialty pharmaceutical companies and biotechnology companies worldwide. There are several large pharmaceutical and biotechnology companies that currently market and sell products or are pursuing the development of products for the treatment of the disease indications for which we are developing our product candidates. Some of these competitive products and therapies are based on scientific approaches that are the same as or similar to our approach, and others are based on entirely different approaches. Potential competitors also include academic institutions, government agencies and other public and private research organizations that conduct research, seek patent protection and establish collaborative arrangements for research, development, manufacturing and commercialization.
Specifically, there are a number of companies developing competing anti-CD40 and anti-CD40L therapeutics, including Novartis, Boehringer Ingelheim, Astellas, AbbVie, Sanofi, UCB, Horizon Therapeutics (post acquisition of Viela Bio), Bristol Myers Squibb, and Kiniksa. All of these companies are larger than Eledon and have significantly greater resources to develop their drug candidates.
If approved, we expect that tegoprubart will face competition from numerous FDA-approved therapeutics for the prevention of transplant rejection, including PROGRAF®, ASTAGRAF XL®, ENVARSUS XR®, NULOJIX®, CELLCEPT®, MYFORTIC®, and numerous other branded and generic immunosuppressive agents. Multiple companies are working on islet cell and kidney transplant solutions that may ultimately potentially negate the need for immunosuppressive agents in these indications altogether.
If approved, we expect tegoprubart will face competition from other FDA-approved therapeutics for the treatment of LN, FSGS or IgAN, including TARPEYO™, LUPKYNIS™ and BENLYSTA®, SPARSENTAN, and numerous other branded and generic medicines are already being used “off-label” to treat them.
We expect that tegoprubart will face competition from FDA-approved therapeutics for the treatment of ALS including RADICAVA®, RILUZOLE, and numerous other branded and generic immunosuppressive agents. Multiple pharmaceutical and biotechnology companies, including but not limited to Biogen, Ionis Pharmaceuticals, Alexion Pharmaceuticals, Orion Pharma, Orphazyme, AZTherapies, Voyager Therapeutics, Apic Bio, Brainstorm Cell Therapeutics, Cytokinetics, and Amylyx Pharmaceuticals are also working on competing ALS pharmaceutical, gene therapy and cell therapy approaches.
Our commercial opportunity could be reduced or eliminated if our competitors develop and commercialize products that are safer, more effective, have fewer or less severe side effects, are more convenient or are less expensive than any
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products that we may develop. In addition, our ability to compete may be affected in many cases by insurers or other third-party payers seeking to encourage the use of generic products.
Generic products are currently available, with additional generic products expected to become available over the coming years, potentially creating pricing pressure. If our product candidates achieve marketing approval, we expect that they will be priced at a significant premium over competitive generic products.
Many of the companies against which we are competing or against which we may compete in the future have significantly greater financial resources and expertise in research and development, manufacturing, conducting nonclinical studies, conducting clinical trials, obtaining regulatory approvals and marketing approved products than we do. Mergers and acquisitions in the pharmaceutical and biotechnology industries may result in even more resources being concentrated among a smaller number of our competitors. Smaller and other early-stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large and established companies. These third parties compete with us in recruiting and retaining qualified scientific and management personnel, establishing clinical trial sites and patient registration for clinical trials, as well as in acquiring technologies complementary to, or necessary for, our programs.
The insurance coverage and reimbursement status of newly approved products is uncertain. Failure to obtain or maintain adequate coverage and reimbursement for new or current products could limit our ability to market those products and decrease our ability to generate revenue.
The availability and extent of reimbursement by governmental and private payers is essential for most patients to be able to afford expensive treatments. Sales of our product candidates will depend substantially, both domestically and internationally, on the extent to which the costs of our product candidates will be paid by health maintenance, managed care, pharmacy benefit and similar healthcare management organizations, or reimbursed by government health administration authorities, private health coverage insurers and other third-party payers. If reimbursement is not available, or is available only to limited levels, we may not be able to successfully commercialize our product candidates. Even if coverage is provided, the approved reimbursement amount may not be high enough to allow us to establish or maintain pricing sufficient to realize a sufficient return on our investment.
There is significant uncertainty related to the insurance coverage and reimbursement of newly approved products. In the United States, the principal decisions about reimbursement for new medicines are typically made by CMS, as CMS decides whether and to what extent a new medicine will be covered and reimbursed under Medicare. Private payers tend to follow CMS to a substantial degree. It is difficult to predict what CMS will decide with respect to reimbursement for fundamentally novel products such as ours, as there is no body of established practices and precedents for these new products. Reimbursement agencies in Europe may be more conservative than CMS. Outside the United States, international operations are generally subject to extensive governmental price controls and other market regulations, and we believe the increasing emphasis on cost-containment initiatives in Europe, Canada, and other countries has and will continue to put pressure on the pricing and usage of our product candidates. In many countries, the prices of medical products are subject to varying price control mechanisms as part of national health systems. In general, the prices of medicines under such systems are substantially lower than in the United States. Other countries allow companies to fix their own prices for medicines but monitor and control company profits. Additional foreign price controls or other changes in pricing regulation could restrict the amount that we are able to charge for our product candidates. Accordingly, in markets outside the United States, the reimbursement for our products may be reduced compared with the United States and may be insufficient to generate commercially reasonable revenues and profits.
Moreover, increasing efforts by governmental and third-party payers, in the United States and internationally, to cap or reduce healthcare costs may cause such organizations to limit both coverage and level of reimbursement for new products approved and, as a result, they may not cover or provide adequate payment for our product candidates. Increased expense is incurred to cover costs of health outcome focused research used to generate data necessary to justify the value of our products in order to secure reimbursement. We expect to experience pricing pressures in connection with the sale of any of our product candidates, due to the trend toward managed healthcare, the increasing influence of health maintenance organizations and additional legislative changes. The downward pressure on healthcare costs in general, particularly prescription drugs and surgical procedures and other treatments, has become very intense. As a result, increasingly high barriers are being erected to the entry of new products into the healthcare market.
In addition, many private payers contract with commercial vendors who sell software that provide guidelines that attempt to limit utilization of, and therefore reimbursement for, certain products deemed to provide limited benefit to existing alternatives. Such organizations may set guidelines that limit reimbursement or utilization of our products.
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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 trials and will face an even greater risk if we commercially sell any products that we may develop. If we cannot successfully defend 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 decreased demand for any product candidates or products that we may develop; injury to our reputation and significant negative media attention; withdrawal of clinical trial participants; significant costs to defend the related litigation; substantial monetary awards to trial participants or patients; loss of revenue; reduced resources of our management to pursue our business strategy; and the inability to commercialize any products that we may develop.
We currently hold $10.0 million in product liability insurance coverage in the aggregate, with a per incident limit of $10.0 million, which may not be adequate to cover all liabilities that we may incur. We may need to increase our insurance coverage as we expand our clinical trials or if we commence commercialization of our product candidates. Insurance coverage is increasingly expensive. We may not be able to maintain insurance coverage at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
Risks Related to Our Dependence on Third Parties
We contract with third parties for the manufacture of our product candidates for nonclinical and clinical trials and expect to continue to do so for commercialization. This reliance on third parties increases the risk that we will not have sufficient quantities of our product candidates or products at an acceptable cost and quality, which could delay, prevent or impair our development or commercialization efforts.
We have utilized, and intend to continue utilizing, third parties to formulate, manufacture, package, and distribute clinical supplies of our drug candidates. We have no experience in manufacturing and do not have any manufacturing facilities. Currently, we rely on third parties for the manufacturing of drug substance and drug product for nonclinical and clinical activities. Our manufacturing vendors utilize proprietary cell culture media, cell lines, buffers, manufacturing equipment, manufacturing supplies, and storage buffers for the manufacturing of tegoprubart and other product candidates. These materials are custom-made and available from only a limited number of sources. Although we believe that our third-party suppliers maintain a significant supply of these materials and equipment on hand, any sustained disruption in this supply, including as a result of operational disruptions related to the ongoing COVID-19 pandemic, could adversely affect our operations. We do not have any long-term agreements in place with our current suppliers. If we are required to change manufacturers, we may experience delays associated with finding an alternate manufacturer that is properly qualified to produce supplies of our products and product candidates in accordance with regulatory requirements and our specifications. Any delays or difficulties in obtaining or in manufacturing, packaging or distributing approved product candidates could negatively impact our clinical trials.
We expect to rely on third-party manufacturers or third-party collaborators for the manufacture of commercial supply of any other product candidates for which our collaborators or we obtain marketing approval. Despite drug substance and product risk management, this reliance on third parties presents a risk that we will not have sufficient quantities of our product candidates or products or such quantities at an acceptable cost or quality, which could delay, prevent or impair our development or commercialization efforts. In addition, the operations of these third parties have been and may continue to be significantly disrupted by the ongoing COVID-19 pandemic. Any delay or performance failure on the part of our existing or future manufacturers of drug substance or drug products could delay clinical development or marketing approval. We do not currently have arrangements in place for redundant supply. If suppliers cannot supply us with our requirements, we may be required to identify alternative manufacturers, which would lead us to incur added costs and delays in identifying and qualifying any such replacement.
Formulations and devices used in early studies are not final formulations and devices for commercialization. Additional changes may be required by the FDA or other regulatory authorities on specifications and storage conditions. These may require additional studies and may result in a delay in our clinical trials and commercialization activities.
We also expect to rely on other third parties to label, store, and distribute drug supplies for our clinical trials. Any performance failure on the part of our distributors could delay clinical development or marketing approval of our product candidates or commercialization of our products, producing additional losses and depriving us of potential product revenue.
44
We may be unable to establish any agreements with third-party manufacturers or to do so on acceptable terms. Even if we are able to establish agreements with third-party manufacturers, reliance on third-party manufacturers entails additional risks, including:
inconvenient for us.
The third parties we rely on for manufacturing and packaging are also subject to regulatory review, and any regulatory compliance problems with these third parties could significantly delay or disrupt our clinical or commercialization activities. Third-party manufacturers may not be able to comply with cGMP regulations or similar regulatory requirements outside the United States. Our failure, or the failure of our third-party manufacturers, to comply with applicable regulations could result in sanctions being imposed on us, including clinical holds, fines, injunctions, civil penalties, delays, suspension or withdrawal of approvals, license revocation, seizures or recalls of product candidates or products, operating restrictions and criminal prosecutions, any of which could significantly and adversely affect supplies of our products. Additionally, macro-economic conditions may adversely affect these third parties, causing them to suffer liquidity or operational problems. If a key third-party vendor becomes insolvent or is forced to lay off workers assisting with our projects, our results and development timing could suffer.
Our product candidates and any products that we may develop may compete with other product candidates and products for access to manufacturing facilities. There are a limited number of manufacturers that operate under cGMP regulations and that might be capable of manufacturing for us.
Our current and anticipated future dependence upon others for the manufacture of our product candidates or products may adversely affect our future profit margins and our ability to commercialize any products that receive marketing approval on a timely and competitive basis.
We depend on CROs and other contracted third parties to perform nonclinical and clinical testing and certain other research and development activities. As a result, the outcomes of the activities performed by these organizations will be, to a certain extent, beyond our control.
The nature of outsourcing a substantial portion of our business will require that we rely on CROs and other contractors to assist us with research and development, clinical testing activities, patient enrollment, data collection, and regulatory submissions to the FDA or other regulatory bodies. As a result, our success will depend partially on the success of these third parties in performing their responsibilities. Although we intend to pre-qualify our CROs and other contractors and we believe that the contractors selected will be fully capable of performing their contractual obligations, we cannot directly control the adequacy and timeliness of the resources and expertise that they apply to these activities. Additionally, macro-economic conditions may affect our development partners and vendors, which could adversely affect their ability to timely perform their tasks. If our contractors do not perform their obligations in an adequate and timely manner, the pace of clinical development, regulatory approval and commercialization of our drug candidates could be significantly delayed, and our prospects could be adversely affected.
Risks Related to Our Intellectual Property
If we are unable to obtain and maintain intellectual property protection for our technology and products or if the scope of the intellectual property protection obtained is not sufficiently broad, our competitors could develop and commercialize technology and products similar or identical to ours, and our ability to successfully commercialize our technology and products may be impaired.
Our success depends in large part on our ability to obtain and maintain patent protection in relevant countries with respect to our proprietary technology and products. We seek to protect our proprietary position by filing patent applications in the United States and internationally that are related to our novel technologies and product candidates. This patent portfolio includes issued patents and pending patent applications covering pharmaceutical compositions and methods of use.
The patent prosecution process is expensive and time-consuming, and we may not be able to file and prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. We may choose not to seek patent
45
protection for certain innovations and may choose not to pursue patent protection in certain jurisdictions, and under the laws of certain jurisdictions, patents or other intellectual property rights may be unavailable or limited in scope. It is also possible that we will fail to identify patentable aspects of our discovery and nonclinical development output before it is too late to obtain patent protection. Moreover, in some circumstances, we may not have the right to control the preparation, filing and prosecution of patent applications, or to maintain the patents, covering technology that we license from third parties. Therefore, these patents and applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
The patent position of biotechnology and pharmaceutical companies generally is highly uncertain, involves complex legal and factual questions and has in recent years been the subject of much litigation. In addition, the laws of foreign countries may not protect our rights to the same extent as the laws of the United States. For example, India and China do not allow patents for methods of treating the human body. Publications of discoveries in the scientific literature often lag behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all. Therefore, we cannot know with certainty whether we were the first to make the inventions claimed in our owned or licensed patents or pending patent applications, or that we were the first to file for patent protection of such inventions. As a result, the issuance, scope, validity, enforceability and commercial value of our patent rights are highly uncertain. Our pending and future patent applications may not result in patents being issued which protect our technology or products, in whole or in part, or which effectively prevent others from commercializing competitive technologies and products. Changes in either the patent laws or interpretation of the patent laws in the EU, the United States and other countries may diminish the value of our patents or narrow the scope of our patent protection.
The risks described pertaining to our patents and other intellectual property rights also apply to the intellectual property rights that we license, and any failure to obtain, maintain and enforce these rights could have a material adverse effect on our business. In some cases, we may not have control over the prosecution, maintenance or enforcement of the patents that we license, and our licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain and enforce the licensed patents. Any inability on our part to protect adequately our intellectual property may have a material adverse effect on our business, operating results and financial position.
The USPTO and various non-U.S. governmental patent agencies require compliance with several procedural, documentary, fee payment and other similar provisions during the patent application process. In certain situations, non-compliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, our competitors might be able to enter the market and this circumstance would have a material adverse effect on our business.
In addition, we have acquired rights to tegoprubart and other product candidates through a license agreement with The ALS Therapy Development Institute, and may in the future enter into other license agreements with third parties for other intellectual property rights or assets. These license agreements may impose various diligence, milestone payment, royalty, and other obligations on us. If we fail to comply with our obligations under these agreements, or we are subject to a bankruptcy, we may be required to make certain payments to the licensor, we may lose the exclusivity of our license, or the licensor may have the right to terminate the license, in which event we would not be able to develop or market products covered by the license. Additionally, the milestone and other payments associated with these licenses will make it less profitable for us to develop our drug candidates than if we had developed the licensed technology internally.
In some cases, patent prosecution of our licensed technology may be controlled solely by the licensor. If our licensors fail to obtain and maintain patent or other protection for the proprietary intellectual property we license from them, we could lose our rights to the intellectual property or our exclusivity with respect to those rights, and our competitors could market competing products using the intellectual property. In certain cases, we may control the prosecution of patents resulting from licensed technology. In the event we breach any of our obligations related to such prosecution, we may incur significant liability to our licensing partners. If disputes over intellectual property and other rights that we have licensed prevent or impair our ability to maintain our current licensing arrangements on acceptable terms, we may be unable to successfully develop and commercialize the affected product candidates.
We may become involved in lawsuits to protect or enforce our patents or other intellectual property, which could be expensive, time-consuming and unsuccessful.
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 the proprietary rights of third parties. There is considerable intellectual property litigation in the biotechnology and pharmaceutical industries. We may
46
become party to, or threatened with, future adversarial proceedings or litigation regarding intellectual property rights with respect to our products and technology, including interference or derivation proceedings before the USPTO. 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, including treble damages and attorneys’ fees if we are found to have willfully infringed a patent. A finding of infringement could prevent us from commercializing our 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 could have a similar negative impact on our business.
Because competition in our industry is intense, competitors may infringe or otherwise violate our issued patents, patents of our licensors or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their patents. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly, or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly. We may also elect to enter into license agreements in order to settle patent infringement claims or to resolve disputes prior to litigation, and any such license agreements may require us to pay royalties and other fees that could be significant. Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure.
We may need to license certain intellectual property from third parties, and such licenses may not be available or may not be available on commercially reasonable terms.
A third party may hold intellectual property, including patent rights, that are important or necessary to the development of our products. It may be necessary for us to use the patented or proprietary technology of third parties to commercialize our products, in which case we would be required to obtain a license from these third parties on commercially reasonable terms, or our business could be harmed, possibly materially. If we were not able to obtain a license or are not able to obtain a license on commercially reasonable terms, our business could be harmed, possibly materially.
If we are unable to protect the confidentiality of our trade secrets, our business and competitive position would be harmed.
In addition to seeking patents for some of our technology and product candidates, we also rely on trade secrets, including unpatented know-how, technology and other proprietary information, to maintain our competitive position. Any NDAs or similar agreements entered into by the Company may not be with all relevant parties, or adequately protect the confidentiality of our trade secrets. Moreover, to the extent we enter into such agreements, any of these parties may breach the agreements and disclose our proprietary information, including our trade secrets, and we may not be able to obtain adequate remedies for such breaches. Enforcing a claim that a party illegally disclosed or misappropriated a trade secret is difficult, expensive and time-consuming, and the outcome is unpredictable. In addition, some courts inside and outside the United States are less willing or unwilling to protect trade secrets. If any of our trade secrets were to be lawfully obtained or independently developed by a competitor, we would have no right to prevent them, or those to whom they communicate them, from using that technology or information to compete with us. If any of our trade secrets were to be disclosed to or independently developed by a competitor, our competitive position would be harmed.
We may be subject to claims of misappropriation of trade secrets from former employers of Company personnel.
Many of our employees and certain of our directors were previously employed at or affiliated with research foundations or other biotechnology or pharmaceutical companies. Although we try to ensure that our employees and directors 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 or directors have used or disclosed intellectual property, including trade secrets or other proprietary information, of any such employee’s or director’s former employer. Litigation may be necessary to defend against these
47
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 could result in substantial costs and be a distraction to management.
Risks Related to Our Common Stock
We expect our stock price to be volatile, and the market price of our common stock may drop unexpectedly.
The market price of our common stock could be subject to significant fluctuations. Market prices for securities of early-stage pharmaceutical, biopharmaceutical, and other life sciences companies have historically been particularly volatile. Some of the factors that may cause the market price of our common stock to fluctuate include:
Moreover, the stock markets in general have experienced substantial volatility that has often been unrelated to the operating performance of individual companies. These broad market fluctuations may also adversely affect the trading price of our common stock.
In the past, following periods of volatility in the market price of a company’s securities, stockholders have often instituted class action securities litigation against those companies. Such litigation, if instituted, could result in substantial costs and diversion of management attention and resources, which could significantly harm our profitability and reputation.
If we fail to establish and maintain proper and effective internal control over financial reporting, our operating results and our ability to operate our business could be harmed.
Ensuring that we will have adequate internal financial and accounting controls and procedures in place so that we can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with accounting principles generally accepted in the United States (“GAAP”).
If we are unable to successfully maintain internal controls over financial reporting, the accuracy and timing of our financial reporting, and our stock price, may be adversely affected and we may be unable to maintain compliance with the applicable stock exchange listing requirements. Additionally, as we become a larger company, we will become subject to Section 404(b) of the Sarbanes-Oxley Act, which requires our independent auditors to document and test our internal controls. These additional requirements are costly, and our auditors may identify control deficiencies.
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Implementing any appropriate changes to our internal controls may distract the officers and employees of the Company, entail substantial costs to modify its existing processes and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of the internal controls of the Company, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase operating costs and harm the business. In addition, investors’ perceptions that the internal controls of the Company are inadequate or that we are unable to produce accurate financial statements on a timely basis may harm the stock price of the Company.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of the Company, which may be beneficial to our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions in our corporate charter and bylaws may discourage, delay or prevent a merger, acquisition or other change in control of the Company that stockholders may consider favorable, including transactions in which our 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, because our Board is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by stockholders to replace or remove the current management by making it more difficult for stockholders to replace members of our Board. Among other things, these provisions:
We do not expect to pay any cash dividends in the foreseeable future.
We expect to retain our future earnings to fund the development and growth of our business. As a result, capital appreciation, if any, of our common stock will be the sole source of gain, if any, for any stockholders for the foreseeable future.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Not applicable.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
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Item 6. Exhibits.
Exhibit Number |
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Description |
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2.1 |
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3.1 |
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3.2 |
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3.3 |
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3.4 |
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3.5 |
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3.6 |
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3.7 |
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3.8 |
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10.1# |
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10.2 |
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10.3# |
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License Agreement between Lonza Sales AG and Anelixis Therapeutics, LLC, dated September 11, 2018 |
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31.1* |
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31.2* |
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32.1** |
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32.2** |
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101.INS |
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Inline XBRL Instance Document– the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
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101.SCH |
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Inline XBRL Taxonomy Extension Schema Document |
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101.CAL |
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Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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101.DEF |
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Inline XBRL Taxonomy Extension Definition Linkbase Document |
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101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
104 |
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Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document |
* |
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Filed herewith. |
** |
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Furnished herewith. |
# |
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As permitted by Regulation S-K, Item 601(b)(10)(iv) of the Securities Exchange Act of 1934, as amended, certain portions of this exhibit have been redacted from the publicly filed document. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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Eledon Pharmaceuticals, Inc. |
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Date: August 11, 2022 |
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By: |
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/s/ David-Alexandre C. Gros, M.D. |
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David-Alexandre C. Gros, M.D. |
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Chief Executive Officer and Director (Principal Executive Officer) |
Date: August 11, 2022 |
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By: |
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/s/ Paul Little |
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Paul Little |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
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Exhibit 10.1
Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”
AMENDED AND RESTATED LICENSE AGREEMENT
by and between
ALS THERAPY DEVELOPMENT FOUNDATION, INC.
and
ANELIXIS THERAPEUTICS, INC.
dated FEBRUARY 18, 2020
CONFIDENTIAL
Exhibit 10.1
TABLE OF CONTENTS
Page
1. |
DEFINITIONS |
1 |
2. |
GRANT OF RIGHTS |
7 |
3. |
COMPANY DILIGENCE OBLIGATIONS. |
8 |
4. |
ROYALTIES AND PAYMENT TERMS |
8 |
5. |
REPORTS AND RECORDS |
12 |
6. |
PATENT PROSECUTION |
13 |
7. |
INFRINGEMENT |
14 |
8. |
INDEMNIFICATION AND INSURANCE. |
15 |
9. |
NO REPRESENTATIONS OR WARRANTIES |
16 |
10. |
GENERAL COMPLIANCE WITH LAWS |
17 |
11. |
TERMINATION |
17 |
12. |
DISPUTE RESOLUTION |
19 |
13. |
CONFIDENTIALITY |
20 |
14. |
MISCELLANEOUS |
21 |
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APPENDIX A |
1 |
CONFIDENTIAL
-i-
Exhibit 10.1
AMENDED AND RESTATED LICENSE AGREEMENT
This Amended and Restated License Agreement, dated as of February 18, 2020, (this “Agreement”) amends and restates the May 20, 2015 License Agreement, as amended by a First Amendment dated December 5, 2017 and effective as of June 1, 2017, a Second Amendment dated and effective as of December 17, 2018, and a Third Amendment dated September 17, 2019 (collectively, the “Original License Agreement”), each by and between ALS Therapy Development Foundation, Inc., d/b/a ALS Therapy Development Institute, Inc., a Massachusetts non-profit corporation (“ALSTDI”) and Anelixis Therapeutics, Inc., f/k/a Anelixis Pharmaceuticals, Inc., a Delaware corporation (“Company”) (each referred to as a “Party”, and together the “Parties”). This Agreement is a restatement of, and replaces in its entirety, the Original License Agreement and all prior amendments. In the event of any conflict between this Agreement and the Original License Agreement or the prior amendments, the terms contained in this Agreement will prevail.
R E C I T A L S
WHEREAS, ALSTDI is the owner of certain Licensed Patent Rights (as later defined herein);
WHEREAS, ALSTDI and Company have entered into a Research Services Agreement related to a certain Contract # W81XWH-17-1-0057 issued by the U.S. Army Medical Research Acquisition Activity, U.S. Department of Defense under which certain Inventions (as defined in the Research Services Agreement) are being assigned to ALSTDI.
WHEREAS, ALSTDI desires to have the Licensed Patent Rights developed and commercialized to benefit the public and is willing to grant a license thereunder;
WHEREAS, Company has represented to ALSTDI, to induce ALSTDI to enter into this Agreement, that Company shall commit itself to a diligent program of exploiting the Licensed Patent Rights so that public utilization shall result therefrom; and
WHEREAS, Company desires to obtain an amended license under the Licensed Patent Rights upon the terms and conditions hereinafter set forth.
NOW, THEREFORE, ALSTDI and Company hereby agree as follows:
CONFIDENTIAL
1
Exhibit 10.1
CONFIDENTIAL
2
Exhibit 10.1
any comparable application filed with regulatory authorities in or for a country or group of countries other than the United States.
(ii) the Know-How set forth in Exhibit 1.15(ii) that is owned and Controlled by ALSTDI and necessary for the research, development or commercialization of Licensed Products, excluding in each case (i) and (ii) any patents, patent applications or other patent rights (or foreign equivalents thereof) that describe, claim or cover such Know-How.
CONFIDENTIAL
3
Exhibit 10.1
CONFIDENTIAL
4
Exhibit 10.1
CONFIDENTIAL
5
Exhibit 10.1
offices, and any judicial or other appeals of the foregoing. Cognates of the word “Prosecution” have their correlative meanings.
CONFIDENTIAL
6
Exhibit 10.1
(a) Exclusive Patent License. Subject to the terms of this Agreement, ALSTDI hereby grants to Company (including its Affiliates) an exclusive license under ALSTDI’ s interest in the Licensed IP solely to make, have made, use, sell, offer for sale, import, perform and practice Licensed Products in the Field in the Territory during the Term.
CONFIDENTIAL
7
Exhibit 10.1
Agreement for any reason, any Sublicensee not then in default may seek a license from ALSTDI. ALSTDI agrees to negotiate such licenses in good faith under reasonable terms and conditions.
In addition to the foregoing general diligence obligation, Company shall, or shall cause its Sublicensee to, use Commercially Reasonable Efforts to meet its obligations pursuant to a written development plan, as mutually agreed by the parties.
one-time Milestone Payments for the first occurrence of each milestone event for the first Licensed
CONFIDENTIAL
8
Exhibit 10.1
Product:
Milestone Event |
Payment |
Dosing of first subject in first toxicity study in non-human primates |
$1,000,000 |
Dosing of first patient in a Phase I Clinical Trial |
$1,000,000 |
Dosing of first patient in Phase IIB Clinical Trial |
$ 200,000 |
Dosing of first patient in a Phase III Clinical Trial |
$ 300,000 |
First completion of a Phase III Clinical Trial with a positive clinical endpoint |
$ 500,000 |
First Regulatory Approval in the US |
$1,000,000 |
First Regulatory Approval in the European Union |
$1,000,000 |
First Regulatory Approval in Asia |
$1,000,000 |
First Commercial Sale in the Territory |
$1,000,000 |
The parties acknowledge that the issuance to ALSTDI of 555,555 shares of the Company’s non-voting common stock pursuant to that certain Non-Voting Common Stock Purchase Agreement dated on or about June 1, 2017 fully satisfies the Company’s obligation to make that certain Milestone Payment for the dosing of the first subject in the first toxicity study in non- human primates pursuant to Section 4.1(a) of the Agreement.
Each Milestone Event may be achieved only once and each Milestone Payment shall be due only once following upon the first achievement of the corresponding Milestone Event. For the avoidance of doubt, in no event shall Company be obligated to pay to ALSTDI Milestone Payments exceeding $7,000,000.
The first five Milestone Events above (the “Clinical Trial Milestones”) are intended to be successive; if any of the Clinical Trial Milestones is reached without achieving a preceding Clinical Trial Milestone, then the amount which would have been payable on achievement of the preceding Clinical Trial Milestone shall be payable upon achievement of the next successive Clinical Trial Milestone. For purposes of the above Milestone Events, the “completion” of a pre- clinical or clinical study means the date of the last examination or intervention of the last research subject for the purpose of data collection for the primary endpoint in that trial.
In the event that the Company develops a second Licensed Product for disease indications different than the first Licensed Product, Company shall notify ALSTDI within ten (10) days of the first achievement of any of the following milestones for the second Licensed Product by Company or any of its Sublicensees. At the time of such notification, Company shall pay to
ALSTDI the following one-time Milestone Payments for the first occurrence of each milestone
CONFIDENTIAL
9
Exhibit 10.1
event for the second Licensed Product for a disease indication different than the first Licensed Product:
First completion of a Phase III Clinical Trial with a positive clinical endpoint |
$ 500,000 |
First Regulatory Approval in the US |
$ 500,000 |
First Regulatory Approval in the European Union |
$ 500,000 |
First Regulatory Approval in Asia |
$ 500,000 |
First Commercial Sale in the Territory |
$ 500,000 |
Notwithstanding the foregoing, ALSTDI may, in its sole discretion, defer receipt or acceptance of any Milestone Payment to any later date that it selects.
Milestone Event |
Payment |
$500 million in aggregate Net Sales of Licensed Products in one calendar year, across all indications and uses |
$15,000,000 |
$1 billion in aggregate Net Sales of Licensed Products in one calendar year, across all indications and uses |
$30,000,000 |
Notwithstanding the foregoing, ALSTDI may, in its sole discretion, defer receipt or acceptance of any Milestone Payment to any later date that it selects.
CONFIDENTIAL
10
Exhibit 10.1
CONFIDENTIAL
11
Exhibit 10.1
If no amounts are due to ALSTDI for any Reporting Period, the report shall so state.
CONFIDENTIAL
12
Exhibit 10.1
(i) where such underpayment is in excess of five percent (5%) for any twelve (12) month period, Company shall bear the full cost of such audit, and (ii) Company shall remit any amounts due to ALSTDI within thirty (30) days of receiving notice thereof from ALSTDI. In the event that any audit performed under this Section 5.4 reveals an overpayment, ALSTDI shall deliver written notice to Company within thirty (30) days of acquiring knowledge of such overpayments, and shall remit any amounts due to Company as a result of such overpayment along with delivery of such notice.
CONFIDENTIAL
13
Exhibit 10.1
Prior to commencing any such action, Company shall consult with ALSTDI and shall consider the views of ALSTDI regarding the advisability of the proposed action and its effect on the public interest. ALSTDI may participate in any such action with counsel of its choosing at its own expense.
7.2 or 7.4 shall be distributed as follows: (a) each party shall be reimbursed for any expenses incurred in the action, (b) as to ordinary damages, Company shall receive an amount equal to its lost profits or a reasonable royalty on the infringing sales, or whichever measure of damages the court shall have applied, and Company shall pay to ALSTDI based upon such amount a reasonable
approximation of the royalties and other amounts that Company would have paid to ALSTDI if Company had sold the infringing products, processes and services rather than the infringer, and
(c) as to special or punitive damages, the parties shall share equally in any award.
CONFIDENTIAL
14
Exhibit 10.1
CONFIDENTIAL
15
Exhibit 10.1
Company shall require any Sublicensee(s) to indemnify, hold harmless and defend the ALSTDI Indemnitees under the same terms set forth in this Section 8.1.
$2,000,000 per incident and $5,000,000 annual aggregate and naming ALSTDI Indemnitees as additional insureds. Such commercial general liability insurance must provide (a) product liability coverage and (b) broad form contractual liability coverage for Company’s indemnification under Section 8.1 of this Agreement. The minimum amounts of insurance coverage required under these provisions may not be construed to create a limit of Company’s liability with respect to its indemnification obligation under Section 8.1 of this Agreement. Company shall provide ALSTDI with written evidence of such insurance upon request..
Company shall require any Sublicensee(s) to maintain insurance in favor of ALSTDI Indemnitees under the same terms set forth in Section 8.2 above.
INCIDENTAL OR CONSEQUENTIAL DAMAGES OF ANY KIND, INCLUDING ECONOMIC DAMAGES OR INJURY TO PROPERTY AND LOST PROFITS, REGARDLESS OF WHETHER SUCH PARTY SHALL BE ADVISED, SHALL HAVE OTHER REASON TO KNOW, OR IN FACT SHALL KNOW OF THE POSSIBILITY OF THE FOREGOING;
CONFIDENTIAL
16
Exhibit 10.1
PROVIDED THAT NOTHING IN THIS SECTION 9.2 SHALL LIMIT OR RESTRICT THE INDEMNIFICATION RIGHTS OR OBLIGATIONS UNDER SECTION 8.1.
to ALSTDI, such notice to state the date at least ninety (90) days in the future upon which termination is to be effective, and (ii) upon payment of all amounts due to ALSTDI through such termination effective date.
CONFIDENTIAL
17
Exhibit 10.1
termination; provided, however, that each Party may keep one copy of such Confidential Information in its legal files solely for the purpose of enabling it to comply with the provisions of
CONFIDENTIAL
18
Exhibit 10.1
this Agreement, and shall not be required to remove such Confidential Information from its back- up or archive electronic records, including its electronic laboratory notebook and laboratory information management systems.
CONFIDENTIAL
19
Exhibit 10.1
CONFIDENTIAL
20
Exhibit 10.1
CONFIDENTIAL
21
Exhibit 10.1
overnight courier, or registered or certified mail, postage prepaid, return receipt requested, to the following addresses of the parties:
If to ALSTDI: |
ALSTDI [***] |
If to Company: |
Anelixis Therapeutics, Inc. [***] |
All notices under this Agreement shall be deemed effective upon receipt. A party may change its contact information immediately upon written notice to the other party in the manner provided in this Section 14.1.
CONFIDENTIAL
22
Exhibit 10.1
will be construed to refer to sections, attachments, appendices, exhibits or the like of this
CONFIDENTIAL
23
Exhibit 10.1
Agreement, and references to this Agreement include all attachments, appendices, exhibits or the like attached hereto, (h) references to any law, rule or regulation, or article, section or other division thereof, will be deemed to include the then-current amendments thereto or any replacement or successor law, rule or regulation thereof and (i) the term “or” will be interpreted in the inclusive sense commonly associated with the term “and/or.”
[Signatures Follow]
CONFIDENTIAL
24
Exhibit 10.1
IN WITNESS WHEREOF, the parties have caused this Amended and Restated License Agreement to be executed by their duly authorized representatives as of the date first written above.
ALS THERAPY DEVELOPMENT FOUNDATION INC.
By: /s/ Paul Sallaberry
Name: Paul A. Sallaberry
Title: Authorized Director
ANELIXIS THERAPEUTICS, INC.
By: /s/ Steven Perrin
Name: Steven Perrin
Title: President
[Signature Page to LicenseAgreement}
CONFIDENTIAL
25
Exhibit 10.1
APPENDIX A LICENSED PATENT RIGHTS
Methods for the treatment of Neurodegenerative Disease |
|||||
Country |
Application No. |
Filing date |
Publication or Patent Number |
Publication or Issue Date |
Status |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
PCT |
PCT/US2009/066715 |
12/4/2009 |
W02010/065819 |
6/10/2012 |
Nationalized |
US |
13/858667 |
8/18/2011 |
8,435,514 |
5/7/2013 |
Issued |
US (Divisional) |
13/858,667 |
4/8/2013 |
9,044,459 |
6/2/2015 |
Issued |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
Japan |
2011-539720 |
12/4/2009 |
JP201211014 |
5/17/2012 |
Abandoned |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
|
|||||
Anti-CD40L Antibodies And Method For Treating |
|||||
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
PCT |
PCT/US2016/016165 |
2/2/2016 |
WO/2016/126702 |
11/8/2016 |
Nationalized |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
|
|||||
Therapeutic Anti-CD40 Ligand Antibodies |
|||||
[***] |
[***] |
[***] |
[***] |
[***] |
[***] |
PCT |
PCT/US2018/034172 |
5/23/18 |
WO2018/217918 |
11/29/2018 |
Nationalized |
Any patents, patent applications or other patent rights (or foreign equivalents thereof) owned and Controlled by ALSTDI that arise or result directly from the conduct of the activities set forth in Exhibit 1.15(ii), in each case to the extent necessary for the research, development or commercialization of Licensed Products.
CONFIDENTIAL
26
Exhibit 10.1
Exhibit 1.15(i)
Licensed Know-How includes the following Know-How to the extent it is actually provided by ALSTDI to Company:
CONFIDENTIAL
27
Exhibit 10.1
Exhibit 1.15(ii)
Licensed Know-How includes Know-How to the extent it arises or results directly from:
CONFIDENTIAL
28
Exhibit 10.1
Exhibit 1.29
Provided Materials means the following materials, to the extent they are actually provided by ALSTDI to Company:
CONFIDENTIAL
29
Exhibit 10.2
FIRST AMENDMENT TO RESTATED LICENSE AGREEMENT
Between
ALS THERAPY DEVELOPMENT FOUNDATION, INC.
And
ANELIXIS THERAPEUTICS, INC.
This First Amendment (“Amendment #1”) dated as of September 5, 2020 by and between ALS Therapy Development Foundation, Inc., d/b/a ALS Therapy Development Institute, Inc., a Massachusetts non-profit corporation (“ALSTDI”) and Anelixis Therapeutics, Inc., f/k/a Anelixis Pharmaceuticals, Inc., a Delaware corporation (“Company”) (each referred to as a “Party”, and together the “Parties”) hereby amends the Amended and Restated License Agreement between ALSTDI and the Company dated February 18, 2020, (the “Agreement”). Capitalized terms not otherwise defined in this Amendment #1 will have the same meanings as ascribed to such terms in the Agreement. In the event of any conflict between this Amendment #1 and the Agreement or the prior amendments, the terms contained in this Amendment #1 will prevail.
R E C I T A L S
WHEREAS, ALSTDI and the Company are parties to the Agreement, under which ALSTDI has licensed certain rights in patents and know-how to the Company; and
WHEREAS, the Company also has financial obligations to ALSTDI in an amount of
$904,805.45 pursuant to a separate service agreement (the “Master Services Agreement” dated May 20, 2015) for services through December 31, 2019 and the Company wishes to resolve these obligations in part by revision of certain financial terms in the Agreement as hereinafter set forth.
NOW, THEREFORE, ALSTDI and Company hereby agree as follows:
CONFIDENTIAL
Page 1
Exhibit 10.2
Milestone Event |
Payment |
Dosing of first subject in first toxicity study in non- human primates |
$1,000,000 |
Dosing of first patient in a Phase I Clinical Trial |
$1,000,000 |
Dosing of first patient in Phase IIB Clinical Trial |
$ 200,000 |
Dosing of first patient in a Phase III Clinical Trial |
$ 800,000 |
First completion of a Phase III Clinical Trial with a positive clinical endpoint |
$1,000,000 |
First Regulatory Approval in the US |
$1,000,000 |
First Regulatory Approval in the European Union |
$1,000,000 |
First Regulatory Approval in Asia |
$1,000,000 |
First Commercial Sale in the Territory |
$1,000,000 |
The parties acknowledge that the issuance to ALSTDI of 555,555 shares of the Company’s non-voting common stock pursuant to that certain Non-Voting Common Stock Purchase Agreement dated on or about June 1, 2017 fully satisfies the Company’s obligation to make that certain Milestone Payment for the dosing of the first subject in the first toxicity study in non-human primates pursuant to Section Error! Reference source not found. of the Agreement.
Each Milestone Event may be achieved only once and each Milestone Payment shall be due only once following upon the first achievement of the corresponding Milestone Event. For the avoidance of doubt, in no event shall Company be obligated to pay to ALSTDI Milestone Payments exceeding $7,000,000.
The first five Milestone Events above (the “Clinical Trial Milestones”) are intended to be successive; if any of the Clinical Trial Milestones is reached without achieving a preceding Clinical Trial Milestone, then the amount which would have been payable on achievement of the preceding Clinical Trial Milestone shall be payable upon achievement of the next successive Clinical Trial Milestone. For purposes of the above Milestone Events, the “completion” of a pre-clinical or clinical study means the date of the last examination or intervention of the last research subject for the purpose of data collection for the primary endpoint in that trial.
In the event that the Company develops a second Licensed Product for disease indications different than the first Licensed Product, Company shall notify ALSTDI within ten (10) days of the first achievement of any of the following milestones for the second Licensed Product by Company or any of its Sublicensees. At the time of such notification,
Company shall pay to ALSTDI the following one-time Milestone Payments for the first
CONFIDENTIAL
Page 2
Exhibit 10.2
occurrence of each milestone event for the second Licensed Product for a disease indication different than the first Licensed Product:
First completion of a Phase III Clinical Trial with a positive clinical endpoint |
$ 500,000 |
First Regulatory Approval in the US |
$ 500,000 |
First Regulatory Approval in the European Union |
$ 500,000 |
First Regulatory Approval in Asia |
$ 500,000 |
First Commercial Sale in the Territory |
$ 500,000 |
Notwithstanding the foregoing, ALSTDI may, in its sole discretion, defer receipt or acceptance of any Milestone Payment to any later date that it selects.
$250,000 payment by the Company to ALSTDI, will be incorporated into the Agreement and the Agreement and this Amendment #1 will be deemed one and the same contract. Other than as specifically provided in revised Article 4.1(a), the terms and conditions of the Agreement are not modified by this Amendment # 1 and will remain in full force and effect.
[SIGNATURES FOLLOW]
CONFIDENTIAL
Page 3
Exhibit 10.2
IN WITNESS WHEREOF, the parties have caused this Amendment# 1 to the Amended and Restated License Agreement between ALSTDI and the Company dated February 18, 2020 to be executed by their duly authorized representatives as of the date first written above.
ALS THERAPY DEVELOPMENT FOUNDATION, INC.
By: /s/ Alexander L. Cappello
Name: Alexander L. Cappello
Title: Authorized Director
ANELIXIS THERAPEUTICS, INC.
By: /s/ Steven Perrin
Name: Steven Perrin
Title: President
CONFIDENTIAL
Page 4
Lonza
CONFIDENTIAL
Exhibit 10.3
Certain identified information has been redacted from this exhibit because it is both (i) not material and (ii) a type that the registrant treats as private or confidential. Information that has been omitted has been identified in this document with a placeholder identified by the mark “[***].”
LICENCE AGREEMENT
between
LONZA SALES AG
and
ANELIXIS THERAPEUTICS LLC
Lonza
CONFIDENTIAL
Exhibit 10.3
INDEX
ARTICLE TITLE PAGE
1. |
DEFINITIONS AND INTERPRETATION |
3 |
2. |
SUPPLY OF THE SYSTEM, CDACF VERSION 8.8 OR VERSION 8.8 SYSTEM AND SYSTEM KNOW-HOW |
7 |
3. |
OWNERSHIP OF PROPERTY AND INTELLECTUAL PROPERTY |
8 |
4. |
LICENCES |
8 |
5. |
PAYMENTS |
10 |
6 |
ROYALTY PROCEDURES |
11 |
7. |
LIABILITY AND WARRANTIES |
12 |
8. |
CONFIDENTIALITY |
13 |
9. |
INTELLECTUAL PROPERTY ENFORCEMENT |
14 |
10. |
TERM AND TERMINATION |
15 |
11. |
ASSIGNMENT |
16 |
12. |
GOVERNING LAW AND DISPUTE RESOLUTION |
16 |
13. |
FORCE MAJEURE |
17 |
14. |
ILLEGALITY |
17 |
15. |
MISCELLANEOUS |
17 |
16. |
NOTICE |
18 |
APPENDIX
2
Lonza
CONFIDENTIAL
Exhibit 10.3
THIS AGREEMENT is made the BETWEEN the 11th day of September 2018
BETWEEN
LONZA SALES AG incorporated and registered in Switzerland whose registered office is at Muenchensteinerstrasse 38, CH-4002, Basel, Switzerland (hereinafter referred to as "Lonza"), and
ANELIXIS THERAPEUTICS LLC, of 300 Technology Square, 4th floor, Cambridge, MA, 02139, USA (hereinafter referred to as "Licensee")
The Licensee and Lonza shall hereinafter jointly be referred to as the "Parties" and individually as the "Party".
WHEREAS
A Lonza is the proprietor of the System and the CDACF Version 8.8 System and has the right to grant certain Intellectual Property Rights in relation thereto (all as hereinafter defined), and
NOW THEREFORE the Parties hereby agree as follows:
3
Lonza
CONFIDENTIAL
Exhibit 10.3
4
Lonza
CONFIDENTIAL
Exhibit 10.3
ideas, concepts, trade secrets, know-how, inventions, discoveries, data, formulae, specifications, processes, procedures for experiments and tests and other protocols, results of experimentation and testing, fermentation and purification techniques and assay protocols.
Subject to the qualification stated below, upon any sale or other disposal of Product by or on behalf of Licensee or its Sublicensee hereunder other than a bona fide arm's length transaction exclusively for money at market value or upon any use of the Product for purposes which do not result in a disposal of such Product in consideration of sales revenue customary in the country of use, such sale, other disposal or use shall be deemed to constitute a sale at the then current maximum selling price in the country in which such sale, other disposal or use occurs.
Notwithstanding anything contained in this Agreement to the contrary, the supply of Product free of charge as commercial samples, or for use in preclinical studies, clinical trials or similar or related research studies, shall not be included in this provision.
If the Product is sold as a combined product that consists of Product together with another therapeutically active ingredient or product for the same indication (a "Combination"), the Net Sales will be calculated by multiplying the Net Sales of the Combination (as defined using the Net Sales definition above) by the fraction, A/(A+B) where A is the weighted (by sales volume) average sale price of the Product in the relevant country, and B is the weighted average sale price (by sales volume) in that country of the product(s) containing the other component(s) in finished form. Regarding prices comprised in the weighted average price when sold separately referred to above, if these are available for different dosages from the dosages of Product and other components that are included in the Combination, then the Parties shall mutually agree on the appropriate proportional adjustment to such prices in calculating the royalty bearing Net Sales of the Combination. If the weighted average sale price cannot be determined for the Product or other component(s), the calculation of Net Sales for a Combination will be mutually agreed upon by the Parties based
5
Lonza
CONFIDENTIAL
Exhibit 10.3
on the relative value contributed by each component, such agreement to be negotiated in good faith without unreasonable delay.
6
Lonza
CONFIDENTIAL
Exhibit 10.3
importation of Product by Licensee or its Sublicensees and which also (a) has not been cancelled, withdrawn, abandoned or rejected by any administrative agency or other body of competent jurisdiction, and (b) has not been revoked, held invalid or declared unpatentable or unenforceable in a decision of a court or other body of competent jurisdiction that is unappealable or unappealed within the time allowed for appeal, and (c) has not been rendered unenforceable through disclaimer or otherwise, and (d) has not been disclaimed or otherwise dedicated to the public by Lonza, and (e) is not lost through an interference proceeding and any appeals therefrom.
Approximately 20µg of vector pXC-17.4 Approximately 20µg of vector pXC-18.4
Approximately 20µg of vector pH31K5 containing anti-insulin monoclonal
antibody H31K5
Two 1.5 ml vials of the CHOK1SV-GS-KO cell line
System Know-How contained as at the date hereinabove in (a) manuals of operating procedures for the System, (b) regulatory information in pdf format, and (c) Vector nucleotide sequences.
7
Lonza
CONFIDENTIAL
Exhibit 10.3
additional materials, such supply shall be subject to the payment of an additional fee by Licensee to Lonza in accordance with Lonza's prices at the time.
8.8 Base Powders and CDACF Version 8.8 Supplements to enable Licensee (and only Licensee) to make CDACF Version 8.8 Feeds and CDACF Version 8.8 Media and (b) supply Licensee with the CDACF Version 8.8 Know-How.
8
Lonza
CONFIDENTIAL
Exhibit 10.3
in each case (a) and (b) to use, develop, manufacture, market, sell, offer for sale, distribute, import and export Product in the Territory ("Commercial Activities").
9
Lonza
CONFIDENTIAL
Exhibit 10.3
10
Lonza
CONFIDENTIAL
Exhibit 10.3
Such statement shall be submitted to Lonza within thirty (30) days after the end of the calendar quarter to which it relates, together with a remittance for the royalties due to Lonza to which Lonza shall issue a receipted invoice in return.
11
Lonza
CONFIDENTIAL
Exhibit 10.3
interest to accrue on a day-to-day basis without prejudice to Lonza's right to receive payment on the due date.
12
Lonza
CONFIDENTIAL
Exhibit 10.3
CONSEQUENTIAL DAMAGES. Nothing in this Agreement shall exclude or limit the liability of either Party for fraud or for death or personal injury caused by its negligence or for any other liability that may not be limited or excluded as a matter of law.
13
Lonza
CONFIDENTIAL
Exhibit 10.3
14
Lonza
CONFIDENTIAL
Exhibit 10.3
(a) the product manufactured through the infringing activity is a competing product to the Product, (b) Lonza has not granted rights to Third Parties which prevent Lonza from granting such a right to enforce to Licensee, and (c) Lonza does not initiate proceedings within sixty (60) days of being requested to do so by Licensee.
15
Lonza
CONFIDENTIAL
Exhibit 10.3
Rights (Lonza) or any of the claims thereof Lonza shall be entitled at any time thereafter to terminate all or any of the licences granted hereunder forthwith by notice to Licensee.
16
Lonza
CONFIDENTIAL
Exhibit 10.3
conducted in the English language. The arbitrator's award shall be final and binding. The Parties covenant and agree that they will participate in the arbitration in good faith and that they will share equally the costs of the arbitration, except as otherwise provided herein. Any Party refusing to comply with an order of the arbitrator will be liable for costs and expenses, including attorney's fees, incurred by the other Party in enforcing an award.
Neither Party shall be in breach of this Agreement if there is any total or partial failure of performance by it of its duties and obligations under this Agreement occasioned by any act of God (including without limitation, fire), act of government or state, war, civil commotion, insurrection, embargo, epidemic, terrorism or earthquake, prevention from or hindrance in obtaining any raw materials, energy or other supplies, labour disputes of whatever nature and any other reason beyond the control of either Party. If either Party is unable to perform its duties and obligations under this Agreement as a direct result of the effect of one of the reasons set out in this Clause 13 such Party shall give written notice to the other of such inability stating the reason in question. The operation of this Agreement shall be suspended during the period (and only during the period) in which the reason continues. Forthwith upon the reason ceasing to exist the Party relying upon it shall give written notice to the other of this fact. If the reason continues for a period of more than ninety (90) days and substantially affects the commercial basis of this Agreement the Party not claiming under this Clause 13 shall have the right to terminate this Agreement by giving written notice of such termination to the other Party.
17
Lonza
CONFIDENTIAL
Exhibit 10.3
arrangements relating to the subject matter of this Agreement ("Understandings"). Neither Party shall be entitled to rely on any Understandings which are not expressly set forth in this Agreement.
Address of Lonza
Lonza Sales AG, Muenchensteinerstrasse 38 CH-4402, Basel, Switzerland
With a copy to: Lonza Biologics Plc
[***]
E-mail: [***]
Attn: [***]
Address of Licensee
ANELIXIS THERAPEUTICS LLC
300 Technology Square, 4th floor, Cambridge, MA 02139
Email: [***]
Attn: [***]
18
Lonza
CONFIDENTIAL
Exhibit 10.3
AS WITNESS the hands of the duly authorised representatives of the parties hereto
Signed for and on behalf of
LONZA SALES AG
/s/ Bart A. M. van Aarnhem
Senior Legal Counsel
Signed for and on behalf of
LONZA SALES AG
/s/ Jacov Wirtz
Assoc. General Counsel
Signed for and on behalf of
ANELIXIS THERAPEUTICS LLC
/s/ Steve Perrin
CEO
19
Lonza
CONFIDENTIAL
Exhibit 10.3
APPENDIX 1A
[***]
20
Lonza
CONFIDENTIAL
Exhibit 10.3
APPENDIX 1B
[***]
21
Lonza
CONFIDENTIAL
Exhibit 10.3
APPENDIX 2
[***]
22
Lonza
CONFIDENTIAL
Exhibit 10.3
APPENDIX 3
[***]
23
Lonza
CONFIDENTIAL
Exhibit 10.3
APPENDIX 4
[***]
24
Exhibit 31.1
CERTIFICATIONS
I, David-Alexandre C. Gros, M.D., certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Eledon Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 11, 2022 |
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By: |
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/s/ David-Alexandre C. Gros, M.D. |
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David-Alexandre C. Gros, M.D. |
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Chief Executive Officer (Principal Executive Officer) |
Exhibit 31.2
CERTIFICATIONS
I, Paul Little, certify that:
1. I have reviewed this Quarterly Report on Form 10-Q of Eledon Pharmaceuticals, Inc.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: August 11, 2022 |
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By: |
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/s/ Paul Little |
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Paul Little |
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Chief Financial Officer (Principal Financial and Accounting Officer) |
Exhibit 32.1
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Eledon Pharmaceuticals, Inc. (the “Company”) for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, David-Alexandre C. Gros, M.D., Chief Executive Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 11, 2022 |
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By: |
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/s/ David-Alexandre C. Gros, M.D. |
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David-Alexandre C. Gros, M.D. |
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Chief Executive Officer (Principal Executive Officer) |
Exhibit 32.2
CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report on Form 10-Q of Eledon Pharmaceuticals, Inc. (the “Company”) for the period ended June 30, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), the undersigned, Paul Little, Chief Financial Officer of the Company, hereby certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to the best of his knowledge:
(1) the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of
1934; and
(2) the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 11, 2022 |
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By: |
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/s/ Paul Little |
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Paul Little |
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Chief Financial Officer (Principal Financial and Accounting Officer) |